Category Archives for "Elements of Value"

How Self-Transcendence Enhances Value

This first Element of Value is key to the others.  Self-transcendence is the only Social Impact Element and the only one where businesses pass value to others or society in general.

What is Self-Transcendence?

The problem is social impact is a mutual benefit, and the term “self-transcendence” returns focus to the self.

Mutuality is important and easily lost where a business donates to a charitable cause; a limited approach to social impact that has two important downsides:

1. This one-way approach to charity means business has no skin in the game. They take little interest in how effective their donation is.  They may be interested in the immediate impact of their giving, the outputs.  “We equipped x schools with y desks.”  But what are the outcomes? Is the business committed to social change or does it just want to look good?
2. There is no harm in looking good. A business can point to the good it does, the real change for the better it commits to and benefit from its work for transformation through its marketing.  Arm’s length giving does not do this. Agreeing with a charity for mutual benefit is likely to be good for both parties.

Self-transcendence implies mutual benefit.  When a business passes value to others and society in general it benefits because because prospects see how it benefits others.  This is a business that contributes to well-being beyond its immediate customers.  In a sustainable economy, the costs to the business are balanced by the benefits it receives when prospects perceive it as a beneficial and therefore welcome presence in the economy.

Value for the Client

If self-transcendence is important to your client, what is its value to them?

Let’s consider two kinds of client.

The first is someone in business for social transformation.  They want to help people and see change in the world around them.  They need financial success to meet their aim.  This implies they seek mutual benefit.  For these clients, selling their services is likely to be an issue; is it ethical?  Their vision is a strength and perhaps a barrier to realistic business practice.

The second sees no social impact from their work.  Yet, social impact is real for all businesses as people are unlikely to buy if social impact is negative.  So, knowing the social impact of your business is no disadvantage.  It opens up new dimensions to marketing.  It may be possible to enhance social impact through increased awareness and so increase income.

Social impact offers all businesses strategic direction.  It does not have to be charitable.  Improving management in a specific industry might be social impact, for example.

How to get there.

A good question to ask is: “What social impact do we have?”  Something that flows naturally from your business is likely to be more satisfying than charitable giving tacked on to assuage guilt and look good.

If your focus is on building the business and balancing books, perhaps you have not taken time to look at the impact the business has and build on that as integral to its future.  A clear transformational role, tempered by financial reality can set the strategic direction for a business.

We’ll see over the next weeks there are other things you can build on for strategic direction.  But this one is on top for a reason.  It sets the strategic context in which all businesses work.   If a business cannot articulate the value it offers to society, it is likely to lose direction.  It is not that it has no value to society but the business-owner is unaware of the impact of their own business.

Your offer

Businesses that offer a bit more and invite customers to take part in social change have a competitive edge.  Not everyone is drawn to the same thing but the point is to find those customers that are and build on their commitment to your social aims.

So, the challenge is to work out how to offer social transformation through your business.  This may be easier for coaches or consultants who can point to direct changes they cause through their work.  For businesses that offer products there are options from negative, eg mitigating environmental impact, through to the positive good using the product does beyond the immediate customer, through to activities the business takes part in as  part of its mission.

This is the second of 31 posts about elements of value.  Make sure you don’t miss any by signing up for the offer below.  The posts in this sequence can be accessed below:

Elements of Value

This post introduces a new sequence about Elements of Value.  It is based on Maslow’s hierarchy of needs; a version I have mentioned in passing, see What do People Want that introduces Elements of Value.

Setting Your Price

Setting your price is an art.  Too high and people don’t believe it reflects the value of your offer and too low, you don’t cover your costs.

There are other things to consider besides cost and value.  For example, you may introduce low price offers to prove your value, establish your reputation, etc.  There are pros and cons to all of these.

However, in this post I focus on costs and value to the customer.  Generally customer bears their costs unless you choose to meet them.  Value, if you show it in advance, tends to support increases in your price.

Remember though, there are no set rules.

What are Costs?

Costs to the customer can massively exceed the price.   There are several ways this might work.  For example, you offer a course and ask your customer to purchase a text-book.  You don’t have to do this, eg you could offer a copy of the book as a bonus.  You might choose to supply essential texts and leave it for the customer to decide about supporting texts.

If you supply the text-book, you add its price to your costs.  This expense may be so low compared with your profit on the deal, it makes little difference financially.  But presented as a bonus it adds value to your offer.

Other costs are harder to assuage.  If you are a coach or consultant, your customer will need to invest time in preparation for meetings.  Your prospect must understand their contribution to your effectiveness in advance.  Your customer’s time is valuable and a few hours’ work can add to the overall cost.  You reduce this by ensuring preparatory work is relevant, provide support, etc.

If you are alert to the costs to the customer, you can manage them together and show how they contribute to the value of the offer.

What is Value?

So, the costs, whether borne by you or your client tend to hold prices down.  Your prospect compares perceived costs with perceived value.  They are unlikely to buy if costs outweigh value.

It is not a good idea to hide the costs to the client.  The costs to the client are the contribution they make to the success of your joint enterprise.

Let’s say the cost to the client is 3 hours’ work a week.  This work is essential and so the client must know about it before they buy your offer.  If they are aware and do not do the work, then you can discuss what you can do together given they have already acknowledged the need for the work.

The temptation might be to reflect these costs in your prices.  However, this is not a good idea for several reasons.  If you cut your prices, you need more clients and these take up more time, reducing the value of your support because you have to spread it more thinly.  Worse though, the costs to your clients are likely to increase with the value of your offer.  A higher value offer makes greater demands on your client.  If you cut prices for every increase in value, you have no incentive to develop high-end offers!

The solution is to increase the value to your clients.  If the perceived value is worth the effort, they are likely to opt for your offer.  If they want it enough, they will find the money.

Elements of Value

If you follow the link to the Elements of Value, you see 30 suggestions.  One of them is making money.  That leaves 29 other elements.

You can offer more than one Element of Value and some will be easier for you than others.  Bain offers 4 levels of value and from lowest to highest, here they are:

As this is based on Maslow’s triangle, the idea is you need to meet needs at a lower level before you move to the next.  So, you need to meet some of functional needs before you start on the emotional.  And so on.

Perhaps you need to offer value at all four levels to make a high value offer.  This suggests a belt and braces approach to life.  Get the foundations in place and build the higher values on the foundations.

However, this conceals a disadvantage.  It lacks vision.  If you have no sense of the social impact you intend, how can you know which foundational value you need?  Many people know the changes they want to see and need to work out the values they need from lower down the triangle.

This is why my listing of the 4 levels is upside-down.    It is possible to build a business, see where it takes you and then decide upon social impact.  But many people set out with a vision and must back-fill the other values they need to meet that vision.

This is why over the next 30 weeks I shall start with social impact and work down the triangle, exploring each level in turn.  Starting from the top suggests a strategic approach.  It is for those who know the change they want to see and seek the other values they need to get to their goal.

Two Final Points

First, it is possible to start lower down.  Life changing goals are fine and may provide the strategic goal you need.  Once you meet this goal, you may find a social impact goal appears naturally.

And for those who worry about making a profit, remember: if you want to help more people, you need to be financially successful.  This is about becoming successful enough to carry out your social impact goals.

This is the first of 31 posts about Elements of Value.  Make sure you don’t miss any by signing up for the offer below.  Access previous posts in this sequence below: