“Nowadays people know the price of everything and the value of nothing.” Oscar Wilde
It’s hard to have a conversation about value. It’s easier to have one about price, cost and return on investment. Value is a sum of tangible and intangibles that defy the specific translation into numbers. It’s also subjective. I can see great value on something where you see little of it, yet the cost, the price may be the same.
It’s very healthy to look at value and price/cost at the same time. First together, then unbundling them. There may low cost and high value, or vice versa, or combinations of the two measures.
In the professional services arena, the traditional consulting model, lead by the Big Consulting firms, has destroyed the value conversation by costing and competing on number of people/consultants (bodies), time (number of days) and unit costs (daily rates). That model sells time and bodies, not value. It equalizers time, effort, quality of delivery, and delivery itself. A day is a day. Nowhere else in the contractual world, a day of doing nothing costs the same as day of breakthrough thinking. So, a 100000 contract is composed by so many bodies (consultants) in so much time, at such daily rate. Double the bodies, and the time, you double the cost. And there has always been justifications for sending more and more troupes to the client. This model is broken.
Value consulting is philosophically in the antipodes. It does not understand number of bodies (consultants) or number of days. It understands value delivered and total, fixed costs. Procurement people hate this, and fight this. But, whether you, they, like it or not, value is the only thing that matters.
Similarly, an acquisition can be understood in term of costs, price, multiples of revenue, return on investments, etc., and also in terms of value (strategic, philosophical, enhancement of a platform or capabilities for example). These are two not mutually exclusive, but certainly different categories
We need to reclaim the value conversation in what we do, inside the company, with the market, with professional services providers. It may be hard if you start from zero experience. The comfort zone will always be ‘the numbers’. But pushing the value conversation always pays off. It elevates that conversation to the right level. Paraphrasing Oscar Wilde, yes, there are things that have value and things that have cost. Where to start where to dwell, where to end the conversation, is simply a choice. But The conversations are different.
Reclaim value, get value, put a cost.