مکالمه

BEC : Value -Conversation

AJ: Let’s talk about this idea of valued added. This is a common phrase in business ‘valued added’ or ‘adding value’. You hear it a lot and it’s not always clear what people are talking about. Value added, literally, means adding some extra value to a basic core product or core service. You’ll hear businesspeople talking a lot about commodities versus premium products or commodities versus value added; that kind of thing.

A commodity, in a really general sense of the word, is kind of anything that is indistinguishable. In other words, it doesn’t matter where you get it from it’s not seen of something that has much variation in quality.

For example, let’s say gold. The metal gold is a commodity. Gold is gold so it doesn’t really matter which company you buy your gold from. As long as it’s pure gold you don’t really care if you buy it from one company or another company. Therefore, because it’s a commodity and there’s no extra value, it’s just a basic thing, the pricing tends to be the same. You can’t, as a company, really charge more for gold. There’s a basic commodity price for gold and everybody pays the same price for it. It doesn’t matter where you buy it from or which country you buy it in it’s kind of the same price everywhere.

Now, this idea of value added then, the reason it’s important to businesses is that value added means adding extra innovations, extra value, extra service, extra something to a basic product so that you can charge more for it. Let’s take gold as an example.

If you just have gold, that’s a commodity. People will pay a certain amount per ounce, but if you take that gold and you make it into a beautiful ring or some kind of beautiful artwork and you really add a lot of work and care and make something that is very artistic people will then pay much more than just the price of the gold because you’ve added value. You’ve added, in this case, artistic value so people will pay beyond the price of just the gold for that ring.

This is a general thing that businesses can use in general. Computer companies can use this, for example, Apple computer. Again, we use them a lot as an example, but they’re really good at this. This is why Apple Computers are much more expensive than PC Computers. PC Computers are becoming more and more of a commodity. When people buy a PC they’re mostly just looking at how much memory does it have, what’s the speed. They’re comparing and then all the prices are really pushed down quite low, driven down.

With an Apple because they’ve got a different operating system they’ve added value, meaning they’ve done things to make it easier to use, to make it more artistic, more creative, the design appeals to some people. That’s an extra value. So they’ve added a bunch of valuable things for their customers therefore they can charge more for the exact same level of memory and speed and everything.

George: Yes, I think you kind of hit it right on the head there. When I think of value added or value add I think of something unique. No matter what the product is, somebody has done something to make that product unique. Now, unique in many ways is the way it looks, the appearance. Even though it may be the same product as something else the appearance looks better. We’ll go back to the rings.

In a case of a ring, you’ve got a plain gold ring. How do you make it unique? Well, you put diamonds on it. You put rubies on it. You put sapphires on it.

You put all kinds of sparkly things on there. You actually change the design of the gold. Instead of just a single band maybe you’ve got it with flares or whatever you want to call it where it’s more than one layer. Another unique factor is the more you change the appearance, quite often, the more that makes it more luxurious.

Luxury, there’s a unique thing and a value add to certain customers in certain products. Certainly, the automobile is one of those, the luxury features that are included in a BMW or a Rolls-Royce versus the bottom of the line product that’s sold by Ford or Chevrolet. That makes them unique. It’s value added.

A lot of people like to have a GPS system in their automobile. Well, that’s a value add. Everybody does have that, so the appearance, the design, the luxury notion, the quality, the simple quality.

Let’s go back to that gold ring. Well, a gold ring can have varying degrees or a percentage of pure gold in it. That’s a value add. Maybe our golden ring has 95% pure gold where the ones that you buy from these other stores here in the mall are 90%. There’s a value add. A big one I see in a lot of major corporations that’s come about --I’ll say recently, but it’s been a while --is the notion of customer service or customer support.

After you buy a product part of that product is the ongoing support that you can use either by picking up the telephone or going to the Internet and it’s free. That’s part of the initial packaged product that you bought. Now, there’s a value add that’s worth thinking about.

AJ: I think that all of these could be called ‘soft innovations’. That’s what Seth Godin calls them --soft innovations. So an innovation, obviously, is like a big improvement, a big change, even possibly a revolutionary change. ‘Soft’ refers here to the idea that it’s not expensive that, in fact, it could even be free. So, for example, a very, very, very simple example would be a coffee shop.

So we have two coffee shops and they both serve exactly the same coffee.

Everything is the same, but in one coffee shop the people working there are very friendly and nice and in the other they’re kind of rude and not very nice.

That niceness, the kindness, the friendliness, that would be called a soft innovation. It’s a cheap or, in this case, a totally free improvement to the business and they could actually charge more just because they’re friendlier.

So a lot of the game in business is figuring out how to add more and more and more soft innovations.

Certainly, there are things called ‘hard innovations’ too. That’s where you really spend money and research and develop something that is a much higher quality or it truly is much different than the competition. That’s a more expensive game to play and more difficult certainly for bigger businesses.

For smaller businesses it’s really hard to do, but the soft innovations are available to everybody and, pretty much, to every department. You can always find little improvements that can be cheap or free that will still add a lot of value to the product, to the service, to your department, to your job, to whatever you’re doing.

I think, as always, it’s good to take these ideas and apply them to your own job, your own position. You can think about okay, how can I add value to what I do? Again, thinking like a businessperson. So, once again, you’re in your job and you have your basic duties. In many ways your job is a commodity, meaning they can replace you very easily with another person who has the same skills. If it’s just you need to know certain programming skills, for example, well they can find someone else who has the same programming skills.

You’re kind of a commodity. There’s a certain price they’ll pay you and there’s a certain price they pay people to do your job. However, you can increase your value to the company and eventually increase your actual paycheck by constantly thinking of soft innovations, extra value that you can add. What extra things can you do in your job? The example I gave of just being friendlier and more cooperative and a better team member and really more helpful to everybody, that’s one. That’s one that will add value to what you’re doing.

You could pick up and learn extra skills. That’s another one. So you wouldn’t just have the basic required skills, you could actually go out and keep learning new things and develop in that way so that you would have abilities that other people on the team or in your position don’t have. It’s a constant game and you just have to be creative about it and constantly looking for ways to not just be unique in just any way, but unique in a way that adds value to what you’re doing.

George: Excellent. Yes, the people value add or the value add by people is truly important and easy. I mean if you are somebody who wants to make a difference in your company, somebody who wants to be recognized, somebody who wants to move forward with a career, add value. It’s a double- edged sword. On one hand, part of the value you add is to improve relationships with your peers. Improve relationships with your customers.

Save money. Find creative ways to get things done. Another great one -figure out a way to get rid of some paperwork; eliminate those reports that aren’t necessary. Value add.

Are they written in your job description? Probably not, but the other side of the sword is that’s what’s going to make you unique. That’s how you become unique because you add some value by doing above and beyond what your job description says you’re supposed to do. You get creative, thoughtful and analytical and use your people skills.

This is tremendous. It works for two organizations. It works for the company - the organization you’re working for - and it works for you because you now are of value to the company. Not only are you of value maybe to customers and vendors and other people that the company interfaces with, but you are truly valuable to the company.

AJ: Yeah, that’s really the key to building a career is become more and more and more valuable, adding value to whatever you do. You’re always going to stand out because of that. The good news or the bad news, depends how you look at it, is most people don’t want to stand out. Most people want to blend in. They want to be the same, so they’re going to do what’s expected.

They’re going to do what everyone else is doing. They’re going to follow the basic procedures and rules and duties and they’re afraid to take a chance and do something different.

That’s part of this too is you’re really taking a risk. You’re taking a chance.

Whenever you try to add some value, do some kind of innovation soft or hard, try something new, there’s always a chance that you’ll fail or that people won’t like it. You know maybe you go around trying to be extra friendly to everyone and people for some reason don’t like it. Maybe they’re grumpy or something. Or, if you try to do some kind of new procedure or new way of doing things it might be that your boss doesn’t like it and they yell at you.

It’s a risk, that’s why most people don’t do it. They want to blend in. Most people just try to play it safe all the time. They’re constantly playing it safe.

They’re basically trying to avoid all risk. They’re trying to avoid most attention. That’s actually very good news because that means it’s actually not that difficult to stand out. It’s not that difficult to be different. You just have to be willing to face some failures or difficulties sometimes, but in the long run by being different, by constantly trying to add value, by taking risks, you will come out on top much more often and your career will really be much better than all the masses of people who are just following the herd.

George: Absolutely and let me just give you one more thought. Roughly one-third of your day is spent working. Now, would you rather just be miserable and unhappy and doing only what you’ve been told to do or would you like to be creative and do some of the things you want to do. Take some of the ideas that I know you’ve got and try to implement them, move them forward improving your career. You’ve got nothing to lose. Go ahead and take the chance, take the risk. There are not many people that I can think of who got ahead in the business world or got ahead in the word period without taking some kind of a risk. This is an easy one for you. Go ahead and take it.

AJ: Yeah. Seth Godin’s phrase is ‘safe is risky’. So trying to play it safe in the short terms seems like it’s safe, but when you play it safe too much, when you avoid risk, it’s actually more risky because your job security actually gets weaker and weaker because you’re easier to replace. There’s nothing special about you.

The End.