Closing the loop on value.
A little while ago I wrote about the differing scales of value at work within something as simple as the penny.
1. Cost of production
2. Value of materials
3. Redemption or face value
4. Actual economic value.
The same is true of many products and services, and it is definitely true of almost any business. Value can be created or improved among a number of different axes. Being one of my favourite topics I’ve written fairly often about this. I think that finding a new dimension of value within a category is the most dramatic way to create a disruptive innovation. Rather than simply getting people to think about something in a different way which is the aim of a “disruptive communications campaign,” a change in how money is made forces people to do business in a different way.
As we’ve seen in the technology arena, reshaping how people do business is far easier as businesses have become largely digital. Microsoft has declared it will become an advertising business because Google moved the value away from software. This is one of the reasons I love being in this business right now, the potential for software and services to completely transform a business is (to steal a cliché) limited by your imagination.
However, to me, the biggest lesson from the penny is that even with a physical piece of currency, all of the scales or axes of value are social. They are all dependent upon what “we” collectively believe worth is. The Web 2.0 companies have exploited this to great end. The prices paid for Facebook, YouTube and MySpace are based almost entirely on their social value not their physical or even digital value. Software has been how they have created social value from scratch.
Of course, this is why I believe that turning your marketing into a service or set of services has so much potential. A communication – no matter how creative or clever – can’t create this kind of separation between you and your competition.