Wednesday, October 8, 2014

Define: value - What is value?

Two definitions from my thesis define: What is value?
CC-SA,BY (R Bartz, Munich)

1. An early working definition

p.16. Ch.2. Ferrers (2013) "Value is the personal, individual, unique assessment of costs, benefits and risks reflecting individual circumstances that leads to a purchase decision, choice or attitude."

2. The final definition

Abstract. p.ii. "Value emerged from the data as a consumer meaning construction process, guided by social and individual processes of discovery and filtering. Central to this process is the emotional aggregation of multiple meanings into a single overall attitude, facilitating consumer action. Three other value concepts emerged; value meanings, value practices and attitude."

1. Value is a process of valuing. Value, verb. How: using value practices; exploring, comparing, filtering/closing, recommending, observing, inquiring.
2. Value is an outcome of (1), stored as an attitude (5). Value, noun.
3. Properties of Value: dynamic; Value shifts with new information.
4. Properties of Value: complex; Value was described in many ways by consumers (value meanings).
5. Properties of Value: simple; Value (2) endures as attitudes, occurring both at value meaning level and overall. Overall attitude simplifies many value meaning attitudes into one single attitude, a vector, showing strength and direction (positive or negative) towards a value target.

Tuesday, April 22, 2014

What consumers value: lessons from ten years of smartphones (Draft for Comment)

A draft for comment... Value 101, targetted at Managers, introducing a value perspective of innovation, for the Sloan Management Review.

Your comments are appreciated to achieve the below aim.... either to blog post, or to @valuemgmt or by email. Your assistance is appreciated.

Brief aim: Sloan want "the most potent, useful and directly applicable management insights... on innovation". Can you help me with comments to achieve this aim....? First para and links below.

pdf version at Google here; (Active) iCloud version here (Not currently active; Oct '14). Now also available at SSRN here (Oct '14), for wider review.

Better by Apple
Innovation means more than doing new, but doing better.

Target Innovation Reviewers:
Jorge Barba  @jorgebarba
Seth Godin @ThisisSethsblog
Matt McFarland @mattmcfarland
Stewart Harker  Global Retail & Consumer Advisory Lead Partner at PwC.
Christian Behrenbruch CEO ImaginAB

AIM: Sloan Management Review seeks "the most potent, useful and directly applicable management insights developed by researchers... and translate these new ideas for business executives and management teams who can put them to work... we seek manuscripts... that offer new research and insights about the most imporant and transformative management topics (today and in the future) with a focus on innovation."

Title: What consumers value: learning from ten years of smartphones
Subtitle: Value is a new and (potentially) better way for Managers to understand innovation

Alternate title: The Problem of Value: Creating and Innovating 3G

Value is a potentially better way to think about innovation, now nearly 15 years, since its proposal in this journal (Sloan Management Review). Value is still incompletely **understood by Managers, even though consumers value every time they buy or try something new, because value is subtle in its complexity. Value, I discovered in consumers’ experience of smartphones, is both a process (an assessment; ‘value the doing’, using what I call value practices) and an outcome of that process (‘value the result’, I call overall value) aggregating a group of attitudes against potentially many meanings of value (I call value dimensions). I introduce these value concepts below. Value answers recent **calls to focus beyond short term profits, beyond shareholders, towards something more worthy and more sustainable. Value creation “delights customers” and “inspires employees” but value thinking requires Managers to take responsibility for *consumer’s value experience in a process I call ‘Value Management’, or more boldly as ‘Value Leadership’.

NB: asterisks indicate references in footnotes.
pdf version at Google here; iCloud version here (iTunes login required)

1. Kim, W. and R. Mauborgne (1999) Strategy, Value Innovation and the Knowledge Economy. Sloan Management Review, 40, 3, 41-54.
2. Gummerus, J (2013) Value Creation Processes and Value Outcomes in Marketing Theory: Strangers or Siblings. Marketing Theory, 13,  1, 19-46.
3. Gronroos, C (2011) Value Co-creation in Service Logic: A Critical Analysis. Marketing Theory, 11, 3, 279-301.
4. Porter, M. and Kramer (2011) Creating Shared Value: How to Reinvent Capitalism and Unleash a Wave of Innovation and Growth. Harvard Business Review, 1, 62-77.
5.  Tata, R et al (2012) Why Making Money is Not Enough. Sloan Management Review, 54, 4, 95-6.
6. For work on value as related to business customers, see Flint, D., Woodruff, F. and S. Gardial (2002) in the Journal of Marketing, 66, October, 102-117. My work examines consumers rather than business buyers.

Thursday, March 6, 2014

The ABCDE of Value Meanings; 12 value dimensions in smartphones

My study of smartphone consumers found many many meanings of value; something approaching 100. A full list is in Appendix 7 of my PhD (link). But such a long list is impossible to remember, so I distilled (well...  clustered) the list into 12 dimensions.

But a list of 12 is still quite long and even I have trouble remembering the list. But this morning as I was listing them down in alphabetical order I noticed an unusual coincidence. The 12 dimension fall into two clusters of near alphabetical order.



This seems extraordinary that they are nearly alphabetical, and so I had to share the list again.

























Value dimensions were shown at Value Management earlier as a Rose Window (May 2011), and earlier yet in What is value? (June 2009). First release of the value dimensions was in post called Another Brick in the Wall (Nov 2007, published Jan 2008).

Enjoy! And I hope this makes it easier to remember the list of 12 Value Dimensions.

The thesis provides lots of examples of these dimensions in Chapters 3 (Connection, Price, Novelty, Power, Beauty), Chapter 4 (Price, Service, Simplicity) and in Section 4.4 Underlying Value Meanings; Need, Function, and Time.

Wednesday, November 20, 2013

Measuring innovation: tracing progress in Fortune 500

This is a follow on post from : Feb 2011 which looked at 2006 - 2010 Fortune 500 data. This post updates to 2013 Fortune 500 updates.

Three fast risers: Apple, Google and Amazon continue their surge.
Innovation can manifest as rising sales; bring new products to new customers (new iPad users) or old customers (selling iPad to iPhone users) or reselling products or services to old customers (such as  selling apps to iPhone users).  The Fortune 500 traces rising sales (rather than profits) which are more difficult than profits to manipulate.

Two techniques to inflate sales and therefore confound the Fortune 500 as a measure of innovation are: 1. buying a competing business and hence buying sales, such as Amazon buying Book depository. Thus mergers artificially inflate a businesses Fortune 500 ranking at the cost of liquid assets (paying cash) or by issuing shares. Thus I would adjust Sales from year to year by subtracting out sales from purchased businesses 2. Buying into a new industry by acquiring a business, such as Microsoft buying Nokia, Google buying Motorola, Facebook buying Instagram, or Yahoo buying Flickr. Such business purchases do not reflect bringing new products to old customers or reaching out to new customers.

These three fast risers can be compared to slower risers: Microsoft and Nike.

For comparison, three other companies are fairly static: Coca Cola, AT&T, and Berkshire Hathaway.
For companies near the top of the Fortune 500 there is nowhere further to go.

The Data: (2006 - 2013) [Click on image to see all the data]
Data at:  figshare.

The Picture: (LHS is Fortune 500 ranking)

Thursday, August 1, 2013

First postdoc papers on Value; which to tackle first...

I have arranged for four weeks leave from my work at ANDS (Australian National Data Service), so tomorrow I can start writing my first postdoc papers on Value and Innovation. But which paper to work on first. Here are the options:
  • A value theory of innovation (value in theory)
    Target Journal: Australian Journal of Emerging Technology, Research Policy, Journal of Product Innovation Management, IM Policy and Practice and ultimately Harvard Business Review

  • Value management: managing innovation, creating value (value in practice)
    Target Journal: Sloan Management Review 1000, 5000 words

  • Measuring innovation: a value approach (value in practice)
    Target Journal: Research Policy

  • Value Frontier: visualising value (a value tool)
    Target Journal: Sloan Management Review 1000 words

  • A fifth paper, I thought about today is: Accounting for Research and Innovation and why accounting concepts are poorly suited for business and government measuring innovation, and why value is a better framework to assess innovation by.
    Target Journal:

  • A sixth paper is about a value interpretation of using case studies to measure research impact. See Dept of Innovation Discussion Paper on Measuring Research Impact: for which comments are due shortly on August 16.
    Target Journal: Research Policy
So the next question is how do I decide the order. The last paper is the smallest, pointing at a tool. The first paper is the largest and the most theoretical, introducing the concepts. The second and third papers are implications of the value theory. The fourth paper is an explanation of a value tool; the Value Frontier for visualising value in multiple dimensions.

The first paper, to make it more manageable could be split into two papers:
  1. Dimensions of value: what consumers value in 3G mobile phones
  2. The process of value: how consumers construct value in 3G mobile phones
So there are several issues. The second, third and fourth papers rely on the concepts in the first paper/s. But the first will be the longest to develop. So should I write a fast tools paper with no conceptual basis, or grind through the theoretical paper. Perhaps I can write them all together and jump backwards and forwards between them to keep me fresh and motivated. But I am concerned that I might go around and around and not get to the end of any of them. Hmmm...

Which paper would be the most fun and keep me most motivated? Probably the tools paper.
Which paper is the obvious choice to start with? The theory paper, but it is a drag... and likely long and slow... and I am impatient for progress...
Which paper makes most sense to start with?

So ultimately this becomes a value question. The tools paper is 'fun' and 'quick', 'interesting' and 'lower impact', but the theory paper is 'slow' and 'laborious' but with 'high impact'. The tools paper also would make less sense without the theory paper to explain what is going on. However, I could likely reference the PhD document heavily for the conceptual basis.

Hmmm... your comments appreciated...

...after sleeping on it... I have realised the Dimensions of Value is the right place to start. See Ferrers (2009) for an early mention.

Friday, May 24, 2013

Understanding the changing needs of customers: Akolade

I am giving a presentation at a Financial Analytics for Business Management (for Akolade) conference in Melbourne next week, and provide the presentation (pdf 6Mb; May 2011; Understanding consumer value; other presentations) below:

Key points:
- let's measure value alongside other accounting measures
- Value is complex
- measuring value is complex
- some approaches to measuring value in practice: the Australian National Data Service (where I work: I was interested to know the process ANDS has in place to know what customers value)
- value theory: the 3G mobile phone study (my PhD):

The conference is interested in: Identify[ing] ways to measure and maximize the value of intangible assets...
The presentation in text (and your comments as always are welcome... questions, examples, critique is also welcome as this helps flush out and improve the Value Theory)....

Draft of presentation: (references below)

Understanding the change in customer needs
Jobs to be done theory...

   1.Understanding what customers value in a service environment: Australian National Data Service
    2.Measuring perceived customer value; sensing customer value
    3.Exploring what value means for your customers: Case Study - 3G Mobile phones 2004 - 2009

Business Analytics:
- Statement of Accounting concepts; reliable, measureable; objective

What is value?
- Aristotle: utility, exchange, conspicuous consumption (Gordon 1964)
- Marx (1865): labour theory of value
- Bailey (1838): in the eye of the beholder; subjective
- Vargo and Lusch (2004): co-construction, value conversation

Who are Australian National Data Service?
- customers: Public Sector and Universities, Department
- goal: more researchers reusing research data more often
- funding: $75 million from Dept. of Industry, Innovation, Climate Change, Science and Research
- resources: 50 staff, five states

Measuring Value at ANDS
- Customer contribution: co-investment
- subjective: customer satisfaction
- examples:

Process of tracing Value at ANDS
- Issues Register; documenting issues (245)
- Client Liaison Officers; face to face
- GoTo Meeting; webinars,
- Monthly Informals
- eResearch Australasia annual conference

Issues Register: Value Management in action
- from Progress and Final Reports
- Section to comment on:
- issues needing ANDS facilitation
- issues need direct advice and support
- achievements to share
- Director's review; traffic lights, keywords, weekly review, follow up action
- next steps: status by customer, Business Intelligence, current issues

Understanding Consumers: 3G mobile phones: Value is complex
- what do they value?
- 12 value meanings;
- 80 value elements; Appendix of thesis (Ferrers 2013)
- a simple example
- Consumer quotes

Consumer quotes:

Understanding your customers;
- B2B or B2C
- Value Management
- Value Leadership
- Value Conversation

Key References:

Aust Accounting Research Foundation (1995). SAC4: Definition and Recognition of the Elements of Financial Statements. Viewed online at:

 Bailey, S. (1825). A Critical Dissertation on the Nature, Measures and Causes of Value. London School of Economics (1931), viewed 30.06.2009 at &source=gbs_book_other_versions_r&cad=8#v=onepage&q=&f=false

 Ferrers, R. (2011). Value as a resolution of forces. Viewed online at:

 Ferrers, R. (2011). Beyond Innovation Management: Towards Value Management. Viewed online at:

 Ferrers, R. (2013). A consumer 'value' theory of innovation: a grounded theory approach . figshare. PhD thesis. Retrieved hh:mm, mmm dd, 20xx (GMT)

 Gordon, B. (1964) Aristotle and the Development of Value Theory. The Quarterly Journal of Economics, 78, 1, 115-128; viewed online at

 Kim, W. & Mauborgne, R. (2005). Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant. Harvard Business School Press. More at:

 Marx, K. (1865/1919). Value, Price and Profit. Melbourne: The Workers Intelligence Bureau.

 Sveiby, E (1997). The New Organisational Wealth: Measuring and Managing Intangible Assets. Berrett-Keohler See summary at:

Vargo, S. L., & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of marketing, 1-17. Available online at:

Wednesday, May 1, 2013

Measuring Innovation: National Value Management

The Science and Technology in Technology in China course has an interesting assignment on measuring an economy's innovation capacity:

Aside from the innovations systems approach (wikipedia), can you think of other methods for analyzing an economy’s innovation capacity and output (from a macro perspective)? If the answer is yes, explain the advantages/disadvantages of the alternative in comparison with the innovation systems approach.

My answer builds on Solow's Growth Model, I learnt about in the Model Thinking Coursera course:

1. A Value Growth Model to analyse an economy's innovation capacity 

My model, the Value Growth Model (VGM), is an extension of Solow's Growth Model with an added Value component. Solow, a Nobel Prize winner (pictured below) in Economics (1990), proposed a formula simplified to:

O = f(L, K, T)
Robert Solow, Nobel Prize winner 1990, Economics

Namely that an economy's output (O) or GDP, is a function of the inputs, labour (L), capital (K) and technology (T) or innovation. So technology allows more output from a given amount of workers and investment. T is really the intangibles left over after the tangible inputs are counted, including innovation, skills, intellectual capital and networks. I will consider T to substitute for innovation.

To O, I add V for value. Value is the intangible benefits consumers get from purchases above what they pay for goods. V can be measured relatively by asking the question of a product, firm, industry or country (X); does X provide more value than last year? A sample of say 1000 people are asked the question on a scale of 1-5, where 1 is much worse and 5 is much better.

Thus, O + V = f(L ,K ,T).

The macro innovation output (T) is thus solved as the residual in the formula after finding values for O, V, L, and K. The innovation capacity is the maximum value of T over time.

 2.Advantages and disadvantages of the VGM model

The advantage of VGM is that T can be found for a sector, firm, industry or nation. The VGM applies equally to services, like health, finance, media and government as well as more traditional manufacturing. The VGM also takes advantage of both tangible and intangible inputs and outputs, and is relatively straightforward to calculate.The VGM model is quite simple to understand. While T is not broken down, it provides a concrete measure of innovation.

The disadvantage of VGM is that the focus is really on output rather than capacity. Capacity is inferred from the maximum T over time, but this assumes that T does not vary randomly, which is not known. The model focuses on financial measures, but excludes the value of connections in the economy; these are included in T. The VGM is less a prescriptive policy guide than a measure like inflation, GDP or unemployment. The VGM is not an absolute measure, since value is measured relatively rather than absolutely.

3. Comparing the VGM with the innovation systems (IS) approach

The VGM is more simple, straightforward and concrete than IS. VGM is a measure whereas IS is a descriptive method of analysis. IS is complex, powerful, dynamic and interactive but it is also a little vague about where to begin since it includes a very wide range of possible information. IS is also more capacity oriented so makes more sense in manufacturing, mining and telecoms sectors where capacity is important, whereas VGM can be used to assess innovation in services, government and non-profits through understanding value created. IS focusses more on inputs to innovation and firms whereas VGM focusses more on outputs of innovation and benefits consumers get from innovation (value). The VGM is more simple, direct and thus quicker and more straightforward to calculate.