Thoughts about Value-Add
Value-add dominates our economic scorecard. It is relatively easy to calculate in a manufacturing setting where value is added through material transformation at each step as a product moves from raw material to finished goods. Customers monetize this value by the purchase of products they anticipate will add value to their processes. Value-add also pertains to certain services, like financial and legal, that require a certified, licensed, or bonded provider that possesses or delivers specialized skills or knowledge. The consequence for not utilizing these services is the customer assumes risk.
The concept of value-add also plays a role in information technology and data services. Here, though, the meaning is vague. What value can be assigned to having data or to having data in a usable format? This instance of value is intangible and determined by the receiver of the message. Nowhere is intangible nature of value-add more evident that in marketing strategies and advertising campaigns. Information that induces a user to pay for a product or service has value only to the producer. Value-add for the customer or client occurs at the next stepâ€??the point of utilization.
So much for the traditional view of value-add. Here is where the current issues of globalization â€“ localization come into play. A robust business strategy can entertain and exercise both sides!
On the globalization side, value-added products are produced and services provided far from their points of utilization and consumption. Success is driven by appropriate economies of scale. This situation will continue for many years to come as customers and clients exploit lower cost alternatives. On the localization side, value-added products and services are produced in close proximity to their points of utilization. Success here is driven by economies of scope. This situation enables products and services to be integrated into specific applications or solutions that are tailored for highly localized contexts.
How, though, does one put a value-add strategy in place? Re-enter data and information. Essentially, a successful strategy is a contextually relevant plan of action, conceived through the knowledgeable (and hopefully, wise!) interpretation of data and information, and executed by a skillful tactician. No matter how similar or unalike the challenges, relevant data and information are the common denominator.
Assuming everyone has access to the same data and information, there is no value-add. With universal access to the same data and information, there is a significant benefit. The rates increase in the discovery of new knowledge, application of knowledge already learned, and transfer of experience with applied knowledge from one place to another. In other words, accessibility to data and information makes the global human system of knowledge generation and utilization more effective, efficient, and expansive.
Since data and information carry no particular value unless one does not have access to them, they form a unique type of â€œcommonsâ€??. Anyone may contribute to the pool of data and information, all benefit, and the quality of what is available is not diminished or compromised by the number of users. In fact, the quality and variety increases with more participants as evidenced by Wikipedia.
This â€œcommonsâ€?? approach is a cornerstone in â€œopen sourceâ€?? philosophy wherein volunteers contribute entries and edits and the content is free to use. Originating in the realm of software development and usage, open source applies to any instance where people collaborate in the development, sustainability, and scalability of a system whereby end-users freely pull what they need from the system and respond to their unique circumstances. Participants increase the working knowledge about the system as they act locally and provide feedback to designers / developers so they improve the systemâ€™s robustness, range, and ease of use.
A comprehensive business strategy judiciously positions an â€œopen sourceâ€?? / â€œfree knowledgeâ€?? dimension on the globalization and localization continuum. What to share in open forums, what to hold as proprietary and reserve for limited audiences, how much to contribute in the development and sustenance of open source endeavors, how much to invest in products, services, and technologies for satisfactory returns, where to standardize products, services, and technologies for economies of scale, where to proliferate economies of scope solutions within localized contextsâ€¦these are the kinds of questions about openness, standardization, and uniqueness that drive effective business strategies for all organization types.
Technology gets smaller, faster, stronger, more embedded, more integrated, and more intelligent. Localization increases. The value-add equation is redefined and a greater significance is placed on unique solutions. Addressing the above questions helps organizations adapt within their ever-changing operational landscapes. The implication being that organizations network and collaborate more broadly to energize, inspire, and focus their subject matter experts where it counts mostâ€??learning what customers and clients need in their business and social contexts and responding with value-added alternatives. Isnâ€™t that â€œbusiness as usualâ€???
posted by Steve Bosserman on Thursday July 12 2007
URL of this article:
Giving It Away, Making Money
The burgeoning "Internet Economy" is redefining operational assumptions and models for all organizations within the public and private sectors. This is particularly evident as free access to information increases and the clash between open source and proprietary development of software intensifies. But the transformation underway does not stop in the realm of bits and bytes; it is spilling into the traditional mainstays of agriculture and all types of industry and... [read more]
February 09, 2008 - Steve Bosserman
Cycles of Communication and Collaboration
Recently, several of us were going over the litany of new terms for communication and collaboration "tools" that were less than 10 years old: blogs, mashups, crowdsourcing, webinars, podcasts, etc. just to name a few. It became obvious as we discussed it further than many of us in the conversation were relatively clueless when it came to defining what each is, what it does, how it works, and what were... [read more]
September 22, 2007 - Steve Bosserman
What Is an "Integrated Solution"?
A colleague of mine called the other day and wanted to know how I would answer the question, â€œWhat is an â€˜integrated solutionâ€™?â€?? It seemed that he was entertaining this concept with others in senior management and he was struggling to find an answer that didnâ€™t sound like gobbledygook or pure philosophy and offered nothing pragmatic. In typical management fashion, he needed an answer right away. And, it would be... [read more]
July 15, 2007 - Steve Bosserman