Articles · · 2 min read

Value-based decision making

Distinguish between two different types of values, “actual” and “perceived”, to ensure you're communicating value in the way executives expect.

This is an excerpt from Business Thinking for Designers and has been edited for length and clarity. To read the full, unabridged chapter, download Business Thinking for Designers for free today.

Businesses survive when they create value for customers. Businesses thrive when they create more value for customers than their competitors.

There’s an idea inside many organizations that in order to create business value and make business decisions, you have to go to business school. But the reality is, not all value is created by the techniques taught in business school.

Here’s an example you likely won’t find in business school curriculum: Did you know that for the health of a child with a fever, parents have to keep track of which medication was used last? This simple task can create undue stress for parents during a time when stress levels are already high. There would be tremendous emotional value in relieving this stress.

While financial concerns often inform business decisions, subjective factors should also play an important role in decision-making. Intangible aspects like ethics, morals, or emotions need to influence decisions on everything from project roadmaps to branding. Designers are uniquely qualified to advocate for these values.

To distinguish the effects of these different types of values, let’s define them as “actual” or “perceived.”

Actual value: When math is used, actual values are in play. These are the numbers used to calculate the costs to make something, the prices at which products are purchased, the salaries of employees, the hours needed to develop a tool, etc. When EA decided to invest in new software for customer support agents in 2011, the costs of licensing and maintaining that software came into play. While actual values are relatively simple to calculate, not all companies make trade-off decisions using math.

Perceived value: While difficult to calculate, perceived values have equal, if not more, importance than actual values. When customers or executives use terms like excellence, simple to use, or beautiful, these are all examples of perceived values. These values are less sticky and require a lot of clarification to understand. I’ve worked with plenty of stakeholders over the years who wanted to “just design it like Apple does” because they think it’s the most beautiful.

Combined, these two categories reflect how customers and businesses expect to receive total value from products or services. Historically, designers focused primarily on perceived value. However, our business partners need us to focus on actual value as well.

My friend Kara DeFrias shared an example of combined focus on the Hacking the Red Circle podcast. While at Intuit, she pitched an internal TEDx event for employees. Though she was focused on providing a world-class experience, to secure the necessary funding from her leadership team, she connected the event to the core values of the company and created a worksheet to track each minute of the event to keep costs under control. This approach worked and in turn, created a one-of-a-kind event for the company called TEDxIntuit.

Including a quantifiable metric, like Kara’s minute-by-minute spend calculation, can help us better anticipate the outcomes of our work on perceived values. This is important because every company has different levels of maturity for measuring value. Poor measurement means well-intentioned people can make decisions that negatively impact the business. An important aspect of our job is to increase the maturity around us and that starts by having a stronger aptitude for measuring value. When we measure our work, customers, employees, partners, and other stakeholders can better understand the benefits of the design approach.

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