Tuesday, May 12, 2009

The value equation

I was reading this post by Seth Godin about what he terms as the "value fraction", which is this simple mathematical argument:
Value = benefit/cost
As Seth correctly points out, there are 2 ways to have a net positive impact on this equation:
  1. Decrease cost. This is what everyone seems to be doing these days.
  2. Increase the benefit. This is what fewer people seem to be doing these days.
This equation is mostly applied to the consumer: the consumer wants a better value. However, this equation is equally as applicable to anything where value is required, including your job. If you work for someone else, chances are good that you do not want the cost (i.e., your pay, salary, etc.) to go down, so you need to focus on the benefit you provide to show a higher value.

The equation is easy, the math is simple . . . it's the execution that can be challenging.

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