Saturday, June 21

Adding Value

I was first introduced to the concept of "adding value" back in a university course regarding how to start a new venture. Although it now appears to be an obvious and fundamental point the idea that intangible things like effort, focus and care could increase the financial worth of something was something that many people in the audience, including myself, didn't really grasp until then.

It explains why someone can get away with charging hundred for a handbag that costs a fraction of its asking price to make. Or why different actors can charge a different amount for doing the same job. Or why sometimes it's worth paying someone a large salary to do something they're really good at but doesn't directly affect the manufacturing of a product.

And it's not just about profit or financial gain either. Running a charity for instance is (mostly) about prompting a change in your surroundings. And many people add value simply by making their family or friends happy or comfortable in their daily lives. And going back to business, some of the best aren't interested in making money but more about making the world a better place in which to live. The fact that many are also worth multi-millions is just an aside or bonus.

In short, it's what makes something greater than the sum of its parts.

There is no science to adding value. Since by definition part of the equation is intangible it's difficult to determine exactly how much value is being added - and then if at all since some things can also subtract value too. It's usually up to all involved (be they manufacturers, consumers or whatever) to figure out whether a union is, effectively, worth it or not. One thing to remember though is that any assessment should be made on a holistic level, by considering those who might not be directly involved.

But let's apply this idea to something a bit more interesting, namely relationships and marriage. You can assess relationships, both potential and existing in much the same way, by trying to measure how much value you both add by being together as opposed to remaining apart (since you may add value by removing yourself from the equation altogether) and in what form this benefit takes.

And most of us kinda do this already even if they don't realise it. The selfish types wonder how their own life has or will improve. The considerate types ask how they can make their partner's life better. And in some rare cases the altruistic type question the impact of their relationship on the world (or at the very least those around them). More often than not however all three are considered.

But using this as a basis to go ahead with a marriage or whatever can bring about some weird decisions. For example, two super intelligent quad-degree holders may look good together in theory, but might not actually add anything to who they each already are (why would someone who knows everything already need to know more?). And a woman who is perfect on paper (you know: smart, good looking and able to cook) may still be single because she hasn't quite figured out how she can add value to all the potential suitors queuing up for her.

A guy may decline a girl who totally digs him and who he might even like back just because he doesn't see how he can add value to her life. A couple who do add value to each other may not give it go because they don't add value to the lives of others (family, say) since the net profit, as it were, is still not enough to make the deal worth it. And finally, a couple may decide to split up if they find they're actually subtracting value rather than adding it.

A final twist to this application of adding value is related to the law of diminishing returns. That is that the higher the value you add to your own life - so for example being content with your life, having great family and friends and a job you enjoy - the harder it is for someone else to add value to it. This may explain why people who are content and happy already may not see the appeal of partaking in a relationship, since even if it was super hot it might just not add enough value to their lives.

It worth remembering this concept of adding value, if only because it may explain why some people are still single, or seemingly perfect couples don't work. I'm still not sure whether the ability to add value is a skill that can be learned or practised in itself, but I suspect that some people are better than it that others.

Whatever the case, the next time you can't figure out why someone is backing away from a apparently perfect relationship or any other venture, try asking exactly how much value would have been added by it going ahead. Perhaps it just wouldn't have been enough to continue with?

2 comments:

  1. I've always found the value added often in any type of relation is the fact that you trust the other person's judgement in many cases over your own.

    Rare to come by and definitely worth it's weight in gold...not sure the diminishing returns bit therefore applies...

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  2. Z,

    And that could be a solution to some of the examples I've presented above - who cares if you think you don't add value if the other person does? Surely you should trust their judgement? I've seen the same argument made against the "if you love someone let them go" comment as well as the "it's not you it's me" way of rejecting someone.

    But since you both own the relationship I don't think there's much point in second guessing each other's judgement - in the extreme situation you'll both end up delegating to one another, so in my mind it's best just to discuss and come to a joint decision. That's also why it might be useful to consider value added on a more wider-than-personal basis.

    There's also the danger of falling into the blame game: "well I told you that I was bad for you but you didn't listen".

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