Value vs Benefit. Which is Better?

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Value vs Benefit. Which is Better

If you’re confused about whether your business transformation should be focusing on the benefits your business plans to realise from the changes it implements, or the value Customers might find in the features you can now offer, then this post is for you.

Before we dive into whether Value is better or benefit is better in terms of business transformations, it would help to briefly define both of them.

In simple terms, benefits are what the business realises and experiences as a result of the changes that were implemented by an effective transformation. On the other hand, Value is the benefit the Customer will be able to experience, and what they are willing to pay for. This is the important distinction.

In this post, you will learn what are Business Benefits, what are business values, and why focusing on Value can be detrimental for your transformation.

Let’s start off with the term ‘Value’.

What is Meant by ‘Value’?

Value is mostly a marketing concept, and the difference between the two can be easily understood better by a simple example:

Value vs Benefit. Which is Better

Let’s look at this iPod. On one hand, we have a label that states a 1 GB storage capacity. This is a great feature, staff – namely your project and product staff thing that’s great, after all, that’s what they had been working on to deliver. But, here’s the catch – it’s not something that the Customer can relate to (especially a non tech-savvy Customer), and definitely not one they are willing to pay for (that’s the key!).

Instead of mentioning the storage capacity, explain to your Customer how having this feature will allow them to enjoy 1,000 songs in their pocket. From a marketing point of view, your Customer is more likely to respond positively if you give Value to a certain feature.

In the same way, Business Benefits realised through a transformation don’t mean much to a Customer. Likewise, Value on its own doesn’t mean much to Employees as much as Business Benefits do.

In terms of Business Transformation: the concept of Value is a marketing term. Customers are more likely to respond positively if you give Value to a certain feature. In the same way, Value on its own doesn’t mean much to Employees as much as Business Benefits do.

What is Meant by ‘Benefit’?

In Business Design, specifically Business Transformation, ‘Benefits’ have a rather different meaning. They refer to result achieved from the changes delivered by the transformation that in turn, allow employees to realise Business Benefits.

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Old Business Transformation Methods Don’t Fix Today’s Problems

Simply put, Business Transformations should focus on achieving Business Benefits that employees can take advantage of – in order to deliver Value to Customers.

FYI – If you are a Business Transformator looking to upgrade your skills, you might be interested in checking out my podcast created solely for Business Transformators in action!

Now, here is where the misconceptions occur.

The misconception in Business Transformation to focus on Value, is wrong. Business Transformations should focus on achieving Business Benefits that Employees can take advantage of - in order to deliver Value to Customers.

The Misconceptions

Firstly, Business Transformations wrongly focus on Value, which actually means nothing to the Business and everything to the Customer. As a result, Business Transformators aim on delivering Value, which is the second misconception.

While many stakeholders might be excited by the perceived Value of innovative digital solutions, others such as the CFO and business leaders need to stay focused on business value – or in this case, Business Benefits– that can be measured.

Instead of aiming to deliver Value, Business Transformators need to focus on delivering business changes. This includes any and all enhancements in system processes, technology and even people. It is the business changes that are delivered, that enables the Business to realise its Business Benefits.

For instance, on one client I assisted with their digital transformation, the client upgraded their processes from being paper-based to fully digitalised and made it more agile. As a result, the business was able to process an additional 10,000 applications through automation. When the Customers saw their applications would be approved faster (because now they had the capability to), it was perceived as something of value, value that they (were and did) willing pay for.

In this case, the Business Benefit is the greater number of processed applications. The value derived is the faster approval time. The former is something that is important to staff (both the Business where they would be processing the applications, but also the project staff who delivered the changes), while the latter (faster approval times) is the value Customers are willing to pay for.

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Business Transformations wrongly focus on Value, which actually means nothing to the Business and everything to the Customer. As a result, Business Transformators aim on delivering Value, which is the second misconception.

The Problem with Focusing on Value

Although Value and Benefits are very similar, they are and need to be treated differently. You could think of them as a balance sheet (assets and liabilities) and a profit and loss statement. Both of them are about money, but are used for different purposes.

It may seem like Value is what Business Transformations should focus on more instead of Benefits, but there are a few problems with that.

Value is simply the perceived benefit of a product or service. Since it’s more of a marketing term, it makes it rather subjective, especially in terms of measuring it. ROI (return on investment) is one measure, but Value subjective, impacted by many factors that pre-exist in a Customer’s mind. To borrow the colloquialism “Value is in the eye of the Buyer, not Seller”.

Secondly, Value is relative to competition. A Customer will choose a company or product over another if it delivers more relative Value to the alternative. Therefore, for Marketing, in the Marketing (not Business Transformation) department, it makes sense to say that the focus on Value should be placed.

It may seem Value is what Business Transformations should focus instead of Benefits, but there are a few problems with that. Value is the perceived Benefit of a product or service. It’s a marketing term and highly subjective aka “Value is in the eye of the Buyer, not Seller”.

The Ideal Approach to Business Transformations

That being said, it’s important to know how Business Transformations can greatly influence Value, if carried out effectively.

I have crafted some valuable blueprints and frameworks that you can follow to ensure a seamless transformation.

There is a relationship between Business Changes and Benefits Realisation, and Benefits Realisation and Strategic Objectives that’s missed in the market place today.

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6 Steps To Business Transformation

A successful transformation carries out Business Changes (enhanced processes and people) and increases the ability of Benefits Realisation (turning planned benefits into reality). As a result of enhanced Benefits Realisation, the organisation has greater opportunities to meet its Strategic Objectives, such as greater market share or a larger client base.

What Customers are willing to pay for

When a Business Transformation focuses on increasing Business Benefits, it creates value for Employees. When processes are innovated, it enhances speed and overall performance of an Organisation.

As a result, Employees understand the planned objectives they are working towards, and work more efficiently into creating value for Customers. Customers will be attracted to this aspect and prioritise it over other competitors.

Therefore, a Benefit-oriented transformation leads to better results for all stakeholders, including Customers, as it indirectly also positively impacts value, value perceived in the eye of the Customer, that the Customer is willing to pay for.

If you’re in the transformations industry and are still focused on Value rather than Benefits, it’s time you updated to the new model. Here at Hoba Tech, we focus on transformations that bring about maximum Business Benefits.

In fact, HOBA is highly-trusted and has been used by the UK government to setup and turn around their transformations. Our transformations focus on business changes and transform the organisation from its current state to its enhanced, improved future state. Check out my 6-Week Agile Transformation Accelerator course for starters!

We turn your Target Operating Model (TOM) into a reality that is loved by all its stakeholders, from the Employees to the Customers.

While we focus on delivering Business Benefits to the organisation, we leave it to the marketing department to come up with campaigns and promotions that show how a 1000 songs in your pocket is better than the 1GB storage.

If we follow this radical approach to business transformations, it’s a win-win for everybody! 

Thank you for reading this!

Sincerely,
Heath Gascoigne

P.S. If you want to join our Business Transformator community of like-minded Business Transformators, join the community on the Business Transformator Facebook Group here.

P.P.S. If you want to learn more about Business Transformation, check out The Business Transformation Playbook here.

For more information, visit https://www.hoba.tech

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Heath Gascoigne

Heath Gascoigne

Hi, I'm Heath, the founder of HOBA TECH and host of The Business Transformation Podcast. I help Business Transformation Consultants, Business Designers and Business Architects transform their and their clients' business and join the 30% club that succeed. Join me on this journey.
Heath Gascoigne

Heath Gascoigne

Hi, I'm Heath, the founder of HOBA TECH and host of The Business Transformation Podcast. I help Business Transformation Consultants, Business Designers and Business Architects transform their and their clients' business and join the 30% club that succeed. Join me on this journey.

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0-31.5-14.5t-10.5-35.5q0-6 2-20l86-500-364-354q-25-27-25-48 0-37 56-46l502-73 225-455q19-41 49-41t49 41l225 455 502 73q56 9 56 46z"/></svg></label><label class="wpforms-field-rating-item choice-4" for="wpforms-28908-field_3_4"><span class="wpforms-screen-reader-element">Rate 4 out of 5</span><input type="radio" id="wpforms-28908-field_3_4" class="wpforms-field-required wpforms-screen-reader-element" name="wpforms[fields][3]" value="4" required><svg width="28" height="28" style="height:28px;width:28px;" fill="currentColor" color="#ffcc00" viewBox="0 0 1792 1792" xmlns="http://www.w3.org/2000/svg"><path d="M1728 647q0 22-26 48l-363 354 86 500q1 7 1 20 0 21-10.5 35.5t-30.5 14.5q-19 0-40-12l-449-236-449 236q-22 12-40 12-21 0-31.5-14.5t-10.5-35.5q0-6 2-20l86-500-364-354q-25-27-25-48 0-37 56-46l502-73 225-455q19-41 49-41t49 41l225 455 502 73q56 9 56 46z"/></svg></label><label class="wpforms-field-rating-item choice-5" for="wpforms-28908-field_3_5"><span 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