3 types of value

“Back in the 1900s there was no such thing as Facebook where people could upload pictures from their vacation to Europe for friends to admire. Instead, the equivalent was to linger on the grand staircase of the theater’s foyer so others could take note of your outfit and recognize fashions that had been brought back from the Old World.”

-Tour guide at the Teatro Colon, Buenos Aires

Some companies unlock value by tapping into a deep-rooted psychological need. As our guide noted, these impulses have been around for a long time. Humans generally like:

  • To connect (Facebook, Twitter)
  • To share (Instagram, Tumblr)
  • To learn (Codecademy, Quora)
  • To be respected for our knowledge (Quora, Yelp)
  • To help others (Yelp, LinkedIn)

If you’re not addressing one of these fundamental desires, a second way to create value is by reducing friction in other parts of people’s lives so that they can spend more time doing one of the above. Companies in this category include Uber, Evernote, and Square.

A third type of value creation happens when a company is able to humanize interactions where the original person-to-person link has been obscured. During a recent Airbnb stay, I found myself treating my surroundings with much more care than I would have taken if we had booked a hotel. The reason was not just the understanding that I would be reviewed afterwards, but the simple act of meeting Florencia, the apartment owner, meant that her face stayed with me throughout our stay. You make a more concerted effort to conserve resources and keep things tidy when you’ve met the person who’ll to deal with the consequences of your actions. A number of industries—healthcare, environment, government—stand to benefit from the better alignment of incentives that results from reintroducing the human element into formerly impersonal interactions.

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