{"id":251,"date":"2019-10-12T22:46:23","date_gmt":"2019-10-12T22:46:23","guid":{"rendered":"http:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/?p=251"},"modified":"2024-09-08T16:49:07","modified_gmt":"2024-09-08T16:49:07","slug":"price-does-not-equal-value","status":"publish","type":"post","link":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/price-does-not-equal-value\/","title":{"rendered":"Price Does Not Equal Value"},"content":{"rendered":"\r\n<p class=\"wp-block-paragraph\"><br \/>It\u2019s been an interesting couple of weeks for us in work, one that has made me acutely aware of the fact that it is so hard to accurately describe value &#8211; holistic, intangible value.\u00a0\u00a0As a lean thinker, this phenomenon is not new to me of course. Often we spend a great deal of time improving process and service experience, making things better for customers, and for the staff delivering that service, to be challenged at the end of the initiative \u201cah &#8211; but did it save us any money though?\u201d.\u00a0\u00a0\u00a0Statements like this just make you want to scream.\u00a0\u00a0Within services, the\u00a0<strong><em>only key<\/em><\/strong>\u00a0way to save money, is to not employ as many people.\u00a0\u00a0Yet what good is it to involve staff in improving a system, to then sack them as a consequence of their hard work? What\u2019s the point of sacking good people when people are the machines that actually deliver the value that makes your service memorable? The best tactic to survive and thrive, of course, is growth. Positive, dynamic, growth. Growth of your market, growth of your esteem, growth of your prices. None of which can be achieved without investment.<\/p>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">Investing in the future is\u00a0<strong><em>the only way<\/em><\/strong>\u00a0to survive. Unfortunately, therefore, this means that it\u2019s the ultimate paradox. Just when you need to save money, you have to spend more.\u00a0<\/p>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">Our family used to go to a lovely restaurant in a village in Cardiff, the food was so amazing, truly excellent, but yet they struggled. Number 1 problem for me, it always felt cold in there. And this is someone who comes with their own personal layer of insulation.\u00a0\u00a0They didn\u2019t have any central heating, so they used electric heaters, but you could never shake off that cold feeling. My Mum and Dad would say to me \u201cwant to come with us for a meal at x today?\u201d and I\u2019d say, \u201cThe cold one? Do we have to?\u201d They\u2019d say, \u201cbut the food Sarah!\u201d, and I\u2019d sigh, and I\u2019d join them after putting on a jumper.\u00a0\u00a0(Thanks Mum and Dad for the millions of free restaurant meals by the way \ud83d\ude00 ). The last time we went, it was not only cold, but you were acutely aware that they only had one waiter, doing everything, and the service was just shocking. This was in no way this poor chap\u2019s fault, he just had far too much to do. The food was great (although I still suffered from the \u2018why do men always get the best steaks?\u2019 phenomenon\u2026 grr.. women \u2026 start noticing this and let\u2019s rise up and do something about it. It\u2019s an epidemic. #worsesteak #womenpayformealstoo #exceptwhenIgooutwithmyparents) but yes, it was just all far too slow, too difficult to get any attention.\u00a0<\/p>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">I thought to myself, \u201cthey won\u2019t be able to keep going for much longer, they\u2019re at the end\u201d \u2026 they shut within a month.\u00a0<\/p>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">The food was so good, I seriously think that all they needed was central heating, employing more waiting staff (and a bit of a fresh look at the d\u00e9cor which was incongruous to their offer). Investment would have saved them.\u00a0\u00a0<\/p>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">I\u2019d hazard a guess that just getting central heating could have been their \u201ctipping point\u201d. I\u2019ve just googled \u201cTipping Point Business\u201d and can see that Malcolm Gladwell (brill author) has written a book entitled just this!!! *adds to reading list. A tipping point is the trigger that can turn a struggling business into a successful one.\u00a0\u00a0This pivot can happen after a myriad of different things\u2026 after they invest in better outside furniture, a brand refresh, or sending a celebrity a gift pack who then endorsed their brand.\u00a0<\/p>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">And yet so often, our ability to invest is limited by others, those who are constrained by the ideals of traditional cost accounting.\u00a0\u00a0\u00a0When working in the Lean Enterprise Research Centre, I worked alongside John Darlington, a great guy and advocate of \u2018Flow Accounting\u2019, an approach devised to overcome the limitations of traditional cost accounting measures. He described the problem of cost accounting so brilliantly, he said \u201cif you ran your home the way that we run our businesses, you\u2019d never buy a new kitchen, you\u2019d work out it was cheaper to have takeaway chips every night\u201d.\u00a0\u00a0<\/p>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">This analogy is genius.\u00a0<\/p>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">Too often our decision-making capability is bound within the confines of a one year budgeting cycle. Departments feel encouraged to \u2018spend spend spend\u2019 (pointlessly) towards the end of the financial year in order to protect their budgets for future years but are unable to make a significant one off investment within the confines of their one year budget. A large cost, such a brand new kitchen, does not make sense within this one year of financial activity.\u00a0\u00a0Outsourcing chips every night at \u00a31.75 a go represents a massive cost-saving compared to the \u00a310k investment and inconvenience required to build an fab new kitchen within a one year cycle. You wouldn&#8217;t &#8216;make the money back&#8217; within that year.\u00a0\u00a0Yet within that low-cost decision, no value is paid to the <strong>huge<\/strong> negative health consequences that will result from daily chip shop chips, coupled with the massive irritation (and lingering smell) of the daily chip shop queue.\u00a0\u00a0The chip shop chip decision is not sensitive to the fact that a fantastic new kitchen would add a tremendous amount of value to your home (if and when you sold it) and, perhaps most importantly, the ongoing delight that would be brought to the whole family now enjoying this delicious new space. The amazing chats over homecooked meals that would now be had! Family bondingtastic!\u00a0\u00a0Who knows, maybe these family meals would even be followed by a hilarious board game or two? (hmm.. let\u2019s not go too far). My point is that a brand new kitchen saves lives.\u00a0<\/p>\r\n\r\n\r\n\r\n<p class=\"wp-block-paragraph\">That\u2019s not my point. \ud83d\ude42 My point is how dangerous it is to view everything in mere financial terms. Value is so much more complicated than that. And praise be for senior leaders who get that.\u00a0<\/p>\r\n","protected":false},"excerpt":{"rendered":"It\u2019s been an interesting couple of weeks for us in work, one that has made me acutely aware of the fact that it is so hard to accurately describe value [&hellip;]","protected":false},"author":151,"featured_media":1004,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[6,8],"tags":[],"custom_author":[44],"class_list":["post-251","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-service-improvement","category-value","custom_author-sarah-lethbridge"],"jetpack_sharing_enabled":true,"meta_box":[],"jetpack_featured_media_url":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-content\/uploads\/sites\/554\/2019\/10\/Close-up-of-till.jpg","_links":{"self":[{"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/posts\/251","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/users\/151"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/comments?post=251"}],"version-history":[{"count":9,"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/posts\/251\/revisions"}],"predecessor-version":[{"id":1005,"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/posts\/251\/revisions\/1005"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/media\/1004"}],"wp:attachment":[{"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/media?parent=251"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/categories?post=251"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/tags?post=251"},{"taxonomy":"custom_author","embeddable":true,"href":"https:\/\/blogs.cardiff.ac.uk\/sarahlethbridgelean\/wp-json\/wp\/v2\/custom_author?post=251"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}