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What is ‘value add’?

I’ve been hung up with office bingo
for years and hate it when you hear words and phrases like scenario,
paradigm shift and value-added.  The reason is that the phrases are
meaningless buzzwords that people throw out to sound intelligent but
often just sound like a complete pratt.

"Oh yes, let’s run this scenario up the flagpole and see if the poobah in the tent likes the colour of the smoke."

Sounds like that complete twit David Brent from the Office.
The thing is that although David Brent is a complete wazzok, he’s
fairly typical of management in any bank or technology firm.

"We
have implemented leading-edge feature functionality using the latest
tools and technologies to provide a platform fit for the future."

"I
think we need to look at our customer profile and segment to deliver an
experience through our relationships to enable higher value results." 

"This
product is unique in that it provides a full service capability using
the latest best-of-breed management techniques to ensure you achieve
your full potential."

"We have thoroughly re-engineered the
process to organise around the structure of today’s markets to optimize
our cost-income ratio."

Now I wouldn’t mind this kind of gawkish
toss if it actually had some substance but, a bit like mission
statements, it’s just modern office techniques for hiding the fact that
you have no idea what you are doing or what you are talking about.

Take this statement for example:

"Our company provides value-added services for our clients that are unsurpassed by any of our rivals."
OK.  What do you mean by value-added services?
"Well, we mean that we are better."
OK.  How are you better?
"Well, y’know, we’re good at what we do."
Good?  You just said you’re better.
"Well, we are."
Better than what?
"Everyone else."
Prove it.
"Pardon?"
Prove it.
"Doh!?"

Too
often, firms just throw out this tripe and cannot substantiate any of
it, whether it is a bank, technology firm, infrastructure provider or
corporation.   What I want to see is some definition.   I mean, I don’t
mind phrases like ‘leading edge’, ‘best of breed’, ‘re-engineered’,
‘paradigm shift’ and so on and so forth, as long as it is relevant,
defined and clearly being used in context to mean something.

Take value-added.

Value-add is bandied about all over the place and yet no-one ever says, how are you defining that?  But we should.

Personally,
I define ‘value-add’ as a measurable difference before and after a
project, based upon clear delivery of results.  These results should be
quantified and demonstrate either a revenue uplift or cost saving or
both.  But that’s not all, as value-add does not have to just mean a
financial value.  Value can be value through retaining staff, improving
productivity, increasing customer satisfaction, creating customer
advocacy, managing risk or minimising risk.

By way of example:

  • 50% increase in customer responses to followed up leads as a result of our work
  • Customer response rates of 38% to 50% as demonstrated here
  • 14 million contacts per year, with response rates up from 10% to in excess of 25%
  • Savings of more than $700,000 in the first year and incremental revenue is more than $1.5 million per year         

In other words,
value-add is creating a measurable difference through the work you
deliver that can show either a financial, customer, employee or risk
improvement.   That’s what I mean by value add and that’s what I want
to see businesses articulate when they talk about their products and
services. 

Otherwise, it’s just buzzword bingo.

About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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