The Many Faces of Value

Business development may be the creation of long-term value, but value is a subjective concept. All too often, a decision on what value to pursue via partnership deals faces the same weak screen as the Supreme Court’s view of pornography: “I know it when I see it”.

There are usually dozens of opportunities that can pull your attention away from what matters most to your business. Being able to prioritize growth opportunities requires a clearer, more objective way to think about the value that you can create for your company and potential partners. It all starts with understanding what kind of value you’re after.

There are several types of value that you can consider:

1. Economic Value – does it drive revenue or profits?

The most obvious question one might ask when evaluating a business opportunity is: does it make us money? It’s an important question, of course, but it’s not the only source of value that can be worth the pursuit.

2. Product Value – does it improve our offering to customers?

Building or improving products is expensive, and the choice of which path to take to build something that customers will want to buy comes down to a decision of “Build, Buy, or Partner?” A proprietary technology, a unique set of data, or a conveniently accessible API can all provide a very clear form of value that will ultimately help steer the answer to that question.

3. Audience Value – does it give exposure?

Audience value is often what drives distribution deals, as publishers, brands, and startups seek access to customers, users, prospects, or eyeballs. An audience may not be directly monetized, but exposure is often a valuable asset to have or receive.

4. Brand Value – does it improve the way customers think about our company?

Nurturing a brand is kind of a big deal, and Big Companies spend hundreds of billions of dollars each year on advertising, sponsorships, and product launches designed to positively impact the perception of their brands in the eyes of consumers. Partnerships have the power to impact brands as well, and many deals have been done in the pursuit of positive brand associations.

5. Option Value – does it open the door to future opportunities?

Not all partnerships make sense for the value they bring today; some are bets on a future return. A run at Option Value motivates the pursuit of growth opportunities that may look crazy in the short-term but brilliant in the long-term. When pursuing Option Value, keeping your eye on the long-term prize outweighs the potential costs of the short-term.

What other kinds of value should every good Business Developer think about when evaluating an opportunity? Let me know in the comments!

 

5 Responses to The Many Faces of Value
  1. Octavio Dubois Reply

    Hi Scott, Agree on all but not 100% in #4, I think value comes from the product/service itself by adding value to the shopper/user and i think marketing has evolve into something the users talks/shares/lives and from that comes brand value, investing millions of money kind of sounds “buying market share” although big companies and some startups are still doing. Saludos from Mexico….

    • slpollack Reply

      Great point, Octavio. Pursuing Brand Value without any underlying Product Value will cause any benefit to be short-lived. I fully agree with the notion that “a good product is your best marketing” (or at least the start of it). However, that’s not to say that every decision maker always makes the best decisions about what kind of value to pursue — a lot of times advertising dollars could be better spent on product development, but it doesn’t mean that’s how it will be spent.

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