Tuesday, October 20, 2009

Intangible Value

Rory Sutherland is a marketer who recently gave a TED talk. The talk is about 16 minutes long and is hilarious, you should totally watch it.


He opens the talk with this gem, "if you want to live in a world in the future where there are fewer material goods, you can either live in a world which is poorer (which people generally don't like), or you can live in a world where actually intangible value constitutes a greater part of overall value."

Seth Godin is another marketer who has a short and sweet blog post called Creating sustainable competitive advantage in which he argues that competitive advantage rarely comes from proprietary technology or technological barrier to entry. In other words, technology alone will not allow a business to succeed because its competitors will quickly be able to copy the technology.

He has a list of things you can do to gain competitive advantage, 3 of which apply here:
  • You can build a network (which can take many forms--natural monopolies are organizations where the market is better off when there's only one of you).
  • You can build a brand (shorthand for relationships, beliefs, trust, permission and word of mouth).
  • You can create a constantly innovating organization where extraordinary employees thrive.
Tying in with Sutherland, these are about adding intangible value. You can gain intangible value by building a network around your product, or by building trust and a name for yourself ("brand"), or by being a constantly innovating organization.

The last is half intangible, half tangible. The actual innovations produced are tangible, but being innovative adds its own intangible value, both to your customers as well as your own employees and even to job applicants! Emphasizing extraordinary employees is a relatively intangible thing which can produce tangible benefits across the board (better products, faster delivery, lower employee turn over rate, and better employees). Thus the competitive advantage.

I think this concept of Intangible Value can be extended into software itself. Possibly the best example is usability. Some software usability concerns are tangible: how long does it take someone to accomplish a task, how many clicks are required, etc. But other usability concerns are intangible: does the user enjoy using the software or does it make them want to shoot themselves in the face.

Seth Godin's post talks about things you can do today to gain competitive advantage, but Rory Sutherland's talk is about how we as a people need to learn to value intangible things more. This is much harder than it sounds.

When you're evaluating two products, you look at the feature lists. If one product has more features, you're likely to decide that it is the better product. But while it may have more features, it may also make people want to shoot themselves in the face. Can we include that on the list of features?

As an example, compare Microsoft Visio to Balsamiq Mockups. Visio is a very full featured product which is ridiculously flexible and powerful compared to Balsamiq. But everyone I know likes Balsamiq better. Why? It's the shoot myself in the face factor. Balsamiq is faster and easier to use. In fact, it's a joy to work with. That is a relatively intangible benefit, but it's real.

As another example, take 37 signals. I have not personally used their products, but I know from what I've heard and from what they've said that their focus as a company is on building slim lined and usable software. There are big box alternatives to their products that have been around for much longer and are far more "configurable," but people love 37 signals. Again, for mostly intangible reasons I think.

So intangible value is a real thing which is often overlooked by the "deciders" but always appreciated by the users. The challenge for those of us who design software is to figure out how to add that intangible value into our products, and how to make potential users aware of it. The challenge for people in general is to recognize intangible value when they come across it and not dismiss it as unimportant.

1 comment:

  1. He makes great points, and very applicable to software design. It makes it much easier to think of the benefits that are going to be useful to the user.

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