The Cloud and many facets of value

ValueBy: Kaisa Koskela-Huotari and Andrey Sirotkin

The word value has been used lately a lot in the discussions related to business and the Cloud. What do we, however, mean by value in this context? Roughly, one can argue that the concept of value has evolved into two quite distinct meanings [1]. Firstly, value is used to portray ‘goodness’ of something physically external to a person. This something can be another person, a product, an activity or anything else. Secondly, the concept of value can also describe ‘goodness’ as determined by an individual personally and culturally, and in an ethical sense. Usually in this meaning the plural term – values – is used.

Value (of something) and the Cloud

There are three ways to discuss the concept of value (of something) [2, 3, 4] and the Cloud.

The first one is the value-in-exchange perspective, where the focus is on outputs. Value is seen as something created by companies in their production activities and embedded in company outputs such as tangible products. Therefore, value is measured by the exchange transaction and is equal to money. In the case of the Cloud this perspective would mean e.g. that a Cloud-based service would be regarded valuable on its own – without being used by someone. We would be more worried about what our sales numbers are than do our customers perceive our service beneficial or not.

The second, value-in-use, perspective provides a very different view on value and value creation. Here, the attention is focused on the process of use, and the locus of value creation shifts from the producer’s end to the customer’s end. Hence, value is seen as something that emerges as a person uses or applies a resource provided to him/her by somebody else. For a Cloud-based solution the value-in-use perspective would mean that we would view the solution valuable only when someone is using it – e.g. to share photographs with family and friends – and therefore perceiving the service valuable for him/her.

The third value-in-context perspective can be seen as an extension of the value-in-use perspective. In this perspective value is seen as an experience. This experiential view on value implies that the perception of value is not a linear, cognitive process restricted in isolated events of use but an iterative and circular process including both lived and imaginary experiences as well as individual and collective dimensions. The value-in-context perspective for a Cloud solution would mean that we acknowledge that the value of a service does not remain the same for the individual using in, but that the perception of value constantly alters as the time, place and context of use changes, and also that the perception is influenced by social interaction.

When tapping into the potential of the Cloud it is important that we take into consideration all the different perspectives on value (of something) as they all provide us important information on how we can create solutions that are beneficial both from the business’ and customers’ perspective.

Values as beliefs

A concept of human values is different from that of value (of something). Human values are principles and beliefs that people use to evaluate goodness, fairness and the legitimacy of experiences. Human values are defined in axiological sense. These values are beliefs that people hold in aesthetics (e.g. beauty, harmony, goodness) and ethics (e.g. right, wrong, fair, legitimate). What makes values especially interesting in business studies is their motivational character. Values guide individuals’ choices, evaluate behaviour, and provide meaning to experiences (e.g. [5], [6], [7] and [8]).

Although values are abstract concepts, they are practical for understanding customer experience. By understanding we mean an ability to find reasons or explain meaning. Regardless of whether such explanations are rational or irrational they contain cues for companies for what experiences customers may value. When customers have difficulty with anticipating what future product and services they will value (in terms of goodness of something), they can describe their view of reality in terms of desires and values. Thus, values can be a very useful source of information about customer experiences.

Because values are remarkably stable and resistant to change even in dynamic environments, they may serve as a vector of strategic differentiation. That is, a strategy can be intentionally focused on the perceived value of experience, which is a key differentiation factor. Values, for example, can be used to describe customer desired experiences, which, in turn, can be disseminated throughout the organisational processes. As a result, values bring together strategy, marketing and development functions in a unified effort of staging an experience that customers will value.

This posting is modified and shortened from the original article. To see the full version and to read about more about our research in the Cloud context, check out the newest edition of VTT Research Highlights – Value-driven Business in the Cloud.

References:

[1] Ng., I.C.L. & Smith, L.A. 2012. An Integrative Framework of Value. In Vargo, S.L. & Lusch, R. F. (eds.) Special Issue – Toward a Better Understanding of the Role of Value in Markets and Marketing. Review of Marketing Research, Vol. 9. Emerald Group Publishing Limited. Pp. 207–243.
[2] Vargo, S. L., Maglio, P. P. & Akaka, M. A. 2008. On value and value co-creation: A service systems and service logic perspective. European Management Journal, Vol. 26. Pp. 145–152.
[3] Chandler, J. D. & Vargo S.L. 2011. Contextualization and value-in-context: How context frames exchange. Marketing Theory, Vol. 11. Pp. 35–49.
[4] Helkkula, A., Kelleher, C. & Pihlström, M. 2012. Characterizing value as an experience: implications for service researchers and managers. Journal of Service Research, Vol. 15. Pp. 59–75.
[5] Boudon, R. 2001. The origin of values: Sociology and philosophy of beliefs. New Brunswick, New Jersey, USA: Transaction Publishers.
[6] Kahle, L.R. 1996. Social values and consumer behavior: Research from the list of values. In Seligman, C., Olson, J.M. & Zanna, M.P. (eds.) The psychology of values: The Ontario symposium, Vol. 8. Mahwah, NJ: Lawrence Erlbaum Associates, Pp. 135–151.
[7] Schwartz, S.H. 1992. Universals in the content and structure of values: Theoretical advances and empirical tests in 20 countries. Advances in Experimental Social Psychology. Vol. 25. Pp. 1–65.
[8] Rokeach, M. 1979. Understanding human values: Individual and societal. The Free Press: New York

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