Delivered value vs perceived value
You pay for any product or service because you are getting value out of it. The service or the product receives money from you because they deliver value to you. There is difference between those two values. The value that you get or perceive to get is the ‘perceived value’ and the value that the business delivers you is the ‘delivered value’.
You ask ‘what’s the difference?’. Let me explain with an example. I recently gave my Volkswagon car for annual service. The service supervisor called me and told me that they have to change the oil, air filter, brake pads and other things. None of those things had caused any deterioration in my driving experience. But I figured they are the experts and said OK. After a day of ‘servicing’, the supervisor sent me an invoice for INR 7,500. I paid for the service that he told me he delivered - ‘delivered value’.
I got the car back and the next day I took the car for a drive. The moment I sat in my car, first thing I noticed was the floor mats were not cleaned, the second thing I noticed as I started the car was that the clock was not set to the right time and as I started driving I could feel that the tyre pressure was not right. The ‘perceived value’ for me was negative. According to me the car was the same, if not worse (clock was correctly set when I gave it for servicing). I’m sure the air coming in through the new air filter was cleaner than before. I’m sure that the new oil is going to lubricate the engine better. But I couldn’t see or feel it and so I could not perceive the value for which I paid INR 7,500. I was not happy.
When building a feature(product management) or doing any work(any work), it is important to make sure that there is some value which the customer can perceive. It is ok to ship ‘under the hood’ features (eg. decrease load time by 400ms (5 seconds to 4.6 seconds)) but don’t expect applause from the customers for that. You have to give them something that they can feel, maybe reduced couple of clicks in a frequently used flow, or a new AI feature that reduces the time to do a task by half. Perceived value is more valuable than delivered value. It doesn’t matter what the business provides, it is what the customer thinks feels the business has provided that matters.
Very interesting. Which of these should an org prioiritise when there is a resource crunch? And interestingly this seems applicable to those working in a large organization. Not only must I deliver a lot of 'delivered value', I must also deliver on the perceived value. Speak up in meetings. etc...