In 1947, Lawrence Miles established the concept of value as a technical field of study. In 1961, Miles published Techniques of Value Analysis and Engineering, which laid forth the concept of function as an integral part of value.
Miles’ codification of function as a component of value has had far-reaching implications within the sphere of human industry. It spurred a new wave of thinking with respect to the value of goods and services. Miles defined value in terms of the relationship of function and cost. This was eloquently stated in his now famous axiom, “All cost is for function.”[i] Of equal importance, he stressed that value is established by the user‘s - or the customer’s - needs and wants. This basic understanding of value is essential if we are going to set about improving it.
Building upon Miles’ theory of value, Carlos Fallon further refined these concepts. Fallon recognized that while function lay at the heart of value, it was the manner in which the function performed that allowed it to be quantified. Through his work with RCA, Fallon developed a methodology for quantifying performance, which he described using the concept of utility. In his book, Value Analysis, Fallon discusses at length the concept of utility and its relationship to value. He describes the elements of utility as consisting of “performance, quality (including appearance), reliability, service, and opportune delivery.”[ii]
These explanations seem to be fairly straightforward, however, things start to get complicated when one considers the role that perception plays in determining value. Consider the "customer," as described by Larry Miles above (which we could also refer to as the "observer"). Of course, it is readily accepted that different people are likely to possess different perspectives of value as they will have different attributes and characteristics that shape their opinion about what value is.
Further, an observer involved in making a value judgment makes it at a specific point in space and time. This means that the individual observer's value judgments are influenced by these coordinates. What one values today is likely to change depending upon them. The diagram below illustrates this dynamic.
To further complicate matters, one must consider if value is somehow intrinsic or purely relativistic. Again, this may seem obvious to you at first, but upon further reflection, things may not seem so clear. A link to an excellent and entertaining video, Life Lessons from an Ad Man, explores this notion.
In the meantime, it would be wonderful to here from everyone about their own unique views on this topic. I invite you all to comment on this.