Hi folks,
It’s easy to look around and shake your head at the prices paid for all sorts of things. Paying $5000 for a Rolex instead of $50 for a Timex. Buying an $8000 bike instead of a $500 one. Buying a $17,000 Brioni suit instead of hitting the 4-for-$1 sale at Jos A Bank. Or the fact that the Kardashians somehow earn an income. To many of us, such choices are bewildering. But with a bit of insight into some economics theory, those choices begin to make more sense. Especially the bike one – just saying.
Economists explain seemingly illogical prices through marginalism. For years, economists had defined the value of something as a function of its cost – like the materials and labor invested in its production. But in 1871, William Stanley Jevons published his Theory of Political Economy which flipped the concept of value on its head. It wasn’t the cost, but rather the demand for an object that established its value. Value is defined by the consumer, not the manufacturer.
We can apply the lessons of marginalism to our work as well. The value of our work isn’t measured by the effort that goes into it. Rather, it’s measured by how useful the output is to our stakeholders. Working for years on a product that nobody wants doesn’t increase its value – it’s just wasted effort. We need to align our efforts to the needs of our stakeholders in order to maximize our value.
How? By consulting with them and making them a part of the design process. Do they get to direct every step of our process or all of our activities? No. We’re the security experts and sometimes our expertise will point us in a different direction. But if our goal is to provide our stakeholders with something they value, we generally need to defer to them – to the extent practical – and let them guide us towards what they’ll find most useful.
Rex