Paul Carney

Working hard to make things simple

Monthly Archives: March 2011

Value = Benefit / Price

It is such an easy formula that I learned from Seth Godin.

Value = Benefit / Price

For the following example, we will assume that each benefit is worth 1,000 points so that the ratio is a smaller number.

A man needs a vehicle to get him back and forth to work and the occasional family trip. He buys a $20,000 car that provides the following benefits:

  1. Gets him to where he is going, comfortably
  2. Decent gas mileage

So, his Value is 2,000 / $20,000 or 10%

A woman wants a vehicle, too, but she wants it to have style, make a statement, and get her where she needs to go. She decides to buy a $40,000 car with the following benefits:

  1. Smooth ride
  2. Luxury features
  3. Status
  4. Extra safety features

Her Value is 4,000 / $40,000 or 10%

See how it works? The person in the second example paid twice as much for her car, but her Value is the same as the guy who bought his car. This is an easy way to determine value even if the price is different.

This same example can be used to sell items to people by revealing the value of a product or service to them while convincing them to pay the price you want. As Seth says, you don’t always need to lower your price to generate more value. I will cover in an upcoming blog post some cool ways that you can increase value while raising the price!

Did You Have Your Grit this Morning?

Grit – it is such a cool word. It sounds tough and “roll-up-the-sleeves” productive. It has harsh-sounding letters, is short and tough.

Do you have grit? Do you work for a grade or work to learn? It all comes down to why you do things: for someone else or for your own reasons.

Heidi Grant Halvorson points out the Nine Things Successful People Do Differently. The hardest part about persistence is that it is usually not convenient – when you need grit, it is not timely. But that is why your persistence can make you a successful person. How many of them can you relate to?

I find that it is helpful to review lists like this, especially when the times get tough and I need to call on some additional grit to get through my day.

Do you have lists that you use? Add a comment so that others can learn. I will continue to compile a list of the ways that people continue to get things done, or in the words of Larry the Cable Guy, Git-R-Done!

Collecting and Sharing Data is a Good Thing

It seems that four of our illustrious US Sentators – Harry Reid (D-NV), Charles Schumer (D-NY), Frank Lautenberg (D-NJ) and Tom Udall (D-NM), feel that citizens collecting data and sharing it with each other is wrong. And that any company helping must be stopped.

In their letter to RIM, Apple and Google, they asked the companies to remove and stop selling apps that allowed people to collect traffic information related to law enforcement checkpoints. In particular, they cited that DUI (driving under the influence) checkpoints were being tracked in real-time and shared with the app customers.

Why should a Senator have the power to tell a company what app they can or cannot sell based on the vague premise that a person can use the app to do something that they do not approve of? It is similar to telling the phone company to not allow phone calls in case someone is planning a takeover of another company through board elections. And besides, they failed to list the specific apps by name, indicating that their letter might just be a knee-jerk reaction to letters they are receiving from “concerned citizens”.

Also, keep in mind that the users were not doing anything illegal. There are dozens of applications that customers use each day to help others stay up-to-date with the latest traffic and congestion information. Law enforcement and city officials are even helping the citizens so that they stay aware of traffic issues to avoid congestion and lower car emissions. In one example, city officials from Eugene, Oregon collaborated with an app company to help citizens track traffic-light situations to avoid backups.

ACT, an organization focused on the needs of small business innovators from around the world, describes in better detail why this activity is misguided. The government should not be allowed to tell businesses, on a wholesale and vague level, what types of apps they can and cannot sell if there are no laws being broken.

In short: apps that allow people to share information should not be banned by the US Government. This opens the door to the good Senators requesting that people avoid gathering for protests by using Foursquare, Gowalla or Facebook Places. Please use your voice to condemn this type of interference before it goes too far.

Good, Fast or Cheap: Why You Have to Pick 2

It is the classic dilemma: you want to have great service, done quickly and for a cheap price. But the laws of physics only allow you to have 2 at a time and here is why.

Here are the combinations of 2 choices at a time:

  1. Good and Fast
  2. Fast and Cheap
  3. Good and Cheap

Whether it is the study of law, how to price freelance work, or project management, the laws are the same – you can only pick 2 at a time. One exception seems to be cooking, but only when I am not in the kitchen!

Let’s review these choices from the perspective of a craftsman who builds custom homes.

Take the first combination: “Good and Fast”. This is a great selection because you get great work done quickly. The craftsman who constructs a well-built custom home quickly will have decades of experience, having learned where he can take shortcuts that will not  affect the quality of the finished product. This level of provider knows that the market will pay him a higher price, hence he is “Not Cheap”

We now move on to “Fast and Cheap”. In this case, your custom home is put together quickly and for a lower cost. Quality workmanship for something as complex as a custom home cannot be rushed, and experienced craftsman know this. When he cuts the wrong corners or does the bare minimum to complete the job, you don’t end up with “Good” results.

Finally, we have “Good and Cheap”. In this case, you get a nice custom-built home but at a lower cost than the market drives. This means the craftsman will work on the home as time allows, allocating his scarce (and high-priced) time to other projects that will pay him more. You get your great home at a cheaper cost, but it will take a lot longer to get it done.

The bottom line: Good, Fast or Cheap: Pick 2. Do not try to fight it. The laws of physics will not allow you to win. The earlier you realize this in life, the easier it becomes to make decisions because you understand what you are giving up in your final choice.

It’s only 16 feet…

Yes, that is it: 16 feet.

That is the average length of a car on the road. It is the minimum distance you have to give so that the other car can enter into your lane when everyone is stopped dead and lanes are merging.

But why is it so hard to give up that 16 feet?? It is ours – we were here first. Sure, we aren’t going anywhere quickly, since we are stuck in traffic. But still – why should I yield that space to the other person?

The answer is simple: it is only 16 feet. You can afford to let the person in. You will still get where you are going. Go ahead, give the person a break.

And throughout the rest of the day, you can say to yourself, “It is only 16 feet.”

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