Understanding social value
The full concept of value is not captured when we talk about financial capital alone. Value is a much broader concept including human, intellectual and natural capital.
Up until now, organizations have mostly been accountable for the financial capital they create or destroy. With the growing notion of a wider definition of value however, the “old” way of looking at value no longer suffices. Many organizations are currently working on a new vision of value: social value. At Sinzer we create solutions to measure, report and communicate about social value. And since our pay off is “Value what matters” we would like to share our vision of value with you.
Although many organizations are trying to capture value behind their desk, we believe that ”Value is in the eye of the stakeholder, like beauty is in the eye of the beholder”. This statement means to emphasize the importance of involving stakeholders; understanding what changes for them (positive or negative change, intended and unintended change); and understanding how important these changes are for them. A question often raised in this regard, is: how objective is this? The answer is simple: value is always subjective!
Value is about how important things are for a person. Many important elements don’t have a market price, for example a change in your self-confidence, security or the environment you live in. A change in self-confidence can be really important for a person who lacks self-confidence and therefore valued higher compared with a person who already has a lot of self-confidence and therefore valued much lower.
The same is valid for products and services that do have a market price. Let’s take high-heeled Valentino shoes for example. There are certain people (for example high-income female managers) who are willing to pay the market price, about € 500, for these shoes. This price represents the value that these shoes create for them: style, sophistication and ambition. They are therefore willing to pay this amount. If you would ask a middle-income nurse, she wouldn’t value these shoes the same way. On the contrary! The shoes would probably create negative value (painful feet) since she can’t work on those during her shifts as a nurse.
Value can also change over time. Some things can be really important for you at a certain moment, but less so at another. Gloves are important when you are biking in the winter and a swimsuit is important when you are at the beach. But gloves are worthless at the beach, as is a swimsuit in the winter while you are riding your bike. Therefore it is necessary to understand for whom you are creating products and services, what changes because of these products and services, when these changes take place and how valuable these are for the stakeholders.
No matter which impact measurement and valuation techniques you use, involving your stakeholders is crucial to fully understand what value you create. Value what matters!
Interested in reading more about social value and how SROI can help you measure and maximize your scoial impact? Download our Beginners Guide: