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Bitesize No. 9 – Using the Concept of Added Value

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In Bitesize 7 we looked at how ‘customers’ need to articulate their learning needs in added value terms.

This is such an important subject that we need to re-visit it again only this time we need to look at it from the trainer’s perspective.

The simplest, most powerful and yet most difficult question you can ask any trainer is ‘do you add value?’

‘Of course I do’ is the reply, what professional trainer is going to say ‘no’ or ‘I don’t know’?

If you push them on it though and ask them how their training adds value and how much value they add, in pounds, they often start to become very uncomfortable.

They will usually try to defend themselves by saying you cannot measure all of the benefits of training and development so easily. They will even accuse you of being too simplistic.

Such trainers are not business partners. All organisations exist to produce value so business partners need to know how they contribute value.

Business partners know precisely what added value is and how to use it.

They are not afraid of talking about training and development in these terms (especially if they have been following this series) and never feel the need to defend themselves or justify their existence.

So what exactly is added value and how can you use it every day at work in a training, development and learning context?

Every organisation, be it a plc, private, public sector or not-for-profit aims to produce goods or services, at a cost.

Whether they aim to break even or generate a profit the only thing that matters is whether they can provide their customers with the right service at the right price.

Take Cadbury’s as an example.

Customers value their chocolate, which is why they buy it. But if Cadbury’s want to add more value then they have to sell more chocolate.

They might do this by improving the quality of it. They might bring out new products. They might devise a clever new marketing campaign. They might even reduce the cost so they can reduce the price in order to sell more.

At the end of the day, though, they can only say they have added more value if the difference between their costs and their revenue increases. Selling more chocolate but getting less revenue, because of a price drop, is not added value.

For example:
1,000,000 bars of chocolate @ 37.0p = £370,000
But a 10% increase in sales due to a 10% reduction in price produces
1,100,000 bars of chocolate @ 33.3p = £366,300
A loss in value of £3,700

Business partners understand this very obvious point and use it to their advantage.

Look at some training or development you are currently providing. Think of a particularly ‘soft’ or nebulous type of training.

How about leadership or team building or even a soft skills development programme itself?

Then ask yourself this question - how is this supposed to add value? If the answer is ‘it will improve skills’ then you need to go to the next step and ask - how will those skills add value?

The four added value options are:
* Increase quantity produced (which you sell at no discount).
* Increase revenue (by charging a higher average price).
* Reduce costs or average cost per product.
* Improve the quality of your product or service per pound spent (more patients cared for per £1000).

Whenever you are planning training, if you cannot see a connection to one of these four objectives then that training is not designed to add value.

Business partners do not invest in training that is not designed to add value.


Paul is happy to take questions and comments and can be contacted at:mailto:[email protected]

Earlier articles in this series can be found at:
The Bitesize Business Partners Page

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