Financial Value isn’t the Most Important Value in Business

Nathan Shedroff
8 min readAug 24, 2019

There is more to business and the world than merely function and price

The 5 kinds of value are split between 2 that are quantitative and 3 that are qualitative (and closer to us).

Contrary to most of how traditional business understands value, there are more kinds than merely financial value. The myopia of only recognizing financial value leads many companies astray when they try to create value for themselves and others (their customers, partners, etc.) or when trying to mitigate all kinds of risks (legal, political technological, market, and especially social).

The Five Kinds of Value

Recognizing that there are more kinds of value than just money is the first step in building more and better value. (It’s difficult enough to build what you cannot see, let alone what you don’t recognize as existing.)

The first two kinds of value are much easier for people to recognize, understand, and measure. That’s why business is so focused on it. But, that doesn’t mean they’re the most important. In fact, they routinely represent less economic value than the other three.

Functional Value is what products and services do for people in a, yes, functional sense: features and performance. This is where most product development processes focus. If you were buying a car, for example, you might look for the features that you need and want (how many can ride along, how much storage, a truck vs. a car, etc.) as well as the performance (how fast, how many miles per fill-up, etc.). These are all important but they aren’t the only reasons that people buy things.

Financial Value, of course, is measured in money. It’s the easiest to understand because it’s the easiest to measure. Some features don’t exactly equate so they’re difficult to compare sometimes, but money is money (as long as it’s in the same currency). The vast majority of business is focus on these two: price and performance — especially in the technology industries.

Emotional Value is where things get more ambiguous. Most people know there’s more to value than merely features and performance but because the other three kinds of value are largely invisible and can’t be easily counted, they’re skeptical to what these are and how to work with them. Many businesspeople even bend over backwards to ignore or claim this kind of value…

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Nathan Shedroff

Nathan is a serial entrepreneur, including the new SEED digital currency: www.nathan.com & www.seedtoken.io