< Previous Article     •     The Captain's Log    •     Next Article >


The Chemistry Behind Creating Value: How To Turn Typical Products And Services Into A Valuable Business

In the past, much of the value associated with a particular purchase came from products and services themselves. It was the inherent, physical attributes of the fabric or the shovel or the food that people needed, and there weren't many options for obtaining it. But today, we can get almost anything almost anywhere. If I want a shovel I have a range to choose from: high-end alloys or traditional wood with a metal blade. I can pick the best blade shape for the job I want to do, and choose from a range of prices that, presumably, denote quality. I can also buy a shovel at a big-box store that carries diapers and candy or visit a specialized retailer that can give me information about shovel options. The value no longer comes primarily from the product itself — it comes from the value added to the product by entrepreneurs.

Apple Computer took existing computer technology and added distinctive aesthetics to plain beige boxes, building a design-oriented brand in the process. Build-a-Bear took stuffed animals off the shelves and added a profound experience to the process of purchasing and owning a common toy. Starbucks took a common beverage and made it special, adding value in dozens of ways: the atmosphere of the shop, a wide variety of hot and cold options, and so on. In every industry, entrepreneurs have found new ways to add value to existing commodities and transform typical products, creating multi-national corporations and new markets in the process.

Part of being a blank page entrepreneur is finding ways to create value in the mind for whatever products and services you offer. Ask yourself, “Can customers find my products and services elsewhere?” If the answer is yes, you must find ways to create cognitive and emotional value that separates your business from those others. How you approach this process depends largely on what kind of business you want to build.


Ever since explorers began bringing spices, weapons and fabrics from distant lands, consumers have been willing to pay extremely high prices for unusual items. But in today’s world of online and international commerce, offering things that are unusual has become a function of entrepreneurial creativity. When entrepreneurs develop innovative services or unique products, they create value by offering something that no one else can. As mass market options become stale, we look to individual entrepreneurs to create value by offering things that customers can't find anywhere else. (A good place to see this process in action is Etsy, an online marketplace that offers a large number of one-of-a-kind creations.)


One of the easiest ways for entrepreneurs to create value is by altering the emotional state of customers: increasing positive emotions and decreasing negative emotions. Part of the human condition is the need to feel more good emotions (pleasure, contentment, joy) and fewer negative emotions (fear, shame, loneliness). Viewing your offering in an emotional context is one of the best ways to use the skill of empathy to develop or enhance it.


If you offer a product or service that responds to a basic need (hunger, thirst, health, clothing, shelter), create value by elevating a fundamental human need beyond its basic elements. This is the basis for much of our fashion, beauty, culinary and housing markets — adding value to the food, clothing and shelter we all must have to create remarkable dining experiences, clothing as personal expression, and housing that reflects how we want to live our lives. This type of value is not limited to the more expensive side of the market. McDonald’s creates a unique dining experience, just like an expensive steak-house. The value is not in the price, it’s in the deliberate creation of a brand around the physical experience of eating cooked beef in a restaurant. Procter & Gamble used this same approach to add value to another basic human experience….


It sounds counterintuitive, doesn’t it? If your offering provides access to a place or an opportunity, you can create value by restricting admittance to a select few or offering a second tier of value that's available to just a small group. This kind of “velvet rope” emotional value has turned nightclubs into must-attend venues and enabled organizers to charge thousands of dollars for concert tickets. It’s created luxury boxes at sporting events and VIP lounges at airports. We long to feel special. We want to be part of a group. Even small businesses can use this approach to create value in the mind.


Do customers look at your products and services? Smell, hear, taste or feel them? If so, you may be able to create value by improving the aesthetic experience. Almost every product in your home has been evaluated in this way, and entrepreneurs have developed aesthetic profiles for groups of customers and added different forms of value to appeal to a wide variety of tastes. One example is motorcycles. Aesthetic enhancement has transformed this practical piece of machinery into something more like art, worthy of an exhibition in a celebrated museum.


We all want more time and more money. We want to accomplish tasks with less effort and energy. This approach focuses on conservation – how can you help your customers save their resources or allocate them more effectively? Many small business owners create value by helping their customers save time, money, energy and other resources: everything from bookkeeping and cleaning services to child care and prepared meal delivery falls into this category.


An often overlooked method for creating value is to engage the mind more deeply. People love to learn, to think and to figure out, and inventive entrepreneurs can create value by engaging the mind through knowledge, intellectual stimulation, curiosity or other forms of cognitive engagement. Can you make a game of your product? Can you add value to your service by stoking the fires of curiosity? What can your business teach people, and how can that education create a deeper, more fulfilling relationship with your customers?

Entrepreneurs create value in the mind that can be exchanged for money. A butternut squash has a certain amount of value. Cutting and peeling it adds value, because the customer doesn’t have to perform those chores — it conserves a customer’s time and energy. If you take the time to roast it, put it in a stock pot with broth, add several other ingredients, blend it, balance the flavors and serve the finished soup with croutons, you add aesthetic value that can be traded for $5 or more per bowl.

Entrepreneurs must create cognitive and emotional value that can be traded for money, and those that do this job well will earn a return on that investment and develop a successful business.


How To Create Unique Value: Make An Offer No One Else Can Make

Apples are harvested exactly once a year, but that can be hard to believe when you visit modern grocery stores. Grocers can offer apples every day of the year because producers have found ways to store them for long periods and import them from other countries.

Not that long ago, news was hard to come by. When magazines and newspapers arrived on the train, every word was read. Ads were filled with copy, since the ad itself was usually the only source of information consumers had about the products they bought. Some news was out of date, of course, but it couldn’t be helped. Today we can read the news 24/7, and we hear of events almost as soon as they happen.

Every business must find a way to provide something unique. Grocery stores have responded by stocking dozens of different types of apples, trying to locate heirloom varietals that can’t be bought in just any store. News outlets still try to be the first to report a story, but they have also hired influential opinion makers, offering unique voices that can only be read in a particular newspaper or magazine. In this way, these entrepreneurs continually create one-of-a-kind offerings, even in product categories that have been around for centuries.

Today, almost everything can be bought anywhere at any time. But if you can find a way to make your products or services unique you will be able to create value in the mind that will appeal to a specific audience. For blank page entrepreneurs developing new businesses in an already cluttered landscape, differentiation is a critical skill.


Butcher shops have largely been replaced by grocery stores that sell almost anything. Even high-end steaks and chops are available at grocery stores that serve the more affluent. Paul's Butcher Shop had been a local staple for two generations — his grandfather had passed it to his father who would soon pass it to him. But sales were slow and Paul knew he had to find a new way to add value to the experience in order to keep the customers coming in.

Paul loves adventure travel. He's scaled mountains in Mongolia, traversed rivers in Africa and scrambled over ice in the Antarctic. In his travels he found that people in different parts of the world eat all kinds of unusual meat and fish. Why couldn't he bring this unique perspective to customers in middle America?

Paul began by creating a marketing campaign featuring some of his own photos from these incredible locations. He started featuring all kinds of unusual fish and meat in specialized displays that corresponded to places in the world where those kinds of foods were popular. Printed materials describing history and preparation techniques specific to each type of protein were handed to each customer, and samples were liberally offered.

Word quickly got around on social media when Paul began offering zebra and antelope, farmed in central Texas, as part of his new campaign. He began hosting dinners for select customers at local restaurants, creating promotions with well-known chefs to encourage demand among the more culinarily curious.

He was even able to get some local PR out of a limited run of unusual bugs. Eaten elsewhere in the world — but unthinkable in his hometown — it was something of a stretch for most of his customers. But that didn't keep them from coming by to see what all the fuss was about and purchasing a few ordinary steaks while marveling at his preposterous provisions.


Create Emotional Value: Make Customers Feel The Way They Want To Feel

We value emotion. Most of the choices we make are based on how we feel. When an entrepreneur recognizes the need to feel a certain way about a certain thing, she can use that understanding to guide the development of her products and services. How do your customers want to feel? What feelings do they have that they don’t want? This kind of psychological investigation is a worthwhile pursuit that can create a valuable business.

One way to approach this dynamic is to create a chart of the positive and negative emotions that your customers tend to have. We know that customers want to feel fewer negative emotions and more positive emotions, so by charting this process you can better determine how your offering will help customers alter their emotions. Entrepreneurs usually document the practical value that their products and services offer; brochures, spec sheets and product information create cognitive value that's easily understood. The same process can be applied to the emotional value your offerings provide.


Laura loves love. Her matchmaking business provided great satisfaction; she loved pairing new couples and setting them on a path for long-term happiness. But she knew that customers were not entirely happy with some of the services offered by other people in her field – not just matchmakers, but the various entrepreneurs that helped them prepare for and create romantic relationships.

Laura decided to create an organization that would address the entire process of attracting a mate, determining whether or not a new interest could be the right long-term partner, and setting off into married life. She decided to create a “love firm,” bringing together a set of consultants and experts that could take a client from singlehood to wedded bliss, providing whatever services were needed and tailoring the experience to each customer. She modeled her business after a typical law firm: a single organization where different attorneys, each with their own specialized knowledge, may serve a single client in many different ways, from business planning to divorce. In Laura's new business, consultants with a wide range of skills would work together over months or years with a single client, tailoring their offerings as needed.

Since Laura was creating a service that depends entirely on the emotions of the client, she decided to examine the emotional state of her customers in each part of the process to help guide her in how to create her offering.

To increase the amount of confidence her clients felt, she offered image consulting services for both men and women. Hair and makeup consultants worked in tandem with fashion consultants, tailors and personal shoppers to help her clients create their best possible appearance.

Sometimes people are ashamed of the way they look when it’s time to get intimate. To help reduce the amount of anxiety that some clients felt, she offered counseling services to deal with underlying esteem issues and fitness and nutrition consultants to help her clients create a body that they feel comfortable in.

To reduce the amount of fear that people feel in dating situations, she created a speed dating service that brought a large number of people together in a less challenging environment. This was a benefit for those clients who found a 10-minute interaction far easier to deal with than a multi-hour date.

Some of her clients had few friends. Some recently relocated. Others just never developed a strong social circle. To help diminish feelings of loneliness, Laura developed a group dating program in which four or six clients would go out on a date together, giving them the opportunity to socialize with a group. This allowed some clients to feel less “spotlighted” and enjoy hanging out with people that were not romantic interests, reducing the stress they felt in a one-on-one situation while building a stronger support network.

Laura’s services didn’t end when her clients found love and began long-term dating. Counselors offered individual and group sessions to help clients overcome problems as they surfaced rather than allowing them to accumulate and result in a breakup.

For those who made it all the way to the altar, Laura offered event planners who could help her clients build a wedding that made both partners happy. By this time her clients were usually good friends who trusted her to create something wonderful, and the wedding itself became an extension of the relationships initiated and developed by Laura’s Love Firm.

Beyond The Velvet Rope: Creating Value For A Select Group

We want to feel special. We want to belong. Entrepreneurs of all stripes have used this knowledge to create high value options for products and services. One of the most well-known examples of this approach is Studio 54, a popular nightclub in New York City during the late 70's. Instead of opening the door to just anyone, the owner stood outside and chose select people to let in. Once inside, VIPs might be allowed into a second, more exclusive space. A room inside that space might be set aside for an even more select group.

You can see this same idea at play on the red carpets of award shows. The famous walk slowly down one side of the carpet, posing for innumerable photos, while the rest of the attendees file down a walkway provided for the invited-but-not-famous-enough-to-be-photographed. The least important, of course, never get into the theater. For those who want to belong, the idea of a "velvet rope" barring admittance creates enormous emotional value.

This approach to marketing is hardly new. From first-class accommodations on cruise ships and VIP lounges in airports to closed-door sales for invited customers and exclusive credit card programs, every kind of business has employed this technique to entice clients to spend more and encourage valuable customers to shop nowhere else.

However, keeping people out is not the only way to establish a fan base. Providing opportunities to those willing to learn or participate in specialized programs takes a more positive approach that produces the same results. Nonprofit organizations can create volunteer opportunities for those willing to go through a training program. Theaters and art museums can offer advanced courses for those who participate in introductory level classes. Providing an option to earn access can also be a powerful motivator with significant emotional value.

One advantage to this approach is our tendency to create and sustain habit. Once a customer gets used to buying from a particular vendor, she is less likely to shop elsewhere. Habit rules the mind and creates a barrier to competition. Once you’ve planted your flag in a customer’s thoughts, branding becomes a game of “king of the mental mountain.” And when you've asked your customers to work for the privilege of attaining special status, that habit becomes far more deeply ingrained.


Tonya’s restaurant was slowly gaining a reputation as a good place to try out the inventions of a young, classically trained chef. Her modern takes on traditional dishes had garnered some press attention, but this had not yet translated into a regular customer base.

Tonya decided to try the velvet rope technique, but she didn’t want to put up signs for a loyalty program or send out mailers that might cheapen her high-end brand. She decided, instead, to utilize her flair for new dishes and create a cadre of “Tonya’s Tasters.”

When a table was seated, the waitperson would ask the assembled guests if they were members of this new program. If guests replied that they were unfamiliar with it, the program would be described: those who want to participate receive a small sample of a new dish before the first course. There is no charge for the taste, but participants are asked to provide a brief critique and an email address on a small card each time they receive a sample.

The guests were told that Tonya wanted to receive feedback from her customers to help plan future menus, and that she wanted assistance from the sophisticated palates of her regular customers to guide her choices. Many guests were delighted to be asked to provide an opinion, and Tonya was able to build a database of guests that included information about how often they returned, the average party size, the average check and if they had any food preferences. Those guests that allowed email contact also received special promotions for traditionally busy nights, further cementing the relationship between habitual guests and Tonya’s restaurant.


Beauty For Every Beholder: Creating Aesthetic Value

Creating aesthetic value can be difficult — every individual has his own interpretation of beauty. Many companies develop a series of similar products to please a range of customer tastes, but most mass-market products can’t be tailored to individual preferences, so compromises must be made.

Since small businesses work closely with customers, aesthetic value provides small business owners with an opportunity — they can address individual aesthetic desires. This dynamic appears in markets as diverse as custom motorcycles, extravagant cakes and one-of-a-kind jewelry. Of course, aesthetic value can also be created by service providers: landscape design that blends outdoor sculpture with unusual plants or family photographs digitally manipulated to resemble oil paintings.

Aesthetic value can also have a disproportionate impact on the perceived value of a brand. When a company invests in a beautiful presentation, it can create increased feelings of value among customers and justify higher prices. Aesthetic value may seem abstract, but its effects are very real; beauty can be traded for money. Study after study has demonstrated the link between perceived value created by graphic, interior and product design and the financial success of small businesses.

People want to live in a beautiful world, and many are willing to pay top dollar for aesthetic appeal. Small business owners that examine the aesthetic component of their brands, products and services can differentiate their beautiful offerings from the rest of the pack.


The clientele willing to pay steep prices for original artwork is a fairly small group. Yet introducing artists into the public consciousness is the key to their long-term success; famous artists can charge far more for a piece than those who are unknown. Isabel opened a gallery many years ago and had great relationships with a wide range of local artists. She knew that their success was directly tied to her success, and she longed to help them become more recognized. How could she promote her favorite artists to the majority of consumers when most are either unwilling or unable to purchase original artwork?

Isabel decided to open a subsidiary to her gallery: Isabel’s Inspired Interiors. She recruited a number of willing artists and put together a sample portfolios for each. She then approached local event planners who could take these portfolios to their clients and use them as inspiration for adding high-end interior design to their events.

Paintings were digitally photographed and beamed onto various fabric structures, forming complex sculptures of light that could be used as entrances, kiosks or temporary walls. The photos could also be printed on large sheets of paper or plastic using high-quality ink jet to form mosaics that could cover any surface, no matter how large. Information about each artist and each artwork were printed on small cards made available to all attendees. In this way, everyone who attended an event could become more familiar with the artist whose works were displayed. These installations could elevate a party far beyond traditional balloons, flower arrangements and lighting.

The aesthetics of the event were so profound that they could become a topic of conversation, engaging the minds of the attendees. The artist gained notoriety. Event planners could offer their clients something extremely unusual, setting their parties apart from the rest of the events on the social calendar. By taking the aesthetic value of the art and displaying it in new ways, a much broader audience was engaged, increasing the perceived value of the artwork itself.


Time, Money, Labor, Stress: Creating Value With Conservation

Creating value by helping consumers save their resources — reducing the amount of money, time and labor required to perform tasks — has been at the forefront of entrepreneurial innovation for the last century. Laborsaving inventions, from nail guns to dishwashers to suitcases on wheels, have enabled us to accomplish more with less work. Microwave ovens, email and cars allow us to cook, communicate and travel quickly. Vacuum sealers, do-it-yourself home improvement and online bill paying save money. Many modern innovations were developed to create value through conservation, and they have changed the way we live.

A small business that creates value through conservation can attract a wide audience and form new consumer habits, developing a dedicated customer base in the process. The economic landscape is filled with examples: Many restaurants rely on delivery for a significant portion of their monthly revenue. Auto repair shops have found ways to take the mechanic to the customer, avoiding the hassle of making an appointment and bringing in the car. And almost every small business has found ways to serve customers online, reducing or eliminating the need to travel or wait.

What can your business do to create value through conservation? What processes can be automated? What products can be delivered or replenished automatically? What needs do your customers have that are not being met? With a little creativity, your business can differentiate itself by using the skill of empathy to free customers from chores, save them money or decrease demands on their time.


Many men hate wearing suits. It’s not that they mind looking good, it’s the work involved with purchasing, tailoring, choosing and caring for clothes that becomes a time-consuming chore.

A well-crafted men’s suit is an investment, and it’s not necessarily an inexpensive one, so getting the right suit made the right way is an important first step. There's a wide range of styles and fabrics to choose from. The way the suit is constructed has a significant impact on comfort and durability. Once the suit is chosen, a man also needs shirts that fit, matching ties, belts, shoes and other accessories. Knowing what’s in style is another part of the process, and few men care to keep up with the dictates of fashion magazines.

Once all these hurdles have been jumped, there’s the upkeep. Shoes must be polished. Suits and shirts must be cleaned and pressed. Men must remember what ties go with which shirts and which suits … and the shoes … brown? Black? And then there’s travel — packing, folding, taking all the right things — the whole process just turns into one giant pain the closet.

Sarah decided to create a service that tackles all these jobs for men who have neither the time nor the inclination to do this work themselves. She begins each client relationship with a lengthy interview covering how a man wants to appear, how often he wears his suits, his travel schedule, cleaning preferences, and so on. After the interview, a complete set of measurements is taken and a password-protected online account is created.

From this point on, the entire wardrobe is in Sarah’s hands. She works within a set budget to buy the clothes that are needed, adhering to each man’s own personal preferences while taking into account new trends in menswear. She puts suit/tie/shirt ensembles together, placing each on specially marked hangers that indicate which pieces work well together. Each client only has to choose one set of hangers at a time — no more worrying about what goes with which.

Her delivery dry cleaning service picks up and drops off on a customized schedule to ensure that each client always has plenty of available options. Customers can use their private online accounts to request cleaning or pressing outside of the regular schedule, so stains and repairs can be taken care of quickly.

Sarah’s clients can also use the online account to let her know when clothes begin fitting improperly. If pants need to be let out or taken in, for example, a new measurement is recorded and entered into the database, and appropriate tailoring performed.

When a client has to travel, Sarah's assistant stops by the house and chooses whatever clothes are appropriate for both the destination and the duration of the trip. She then packs everything, carefully folding each piece, ensuring clients arrive with everything they need.

Her clients save time and labor, of course, but also money; her relationships with local clothing stores and cleaners enable her to ask for discounts that she can pass on to her clients. But most importantly, her clients look their best — better, perhaps, because they have one less thing to worry about.


Physical Pleasure: Creating Value From Physical Sensation

Every human physical experience has been elevated through entrepreneurial effort. Everything we eat and drink — from filet mignon to water — has been transformed by intentionally engaging the senses. Our homes have become retreats for rest and rejuvenation. We sleep in more comfortable surroundings than at any time in history. Bathing has become a way to refresh the spirit and cleanse the body. Even the treatments we employ to recuperate from illness have benefited from the addition of appeals to our senses.

If your business creates physical sensations for your customers, novel approaches will differentiate you from your competition. Restaurants have long been forefronts in visual aesthetics, creating interiors that enhance the dining experience. Modern entrepreneurs have taken this trend a further step by taking our sense of smell into account, building olfactory experiences into the meal. Yoga studios have increased the ambient temperature and humidity to enhance the practice; hotels and lounges have created frigid environments as a way to differentiate themselves. Even dental offices — which many regard as dens of expensive torture — have been transformed into something more akin to a spa, where treatments such as massages, pedicures and facials can be performed as part of a more comprehensive beauty experience.

We understand the world through our senses, so it makes sense that entrepreneurs would utilize these approaches to deeply engage customers with the offering and improve the brand. How can your brand encourage a deeper sensory connection?


Smells are remarkable memory triggers. A particular scent can remind you of childhood or a vacation or someone very dear to you. Anna decided to create a business that helped clients access and respond to these memories.

Using proprietary technology, Anna began testing and collecting data from clients' responses to smells.

Each client completes a process of associating olfactory stimulation to individual memories. Once blindfolded, customers begin free associating as essential oils are presented to the nose. Each client's responses are added to a database, and a complex algorithm produces a set of oil blends that appeals to different contexts.

The process is fairly simple. Let's say a client requests a customized holiday fragrance. She is taken to an analysis studio where she rests comfortably in a large reclining chair. She is then blindfolded and presented with several dozen familiar holiday scents — pine, peppermint, chocolate — and several other less obvious examples. Her feelings are recorded as each scent is presented. Some aromas may recall wonderful memories, while others may hold no association. Some may be unpleasant. Once the process is complete, the computer analyzes the results and recommends an essential oil blend customized for her. A sample is made for her to take home and test. If approved, that blend can be added to a wide array of products — candles, room sprays, potpourri, and hundreds more. The blend is kept on file, and she can order new products at any time from a large online menu of available options.

Customers might begin the process with one session of olfactory analysis, then add another to collect more data and produce more blends. A client might request a perfume blend that makes her feel powerful. Some time later she might create a blend that helps her relieve stress. Any type of emotional response can be analyzed. Each time the process is completed, the data is used to create an original scent that's added to soaps, lotions, massage oils or whatever the client needs.


Engage The Mind: Creating Cognitive Value

We are creatures of curiosity. We want to know, to learn and to figure out. Entrepreneurs who satisfy our desire for knowledge can create new and wonderful offerings that create deep relationships with their customers.

One of the most striking recent advances in this type of service is the Internet itself. As millions of people create billions of webpages they add to the accumulated, searchable knowledge of mankind. Everyone with access to the Internet has the opportunity to find and learn about whatever they want. Curiosity has been freed from the limitations of printed material, giving entrepreneurs an opportunity to create a more knowledgeable clientele.

With all this available information, we have come to rely on curators. Those bloggers and news outlets that we return to again and again have become docents in a mental museum, showing us the things that they believe we will find useful, engaging or relevant. Entrepreneurs who create cognitive value can also engage customers in new ways, securing a more focused, attentive audience.

In addition, those entrepreneurs who provide information can be seen as more trustworthy, more knowledgeable and more proficient. If your business offers useful tips, describes novel uses for your products or creates opportunities for people to engage your services more fully, you further differentiate yourself from your competition.


It’s becoming harder and harder to come up with new ideas in the restaurant space. The marketplace has been saturated with wonderful innovations, from chemical gastronomy to cuisine from the most remote cultures.

Gary, a talented chef, wanted to open his own restaurant, but didn’t have the funds to start one himself. He developed relationships with a number of local eateries who agreed to let him create “pop up” restaurants on days they were closed. Gary also had a more than passing interest in history and thought he might be able to attract customers using the “when” of food rather than the “where” that was already in use by so many of his competitors.

Each week, Gary created a menu from a specific historical era. Foods from Ancient Rome, the Middle Ages, the Renaissance, early America and many other periods were assembled into unique dining experiences for history aficionados.  Menus were meticulously researched, ingredients were located and preparation methods were reconstructed as accurately as possible.

Reservations were capped to keep each table to a single sitting. Historians were invited to speak to the assembled guests as the meal progressed. They told the stories behind how various ingredients were obtained and the dishes were prepared, while providing descriptions of the culinary customs of the time. Artifacts, slideshows and costumes completed the presentation, giving guests a remarkable glimpse into cultures long past.