Vino for money


Imagine an organisation wants to find out the value for money they are offering their customers, would they look at the total cost of their service, or the VALUE adding portion of that cost.

The above example shows how value is not just the immediate qualities. Each unit comprised of 75cl of actual wine. But as the price of the unit increases, the total proportion of the money spent on the actual wine increases disproportionately. I infer from this that if you are interested in more than getting plastered, then buy as expensive as you can afford, as the value you can get is hidden not in the total cost you spend, but in the proportion of that cost that goes on the cost of the actual wine.
I’m no economist, but to me this shows how organisations, particularly those in the public sector, can be misled repeatedly into measuring completely the wrong thing when they are looking at far more complex services.

If they look at the cost, and what it appears they do for that cost, and they do look at those two things, they will come to incorrect and misleading conclusions about value for money.

  • In wine the value is hidden in the true value of the wine in the bottle, not the total costs.

    In work, true cost is hidden in the end-to-end service delivery not in the bits that appear in budget books.

  • The value of the wine is not in there being 75cl of alcoholic grape juice. The value is in the quality of the wine.

    The value of a service delivered is not in whether a call was answered, a form completed or a client processed. The value is in what difference it made.

The true value for money of services would surprise managers as much as finding out that expensive wine is much better value for money than cheaper wine.

This entry was posted in data, statistics, systems thinking and tagged , . Bookmark the permalink.

1 Response to Vino for money

  1. Hodgey says:

    The key is to measure the relevant balance of quality and price through the procurement process. So if you need a high quality wine you might evaluate at 80% quality and 20% price, if your main requirement is to get plastered you might evaluate at 80% price 20% quality. If you only measure price and quantity of wine you’ve no idea if you are getting what you require. While it may be true that you get what you pay for it should never be taken for granted and quality must always be tested; by doing that it may be possible to find the same quality at a lower price.


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