In a previous post I explained that innovation is fundamentally about finding ways to deliver superior value. I also explained that value equals the benefits received minus the costs incurred in obtaining the benefits. In short: Value = Benefits – Costs. In this column I will expand on the concept of benefits and describe some ways to think more systematically about them.

The first thing to understand is the distinction between a feature, a function, and a benefit. As illustrated below, a useful way to think about the distinction is to describe a feature in terms of what it is, a function in terms of what the feature does, and a benefit in terms of what the function does for the customer or beneficiary. For example, a feature of a hotel might be its location next to an office building. The function of this feature is to reduce travel time to and from the office building. For hotel guests who have morning meetings in the adjacent office building, a benefit of the function is that it enables them to wake up later in the morning.

Features-Function-Benefit

 

After making the distinction between a feature, function and benefit, you next want to consider the following four facts:

1. A feature can have more than one function. For example, a second function of having the hotel located next to the office building is that it enables the hotel and office to share some parking.

 2. A function can provide multiple benefits to the same customer or beneficiary. Additional benefits associated with reducing the travel time between the hotel and office are that guests can return to their hotel room between meetings and they avoid the cost and aggravation of driving to their meeting.

3. A function that benefits one type of customer does not necessarily benefit another type of customer. Quick access to the adjacent office building is of no benefit to commercial travelers who are doing business someplace other than the office building. Nor is it of any benefit to leisure travelers.

4. The same function can benefit different customers. Consider, for example, that the reduced travel time between the office building and hotel also has value for the office tenants, who benefit by being able to walk to the hotel for lunch rather than having to spend the time and

The feature-function-benefit trilogy is one way of thinking more systematically about benefits. A more comprehensive approach is to create a hierarchy of features, starting with the most general and progressively working to the most specific. For example, you could start with a hotel and subdivide it into its rooms, food & beverage, lobby, and meeting room features. Then subdivide each of these into more-specific features, and so on until you reach a level of specificity that is appropriate to the task at hand.

The next step, after you’ve specified all of the features, is to identify the function(s) of each feature and, in turn, the benefit(s) associated with each function. When doing so, you should systematically consider each of the four facts described above.

Another useful thing to know is that there are four kinds of benefits. Following is a brief description of each.

 1. Practical benefits are those that accrue from the outcomes of a function. For example, as mentioned above, being able to sleep later is a practical benefit of the reduced travel time between the hotel and office building.

 2. Emotional benefits pertain to how a feature-function affects a person’s mood. Turning on soothing music as part of a hotel’s turn down service, for example, has the emotional benefit of making guests feel more relaxed.

 3. Symbolic benefits pertain to what a feature-function means to a customer or what the customer thinks it says about him or her. An example of the latter sort of symbolism is the guest who benefits from staying at a luxury-branded hotel (e.g., a Ritz-Carlton Hotel) because it signifies to others that he or she is well-off.

 4. Cost benefits pertain to reductions in monetary or psychological costs. An easy-to-use radio alarm clock, for example, reduces the aggravation (psychological cost) associated with figuring out how to use it. Ditto for simpler versions of the shower handles and TV remote control units that require an engineering degree to figure them out. (Don’t get me started . . .)

 I’ll end by asking you two questions. Do you think that delivering more and better benefits is critical to the success of your organization? Which method do you think will enable you to identify more and better benefits—generating them randomly and haphazardly or using a systematic framework like the one presented here?