Value and value co-creation

Value is the word ITIL uses more than any other, and for good reason. Every service exists to enable value, every practice should contribute to it, and every improvement should be judged by whether it increases it. Yet value is also one of the easiest terms to misuse. This lesson gives the ITIL definition, explains why value is perceived rather than fixed, shows how value is co-created by providers and consumers working together, and introduces the idea that value can be created for many stakeholders, not only paying customers.

Defining value

ITIL defines value as the perceived benefits, usefulness and importance of something. Three features of that definition matter:

• Perceived: value exists in the mind of a stakeholder. Two customers can use the same service and judge its value very differently.
• Benefits, usefulness and importance: value is not only about money. A service can be valuable because it saves time, reduces anxiety, supports a legal obligation or simply makes work more pleasant.
• Of something: value attaches to a thing in a context. The same mobile banking feature may be very valuable to a commuter and of little value to someone who prefers branch visits.

Because value is perceived, a provider cannot declare that its service is valuable. It can only design and operate the service so that consumers are likely to perceive value, and then check whether they do. This is why feedback, measurement and conversation with consumers sit at the heart of service management.

Value is subjective and changes over time

Perception depends on context, expectations and alternatives. A video-calling service that seemed miraculous in 2015 now feels ordinary; the same features are perceived as less valuable because expectations have risen. A sudden outage can lower perceived value for months even if the service is reliable afterwards. Competitors, social media and personal experience all shape what consumers expect.

Different stakeholders in the same organization may also perceive value differently. For a hospital scheduling system:

• Clinicians value fast, accurate access to appointment lists.
• Patients value short waits and convenient reminders.
• Finance values lower administration costs and fewer missed appointments.
• Privacy officers value strict control of personal health information.

A good service balances these perceptions. Optimizing for one group at the expense of all others rarely produces the most value overall.

From value delivery to value co-creation

Older thinking described providers as delivering value to passive consumers, rather like a factory shipping goods. ITIL 4 replaced this with value co-creation: value is created through active collaboration between providers and consumers, and often other organizations in a wider network. ITIL (Version 5) keeps this idea at its centre.

Consider an online course. The provider designs lessons, runs the platform and answers questions. The learner sets aside time, works through lessons, does the practice questions and applies what they learn. If the learner never logs in, no value is created, however good the course is. If the platform is down at the learner's only free hour, value is lost even though the learner is willing. Value comes from both parties doing their part.

The consumer's contribution

What does the consumer contribute? It depends on the service, but common contributions include:

• Information: accurate requirements, correct personal details, clear descriptions of problems.
• Effort and time: learning to use the service, following procedures, testing new features.
• Resources: their own devices, network connections, data or staff.
• Behaviour: using the service as intended, keeping credentials secure, reporting issues promptly.
• Feedback: telling the provider what works and what does not, so the service can improve.

When providers design services, they should make these contributions as easy as possible. A form that asks for the same information three times, or a help page written in jargon, increases the consumer's effort and lowers perceived value. Much of good service design is about reducing the work consumers must do to achieve their outcomes.

Value for many stakeholders

A service usually affects more people than the person paying for it. ITIL encourages providers to consider value for all stakeholders: consumers, the provider organization itself, its employees, partners and suppliers, investors or funders, regulators and society. ITIL (Version 5) puts more emphasis on this wider view, including environmental and social value, reflecting the growing importance of sustainability in how organizations are judged.

Sometimes value for one stakeholder conflicts with value for another. Cutting driver numbers may raise investor returns in the short term while lowering service quality and harming drivers. Mature organizations make these trade-offs openly, guided by governance and by an understanding of what value means to each group.

Value includes costs and risks

Value is not just about benefits. A consumer weighs what they gain against what they give up and what might go wrong. A service that delivers useful outcomes but is very expensive, or that exposes the consumer to unacceptable risk, may have low overall value. Lesson 5 examines outcomes, costs and risks in detail; for now it is enough to see that value results from the balance between them.

This is not a formula you compute. It is a reminder that value depends on several factors that consumers weigh together, often without thinking about it consciously.

Recognizing value in practice

How can a provider tell whether value is being co-created? Some useful signals include:

• Consumers keep using the service, and use grows without heavy promotion.
• Consumers achieve the outcomes they set out to achieve, measured directly where possible.
• Feedback and satisfaction scores are stable or improving.
• Consumers recommend the service to others.
• The provider's own goals, such as revenue, efficiency or public mandate, are met.
• Stakeholders such as regulators and the community are not harmed and ideally benefit.

No single signal is enough. A service with high usage may be used only because consumers have no alternative. A high satisfaction score may hide a small group of users who are badly served. Lesson 10 introduces measures that help build a balanced picture.

Value in the Foundation exam

Exam questions on value usually test three ideas. First, that value is perceived by stakeholders rather than fixed by the provider. Second, that value is co-created through collaboration, so a question describing a passive consumer receiving "delivered value" is describing the older view. Third, that value involves outcomes, costs and risks together, so the cheapest or most feature-rich option is not automatically the most valuable. When a scenario asks which option creates the most value, look for the answer that balances outcomes, costs and risks for the stakeholders described, and that involves the consumer actively. Distractors often mention only price, only technology or only the provider's view.

Finally, remember that value can be destroyed as well as created. A service that wastes consumers' time, exposes them to risk or damages trust reduces value, even if it produces outputs on schedule. Providers should watch for signs of value leakage, such as rework, complaints and workarounds, as carefully as they track signs of success.