Value & The Placebo Effect

Category: Monthly Article
Category: Monthly Article

Value & The Placebo Effect

Imagine there are two types of value: inherent and perceived.

Inherent value is the actual characteristics of an entity — like the type of steel alloy used to craft a golf club, or how many years an attorney’s been practicing law. These are hard numbers or facts that communicate concrete, tangible worth.

Perceived value is more complicated, because it’s open to interpretation. It’s how much the market is willing to pay for commodities today versus tomorrow. It’s weather Harvard or Yale was a better college choice. Perceived value is implied value, that while incredibly significant, can't be measured or qualified as easily as inherent value.

Perceived value closely aligns itself with the Placebo Effect — the idea that an entity which contributes “nothing” can have a positive effect on an outcome.

In recent weeks, I learned how the Placebo Effect can make you choose one brand over another. I’ve also seen how the perceived value of my presence on a job site delivered much more inherent value than I’d anticipated.

The Placebo Effect and Brand Loyalty
Want clear skin? Use Clearasil. The branding stuck with me. And I’ve used Clearasil pads for my face since I was a kid. That’s another small coincidence my wonderful wife and I share — we both swear by Clearasil.

But the other day, our store was out of Clearasil pads — and so were we. So we wound up picking up the competing brand, Stridex.

One look at the ingredients on the back of the package and you’ll see these pads are basically made from the same thing. However, my wife doesn’t believe Stridex pads work as well as Clearasil.

As much as I hate to disagree with my wife, I know that both products are pretty much equal. Logically, there’s no difference. However, somewhere inside me, there’s a trigger reaction that wants to agree with her — Clearasil must be far superior to Stridex. Otherwise, why would I use them all these years?

I kept thinking about it and then realized something: there is one difference in these products. The Clearasil pads have a scent of rubbing alcohol. The Stridex pads do not.

The smell of alcohol makes my wife and I think we’re cleansing our faces better. While the ingredients are exactly the same, we literally feel a difference between products.

For better or worse, Clearasil clearly has a placebo effect on my wife and I. This realization inspired me: how can this same type of value be created in the workplace?

The Value of The Placebo Effect in Business
One of my clients recently upgraded Worldox from GX3 to GX4. This is a standard update, and the procedure is usually done remotely. Why? It’s just cheaper to send your computer systems out for the upgrade then to bring me in and actualize the labor.

This client insisted on me being there. I was transparent about the expenses and cost of my in-person services — and the client still chose to bring me on-site.

We finished the job and before I left I had to ask why they wanted me on location. Travel is fantastic, and we’re flexible about where and how we perform work for our clients — I was just curious why.

Here’s the reason they gave me: “When our people see you walking around, they feel better. Knowing you are here and overseeing the update makes them feel less worried.”

With all the reasons you’d prefer an on-site visit to a remote workflow, I hadn’t stopped to consider the value of my presence.

The Placebo Effect in Action
Some value is obvious and inherent. Perceived value is created — through presentation, observation and the placebo effect. How can you put this placebo effect to work in your professional practice?

Remote teams can hold regular teleconferences. Sure, all your communication about work can be in IM and emails. But when you have an all text workflow, there’s no personality. Video chatting and conference calls can build your company culture. Create total integration between people and their co-workers.

If you’re the boss, but your business needs help, don’t be afraid to get your hands dirty. If a sales model isn’t working, burn it to the ground and start from scratch. Pick up the phone and do some outreach. There is a time to delegate and a time to act. Even if your individual effort doesn’t make a huge dent in the problem, your actions can inspire your team. Be flexible about solving problems.