The basic assumption of capitalism that companies make money from valuable products is being challenged by recent market changes. Products are no longer considered valuable only for sales’ performance. They must perform well after the sales, i.e. in use, otherwise sales may drop.
The use value (a.k.a. value in use) corresponds to the product applications found by the user. If the user cannot find an application or the product is too difficult to use, the use value is low.
In the long run, this imbalance may also affect exchange value due to the word-of-mouth and product reviews shared between the users. If no one wants the product, the exchange value falls and price becomes the attraction. From this point on, the product loses all its differentials and becomes a commodity that can easily be copied and sold cheaper.
For this reason, organizations are eager to differentiate their products and create unique experiences that cannot be matched. A common strategy for that is to expand products into services. The product becomes part of a service that includes other products seamlessly integrated to support the user. Use value is co-created between the multiple organizations attached to the service, including the user. The major advantage of this strategy is that even if the product can be replicated, the service cannot.
This integration is hard to achieve by companies organized to compete for exchange value, though. The organization is fragmented into silos, and the silos do not communicate very well because communication cannot be exchanged for something else. Each unit has their own product and they are not willing to dissolve the products into a more consistent service. In these organizations, the use value is a distant target that cannot grant direct benefits to work exchanges.
In order to expand into a service with value co-creation, competition must give room to collaboration. This is because only through collaboration unique use values can be co-created. Instead of working with separate objects that are later exchanged internally and externally, the organization works with co-created shared objects.
The organizational boundaries stands on the way to shared objects. Boundaries grow differences between departments or companies to enable competition. When in need of collaboration, a few organizations try to eliminate differences while many others prefer to work with them. Boundary crossing strategies try to reduce differences through integrative technologies or contracts and boundary crossing tactics aim at finding complementary differences through ad-hoc improvisation.
The shared object begins to grow when boundaries become a site for co-creation. This replaces the typical rivalry and fights that can be found at the boundaries. Use value motivates workers better than exchange value because it can be reverted back directly to their producers. People collaborate because they also like to use what they create.
The collaboration for use value does not replace the competition for exchange value though. It is still necessary to be competitive in a capitalist economy in order to get the necessary supplies. Hence every interaction at the boundaries must face this contradiction between collaboration and competition.
An interesting question is how to co-create unique use values while still maintaining a decent exchange value? Such question guided an experiment I run as part of my PhD. The experimented consisted in inviting design students to play a board game about the design of an expansive hospital.
Each player picks a role with a different power and income scheme. This creates an artificial boundary between the players, instigating competition. If the players do not overcome the competitive setup and realize how to collaborate, the hospital is quickly bankrupt and the game is over.
This happens because the design quality suffers when the players are designing with a competitive mindset. In order to win the game as a group, the players need to realize how to maximize the hospital’s use value, represented by the way patients are treated. If patients aren’t satisfied, the hospital and the players do not get money.
The results suggests that boundary crossing tactics are more effective than boundary crossing strategies to co-create use values. In other words, improvisation is more important to collaboration than integration is. This is because over structuring collaboration can easily turn into under covered competition, in which the players holding power over the structure manipulate the others.
The contradiction between exchange value and use value cannot be eliminated. Even when everybody seems to be collaborating, there might be one person with vested interests. This can be healthy if the collaborative structures are fluid and distributed. To secure that, the collaborative work should feed itself, i.e. people should use what they produce. A journal paper about the experiment is on its way to be published.