Value creation: the fundamentals
This article discusses value creation at the individual level. It explains how creating value by the employee, the entrepreneur or the citizen is essential to achieve success.
The most important thing to succeed
There is only one thing you have to understand to succeed, your professional career, your social life, your emotional life. One thing and one that can get you on the road to success.
One thing that all those who have become rich have applied in their lives in a conscious or unconscious way. And when I say rich, it is rich in money, rich in love, rich in gratitude. And this thing, the majority of people do not consider enough in their life, and that's why the majority do not progress while a minority is enriched on their backs.
I am talking about value creation.
Why you have to learn how to create value
If you do not create value in your life, for the people around you, for the organization that employs you, for the society in which you live, or for your clients, then you are not going to have much to exchange in our capitalist world.
Value creation must be your number one priority and you must be prepared to create value throughout your active life. You need to learn how to create value repeatedly and continuously over time. This notion of endurance is important. If you are looking for short-term solutions that are based on monkey business, luck, illegal or morally questionable behavior, then you may have quick results, but not reproducible in the long run. And you will live in insecurity, risking to lose at anytime what you have won.
The notion of positive value creation balance
The notion of positive value creation balance is also very important: you must create more value than you consume, and you must create more value than you get.
You know it like me, there are plenty of people who only want to take advantage of the system, to assert their rights and to clear themselves of their duties vis-à-vis society. I am talking about those who push the system to its limits, those who seek the loopholes to rush into it. Profiteers .
And I put in the same bag as well the slacker who lives in a calculated way of the social aids that the multinational who scrambles not to pay its taxes in the country where it makes profits while it uses the roads, the infrastructures paid by the community, that it enjoys a secure rule of law to do business.
All these people have a negative balance: they consume more value than they create.
Very often their comfortable situation is not related to their own work, but to their ancestors who started their life with no penny, and and have created so much value that several generations will benefit. But all these people are parasites for ou society. You must see them as a model of success, neither fighting them. You have to get away from them and ignore them, because your priority is to create value b>. And you can not create value if you fight.
What is the point of creating value
Crée de la valeur dans ton travail et tu seras récompensé par une augmentation, un bonus ou une promotion, ou des bénéfices si c'est toi le patron.
Create value in your work and you'll be rewarded with an increase, bonus or promotion, or profit if you're the boss.
Create value for the society you live in and you will fulfill as an individual.
What is value
To be in position of creating valu, it's essential to understand what value is.
Value is the amount of money, or the amount of gratitude, that individuals share at the time of exchanging.
And to fully understand the value it must be separated from the cost of production, the purchase price or the time spent creating it.
- Value creation with supply and demand: if you are a farmer planting apple trees, you have costs in fertilizer, manpower, but when you sell your apples on the market, you will sell them at the market price, defined by supply and demand, perhaps cheaper than your cost to produce them. And if you refuse this exchange, your apples nobody will buy them, they will rot and will be worth nothing.
- Value creation varies per perception : if you become rich and decide to offer a Ferrari to your mother, the gift will cost you a lot of money, but for your mother who found happiness in a simple and frugal life, this gift may have very little value.
- Value creation is linked to the experience of the one who consumes it : if it's Valentine's Day, you will spend hundreds of dollars for a magnificent gift, which will have little value for your spouse, if you are not with him or her for the evening. While if you had spent 10 dollars at the supermarket and prepared a personalized meal with a beautiful staging, it would have been much more valuable to him/her.
- Value depends on the context: I was on a tropical island in a hurricane alert, I saw the shelves of supermarkets empty in a few hours, I saw people queuing long to buy a pack of 6 bottles of water, and I can assure you that with the near danger, in people's minds, the monetary value of a bottle of water, a tin or a flashlight reached heights. And the next day, when the typhoon suddenly changed direction to ravage another island, all the water packs stored in my apartment were worthless (they bothered me more than anything else to take up so much space !).
- Value can also be the gap between expectation and reality
Value creation by employees
When you work for your company 40 hours a week doing just the job rright, you create a certain value, like Mr. and Mrs. everyone, and you are paid back at an hourly rate, daily or monthly, fixed in advance.
But for the company that employs you, you are not an individual who creates value, you are first and foremost a cost line for the company. Because you are not the one who creates value. It's your company that creates value. Your employeer buys your work at a predetermined hourly rate to create a product, that it resells on the market, at the end of a complex value creation process.
In the majority of cases it's this process that creates value. Not you as an individual.
Remember that value creation is the result of a process implemented by an organization. You're right there because the company has not figured out how to replace you with a robot or a computer.
So as an employee, if you want to have an increase or a promotion, the organization that employs you must first of all consider you as a unit that creates value, rather than as an employee who is just a cog in system, a cost center.
If your employer is a community, a government, an association, it works exactly the same: you are part of a process of value creation - in this case non-monetary - that provides a service to society, a service that has a cost, among other things your salary. Your job must yield results with the best efficiency possible: the policeman brings security to his community, the teacher trains the workforce of the future, the ecological association values the potential of nature.
If you are an employee and you want your salary to increase, if you want above average results, then you have to learn how to create more value.
If you're independent or business owner it's even more critical: to get results it is imperative that you know how to create value.
This is the purpose of the Waterfall Revenue project: teaching you how to create value.
How to create value
To create more value, to earn more money, is not to spend more time at work: otherwise it would be easy. You work 25% more time, 2 hours more per day, and you earn one more week of pay at the end of the month. You know very well that it does not work that way.
Earning more money is not just investing, otherwise it would be easy, and banks would lend to businesses without problems.
Value creation is a concept of great simplicity but its implementation is complex
The monetary value can be created in various ways: most often it is a meeting between supply and demand. Today we call it capitalism. But it is the natural way in which exchanges have occurred since humanity existed. It is the extension of one of the fundamental laws of nature: the survival of the living being and its species.
Take animals and you give them a lot of food, they will live peacefully between them. But if food becomes scarce, it will be so valuable to them that they will be ready to fight and take the risk of dying in order to eat.
It is the law of the strongest awarded. The strongest have proclaimed themselves chief, king or emperor and they have monopolized all the riches. Today, the law of the strongest still exists, but it is exercised more at the level of Governments than individuals. And that's good because it has pushed back the violence around the world to give way to the rule of law guarantors of security, which has allowed unprecedented value creation in the economic, social, artistic, scientific.
Make money with value creation you have the choice to do it:
- Creating little value on large quantities
- Or by creating a lot of value on small quantities
It is a strategic choice that you must take
If you choose the quantity you will quickly have a problem: as an employee or business leader, you will always find somewhere in the world someone who will do more for less. Or you will have to have a huge machine behind you to be able to produce more and more.
When you choose your sector of employement or your company, you need to make a strategic choice: it is better to work for the pharmaceutical or aeronautics industry, than for mass distribution or mobile telephony. On the one hand, there are strong margins and good working conditions, and on the other, highly competitive sectors that demonetise, with a lot of pressure at work and little empathy from managers.
As an employee, it is more interesting to develop rare skills, or rare combinations of skills, because they have a lot of value in the job market.
Scarcity must be considered geographically and temporally.
Just as a liter of water does not have the same value in the middle of the desert as in your supermarket, a good programmer will have more value in San Francisco than in Mumbai, a nurse will have more value in Montreal than in Manila, and a skilled Westerner will have more value in Dubai than in Paris.
In your emotional life it's the same: how can you make the desired person understand that you have a lot of value if you dress like everyone else, do everything like everyone else, think like everyone else (moreover if you're a little too available or sticky!).
Valeur et expérience
Value is also a question of experience and perception: let's take the example of a manufacturer of soda. It sells the same product in a glass bottle, in an aluminum can, in a plastic bottle or in bulk in the fastfood dispenser. But the product inside is the same.
As an employee you have to provide a good experience to your employer: if you do your job very well but you are complaining or creating problems, you are not giving the best experience to your employer. And your value will be diminished, regardless of the economic value you produce.
Value is a perception. The problem for companies today is that they have such complex value creation processes that they are unable to know which department, which task, which employee creates value. And which employee destroys value.
The best managers set up a reliable system of indicators, but in reality, most managers and companies rely mainly on their perception to understand the value of people, to such a point that your value is disconnected from the aspects of economic production, to be only the sum of these perceptions.
Perception can be corrected with communication. If you have in the average skills but you know how to communicate well, you should still be able to succeed.
It is also rare to find good professionals who also know how to communicate well. Politics is also a professional sector where there are many people who are not very productive but who can speak very well.
The royal way to create value is to link directly monetary value with the outcome of your work and / or your investments. If you are your own boss, it is imperative or you do not survive. If you are employed and can demonstrate that you directly generate value (real, economic, monetary) then your career will grow very quickly and your income will increase. In that case the value that you claim must be reproducible, well connected to you as an individual and not to the process or function that you occupy, and that if you leave the company, it will be hard to replace you because you have rare skills.
Are you more a creator or a consumer of value?
Now I'm going to ask you one thing: in your everyday life, in your lists of tasks to do at work, and in your personal life, how many are about value creation?
Does the first task on your list concern the creation of value?
Does the first thing you do starting your day have a direct link to value creation?
If that's not the case, I'll tell you something that will not please you: if you want to progress in your life and be rich, you will have to completely review the way you organize your work and your free time. Because if you continue like this, your results will be only average.
If creating value in your professional life (and in your personal life) is not your first priority, you will stagnate in your life, you will not progress as fast as you would like.
To be able to progress in your business, to be able to build social relationships, value creation must be the number one priority of your life.
Remember what I told you: we live in a society of exchange, and for every exchange there is a value creation that takes place. Can be monetary, or just pleasant feelings coming into your life.
When I started putting my priorities on value creation my results were increased tenfold.
The problem is that all day long you spend your time with things that do not bring value. Either you do useless things, or you're just a consumer of value.
Ask yourself: are you a creator? Or a consumer?
Because if you always receive without giving, your life impoverishes, humanly and financially.
Value creation in action
The value proposition of Waterfall Revenue is to teach you how to create value
If it's of value to you, you'll find on the Waterfall Revenue website the strategies and methods to apply in your life to create value.
I will talk to you about:
- Creativity, innovation => change
- Opportunity => positioning at the right time, where others are not
- Differentiation => rarity
- Quality => experience
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