Value Creation: The Best Approach To Wealth Building
Value creation is the oft overlooked concept that will help anyone achieve wealth and financial success. It’s value creation, not hard work that makes people become rich. After all, so many people work really hard. Yet they remain poor.
Now you may be working hard, really hard. But that’s not the point. The main issue is what are you working hard at? If you’re putting energy into something that doesn’t create value for many people, then you’ll not become wealthy. Pure and simple.
So many people are out there wondering why things are not working for them financially. Things are so challenging that they think they’re born unlucky. Some even think someone has stolen their destiny or their progress in life. I disagree. Once you tailor your efforts towards creating value for others you will start to become wealthy.
Let me attempt to take the discourse further:
What is Value Creation?
Simply defined the word value means “benefit.” It’s a concept where businesses focus on giving as many benefits to as many consumers in exchange for money.
According to the Evergreen Business Weekly, business begins with value creation. It is the purpose of the institution: to create and deliver value in an efficient enough way that it will generate profit after cost. In other words, value creation is the foundation of business.
Value creation is the aim of any business entity. Customers are value driven, seeking benefit for every purchase or investment of time and money. The more customers who value your efforts the richer you will be.
The 7 types of Value Creation
John Spacey of simplicable.com has provided us with an excellent expose into the different types of value that can be created. This include:
- Information that is timely, accurate and credible;
- Creating products/services that meet needs;
- Providing customers with experiences;
- Processes and practices that achieve objectives and goals;
- Reliability;
- Quality of life; and
- Reduction in risk
Consumers are ready to spend money getting all the benefits listed above. Imagine if you could focus on one and provide the benefit for as many people as possible. You’re firmly on the road to wealth!
The process of creating value
Value creation is definitely not rocket science. It’s a process that in it’s simplistic form consists of the following steps:
- Researching and understanding customer needs and pain points;
- Taking a deep dive into what competitors are offering;
- Crafting and testing a solution that meets their needs and is an improvement on competition’s;
- Packaging, pricing and distributing your solution/product to as many customers as possible;
- Continuous monitoring of trends in order to continue incorporating changing customer needs and requirements into your product
Remember also that today’s great product/service will be history tomorrow. Value creation is not static and the process is never ending. The wealthiest people continue improving their offerings. They’re not afraid to discontinue something that customers have moved away from. They’re willing to restart the process over and over again.
The King of Value Creation
No one sums up the value creation approach to wealth building more than Jeff Bezos. The founder of Amazon is currently the richest man in the world with a net worth of $131.4 Billion.
Bezos saw value in creating an on line book store, and in 1993 established Amazon. Today the company has expanded its footprint into millions of products. In fact, more than 600 million products are currently on the site!
What’s most phenomenal about Amazon is the fact that every year since 2004 its revenue has been increasing. The company did $233 Billion in 2018, up from $180 Billion and $134 Billion in 2016 and 2017 respectively.
Amazon is relentlessly focused on long term growth. There is a serious focus on continually creating value in the organization.
Creating value is synonymous with meeting needs and solving problems
One tested pathway to value creation is by finding out what the needs of many people are and creating a solution. Your solution can then be exchanged for the monetary value your customers are willing to pay for it.
This is precisely the strategy most billionaires are using to create wealth. Gates, Zuckerberg, Walton, Dangote and so many others are involved in ventures that meet the needs of lots of people. No wonder the wealth is concentrated in their hands.
Creating value trumps any other alternative road to wealth
There are several roads to wealth and riches. I actually identified eleven in a previous post. Those that don’t require value creation include marrying a rich person, running for political office or going into labour unionism.
Those who become rich this way are in the minority when it comes to the world’s richest. The world’s richest are actively involved in creating value. It’s definitely the surest route to making it big financially.
Value can be tangible or intangible
Value means different things to different people. It can be tangible, for instance a great price relative to competition. Or it can be the opposite. For example, getting a message from my bank on my birthday may make me feel valued.
Every product’s value is definitely made up of both elements in the mix. It all depends on the customer’s perspective. A good understanding of customers is useful in creating value that they’re ready and willing to pay for.
Creating value affects all aspects of the business
I believe Gautam Mahajan sums it up best in his article, “What is Customer Value and How Can You Create It? Creating Customer Value increases customer satisfaction and the customer experience.
Creating Customer Value increases loyalty, market share, price, reduces errors and increases efficiency. Higher market share and better efficiency leads to higher profits.
In conclusion, so many people pay lip service to the concept of value creation in business. These people tend to underestimate the power the customer has over the success or demise of their enterprise.
The timeless wisdom from Mahatma Gandhi continues to ring true today. He is quoted to have said in 1890, “A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He’s not an interruption on our work. He is the purpose of it.”
“The customer is not an outsider on our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so.”
Thus it pays to serve the customer by creating as much value and benefits for him/her. The customer is willing to pay for your offering as a direct correlation to the value you have created. This is the best approach to wealth and financial success.
Note: This article originally appeared at MoneyTalkNG.
Category: Personal Finance
