When Is Value Created?
When some actions are performed which increase the worth of some goods or services. That increased worth enhances the value of those goods or services. This is value creation. The work done through those actions can be physical, mental, mechanical or creative.
When we create something, when we solve some problem, when we help somebody, when we relieve someone’s pain, we create value.
The beneficiary of that value can be an individual or an organization. When a customer’s life becomes easier because of a company’s product or service and considers the money spent as worthwhile, it is an instance of value creation.
Some Examples of Value Creation:
– When regular tap water is filtered, filled in small bottles and made available at far-flung areas as an easily accessible tool to quench thirst, those actions create value.
– When food is prepared from some ingredients and made available in restaurants or at events through catering services, it increases the value of the ingredients used.
– When plastic granules are molded into some useful household articles, that increases the value of the granules.
– When a doctor studies the science of medicine and surgery and provides services to heal people’s diseases, that service alleviates some pain. That is value created.
– When somebody sings a song, plays an instrument and makes some beautiful music, that is value creation.
– When someone teaches someone something or entertains through their live performance, audio or video mediums, that is a form of value creation.
– When one assembles some words meaningfully and creates some useful content which could inform, educate or entertain, that act creates value.
A Business Is a Tool of Value Creation
Businesses align resources to perform some tasks which produce some goods or services customers are willing to pay for. They are organized tools to create value. Every business intends to create value. But every business does not succeed in doing so. Some fail to create value. They destroy value because all the material and labor spent in making something fails to create something useful.
The business building process ensures that a business creates value consistently. It requires planning, organizing and executing. The size of a business depends upon the number of people it provides value to. Some businesses can scale up to create value for a large number of customers. Others remain small.