A Question of Value

As I’ve said before, the job of business is to create value: value for customers and economic value for the business. And the business model should be designed in every respect to effectively and efficiently create that value. Value is created when the worth of the output is greater than the cost of the input. By the way, there is no middle ground. Everything done in a business is either creating value or destroying it.

BusinessDictionary.com gives five definitions for the word ‘value’:

1. Price times quantity
2. The monetary worth of an asset, business, good or service
3. Worth of all the benefits and rights arising from ownership
4. Extent to which a good or service meets a customer need or want, measured by a willingness to pay
5. Magnitude or quantity represented by numbers

What would happen if each and every employee each and every day focused on adding value? Idly sorting through emails probably doesn’t add value. Creating a report nobody wants doesn’t add any value either. Rework or fixing things that weren’t done right the first time doesn’t add value. Those things destroy value (i.e., costs are incurred but there is no offsetting worth created).

Every day, ask yourself “Is what I’m doing adding value?” If the answer is ‘no’, stop doing it. Do things that create value for someone instead.