In modern society, the digital age and technological advancements have revolutionized value creation in the corporate world. Companies are bringing value to products and services through more creative means including utilizing the population at large to interact with their product, according to a article in Forbes.
For example, companies such as Facebook, Twitter, Pinterest, and other social media websites utilize their network of users to create content. Uber was able to create a network of drivers in which they did not take on the cost of providing vehicles or taxicabs while charging passengers through a mobile application.
Airbnb also utilized a similar network of homeowners who were looking to make money by providing temporary housing or a bed-and-breakfast experience. Netflix or Google provide digital platforms in which tangible products are unnecessary and their value creation is sold via ideas. These companies are relying on a network of people around the globe to offer their services and grow their business. This allows the companies to scale more and become more profitable due to lower start-up costs.
If you’re looking to develop useful products or services for your customer base much like the social media giants of today, it is vital to understand value creation and define it properly. Below we examine the real meaning of value creation for companies of all kinds.
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How to Define Value Creation for Your Business
Essentially, value creation is a major aspect of ensuring your products or services provide a solution for your customer base and hold meaning for your clients. This helps sell more products or services and, thereby, increases value for shareholders due to higher stock price.
In addition, value creation is defined by the brand of a company and drivers such as people, ideas, and innovation. Therefore, understanding the source and drive behind value creation for your particular company is key for bringing greater value for your customers. This will also lead to greater growth for your organization.
When you are attempting to create value for your business, remember the fact that the digital age is now relying less and less on asset-heavy corporations and companies running on applications and websites are taking over the competition. For example, retailers are finding it more difficult than ever before to compete with Amazon since it requires no stores and only storage facilities.
Everyday consumers are no longer interested in owning more and more unnecessary products such as DVD players or even printers. The Digital Age via companies like Netflix and Google have made such products obsolete and consumers have embraced simplicity in their life instead. More companies are also relying on employing contractors and freelancers instead of full-time workers.
Utilizing these aspects could go a long way toward allowing your company to have fewer expenses and, instead, gain greater profit. Employing the network of users to create content will also build value and you will find that your contributors are not even employees. This can be seen in companies such as LinkedIn, Facebook, or even eBay where individuals can buy and sell their own goods through the digital marketplace.
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1. Determining the Value of Your Business
When you are looking to find out the value of your company for your clientele, it is vital to consider value creation for the future, according to the Harvard Business Review. While the past view of value included mass production and efficiency in automation, the future of value creation will involve “economies of creativity.”
This means greater customization for each particular client, adding product or service improvements on a regular basis, providing solutions to customer problems, and developing new and innovative ways to sell or deliver a product to market.
The corporate world has already perfected automation and the general effort required to complete a task. Companies around the globe have optimized efficiency and day-to-day tasks to ensure predictable tasks are automated. Things such as data entry, billing, purchasing, and payroll all undertake this type of optimized efficiency. As such, the future of value creation is centered on creativity and innovation.
There are ways to create more value for your business by possibly enhancing the quality of your product or service instead of merely making it cheaper than competitive items. You can also find ways to meet the needs of consumers that weren’t being met before such as the way Netflix enabled the population to stream movies and television shows.
You can also find ways to utilize the many solutions already available in the Digital Age. For example, devices such as smartphones and tablets have paved the way for companies to create mobile applications that benefit consumers in a myriad of ways from faster communication pathways to purchasing everyday items online instead of in a store.
A more recent phenomenon has come from the creation of meal kits in which companies saw a missing consumer need and filled it by providing a meal delivery service straight to the homes of busy professionals. Essentially, value creation for your company will revolve around solving a problem for your consumers and becoming more creative in meeting their needs.
Based on the Harvard Business Review article, you’ll need to incorporate systems that support innovation and creativity 24 hours per day, seven days per week. These systems will also need to incorporate an increasing scale so that you can grow the innovative side of your company.
Your company will need to constantly keep up with changing consumer demands and essentially be customizable toward solving new problems. However, harnessing the networks available in the Digital Age will help you better align potential solutions to consumer needs.
Essentially, the value chain will take over the supply chain, according to the Harvard Business Review, since the scale of your system will have to meet the ever-changing desires of your consumers. This will become a necessity in order to optimize innovation.
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2. How to Add Value at Your Company
Now that you have a better understanding of value creation and how you can implement it in your business, you will want to follow a number of different steps that will add value to your company. When searching for financial success, one step you can take is to increase the speed at which you deliver the products or services your customers are willing to pay for, according to a Entrepreneur article.
This was clearly seen with pizza delivery companies of the past that promised your food to be delivered in half an hour or a reduced price for the meal. People are willing to pay more for faster delivery whether it is food or other products. Companies that complete something quickly are considered to be more capable than their competition.
Another way to add value at your company is to ensure your products and services provide better quality than your competitors while offering the exact, same price. This means you’ll want to conduct some studies and better understand what exactly your customer is looking for in terms of quality.
Quality involves considering the utility of your product as well as its design. Essentially, the benefit or use a customer gets from your product is vital for determining quality.
You can also provide more value to your customers by increasing the convenience of buying or using your product. Companies like Amazon and eBay have circumvented the need for brick-and-mortar stores, which has given shoppers greater convenience since they no longer have to drive, spend hours in a store, or wait in a line before purchasing the product they choose.
Other companies that sell meal kits have also created greater convenience for busy individuals who do not have much time to purchase groceries on a regular basis. Fast food restaurants have also made grabbing a quick bite to eat much more convenient for families around the globe. If you can add convenience when selling your product or service, your business will stand out from the rest.
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3. Incorporate Value for Your Company through Work Management Solutions
You will find that you can create more value at your company by investing in project management software that will benefit your workers by streamlining and bring convenience when completing day-to-day tasks. For example, Runrun.it software can simplify how you communicate across teams and bring more value by meeting your employees’ needs due to its quality time tracking tools and dashboards.
This software program is web-based and workers receive notifications for each project they work on with a timeline tracking how the project is moving along. The Runrun.it software system logs workers’ time spent on a project automatically. Tasks are tracked to see if deadlines have been met, what has been sent back due to quality problems, and the number of projects that were completed.
Every user also has access to a customizable dashboard in which they can track metrics based on their personal success or the company’s goals. In addition, the dashboard provides information on the amount of revisions a project undergoes.