In principal, business is simple, sell something for more than it costs you too produce it. After that it gets more complicated, but is always tangled up with the word “Value”
It is a word with many meanings to different people in different contexts.
How do we create value?
Value, like beauty in the eye of the beholder, is in the eye of the user. Value means different things to different people in different circumstances, and figuring out how to add value to that customer under those circumstances is the secret sauce of success. The key to value identification is always to be able to see the offer you are making through the eyes of the customer.
How do we deliver value?
‘Value’ is only valuable when it delivers a benefit. If you have the only part in town that will fix a problem, that part only has value installed, it is no good in your toolbox.
The means by which you deliver value varies, and the business models available have exploded. Supermarkets have an entirely different model to a grocery home delivery service. While the products may be the same, and from time to time the customers the same, the circumstances under which they are used will never be he same. AirbnB would not have been possible 10 years ago, two sided markets were simply too cumbersome except in capital intensive applications like a stock exchange. Similarly, the availability of digital versions of books, along with the spoken and traditional print versions deliver the value of a book in different ways.
How do we capture value?
Business is about getting paid for the value delivery more than it cost you to provide it. Again, digital changed the game, just ask anyone in the newspaper business. Deep consideration of the most appropriate business model is required if you are to capture all the available value, and leave your customers happy enough to go again.
Will it be the same tomorrow?
Almost certainly not.
And the day after tomorrow, there will have been substantial change. How you react to or better, anticipate the change will be the measure of how commercially sustainable your business really is.
One more really important thing to remember.
Businesses are inanimate collections of assets and processes that can do nothing by themselves. They need people to make them work, to create the environment that accommodates the four factors above. The old cliche of people being our most important asset has never been truer than in this current environment of accelerating change.
