What is value creation in practice?
Value is a difficult concept because it is such an ambiguous thing and people value very different things in principle. When it comes to value, one thinks about the euro, while the other thinks about the positive impact that their work will have on the world. The practical operation may be the same for both, but the reason for doing things is different.
Many companies have a rather narrow view of the value they produce. In sales-driven organizations in particular, the only measure of value may be the euro below the line, and the discussion about business development may remain at the level: “Selling more and at a better price”. The value generated for the customer and how it is generated may not be better understood.
From the company’s business point of view, value is created when the company has a profit from producing a product/service. How much a customer is willing to pay is affected by how much value the customer feels they receive. The amount of euros spent on production is affected not only by costs but also by how much value employees are able to produce. At the heart of the “value creation” discussions is this dynamic between customer value and production.