Wisdom is not about head knowledge. A wise Man is not someone with ideas but someone who creates and Capture ValueDr. KC Onyima
Value is whatever you do or add that can make a buyer or client to pay you. In one of the videos that went viral, Allen Onyema, the owner of Air Peace narrated how his journey to wealth started. He said that a friend asked him to sell 400 plots of land in Lagos for their community at the cost of N5000. But instead of just going out to look for customers the way agents do, he partitioned the land, registered it, and advertised it. Then he sold the N5000 land for about N10,000 and N15,000.He simply added value and that’s his profit.
Anytime you create, or add value, you get paid. Profit is reward you get for adding value. Every good business exist to create, add or deliver value. A venture is called a SCAM if it makes profit without creating value. So when someone ask you to pay N30,000 and get double in 2 days, the business is not only a scam because they lie to you but because they are not creating any value.
Our economic reward grows by the extent of value we create or add. As well as how customers or people perceived the value. So in today’s class, we shall be exploring different ways of creating and capturing value.
Great businesses are not big businesses. Success in business is no longer about brand but the extent of value they create and capture. For instance, Cocacola is one of the most popular brand in the world, with over 200 billion dollars investment but annual profit is not more than 10 billion. Whereas Google with 54 billion dollars makes almost 20 billion yearly
To be able to create value, find a niche where you seem to have a monopoly. Whether we like it or not, you cannot be rich without playing the monopoly game.
Being unique is the key. Gain monopoly by solving unique problems with unique skills or processes Or serve unique customers with unique products in a unique way.
Create value by redesigning a business operations, marketing, logistics and services in a way that competitors cannot match.
In the past, creating values lie in economies of scale and efficiency in performing repetitive tasks
But in present times, value creation lies in ECONOMIES OF CREATIVITY. That is why start- ups are outperforming big corporations
We can create value not only be having new products but by having better products, better delivery, better options and better mode of selling
The key is to ensure that you are not just doing what other people are doing. No one succeeds by producing commoditized products. Ensure that it’s not easy to substitute your products. Once you make switching cost high, you have started playing monopoly game
Now, one thing is to have a great idea, another thing is to benefit from that idea
Many of us have awesome ideas but sadly, they can only make other people rich and happy without given the owner anything
Value capturing is creating profit for yourself from a particular transaction or business. Thousands of people create value but only a handful captures the value they create.
Most value created easily go back to customers. That is why you need to know your revenue model before you embark on any value creation activity.
Except when you honestly want to serve humanity, putting effort in what will not add profit to you does not worth it
The basic question in any business, any investment, any deal is…what do I gain from it?
Precisely, the value you created is measured by price of the product. Every business or entrepreneur should consider two forms of price views: Perceived value and exchange value.
Perceived value is customers perception of the value of a product which depends on many circumstances.
Exchange value is the real price at which value is exchanged.
To capture value, use good pricing method to your advantage. Your pricing power is your strength
Single or flat pricing does not always help businesses. Develop different prices for different markets, different options, different customers, and different timing
For example, as a fashion designer, the price you charge someone who wants to take her clothes in 2 days should not be same with someone that wants it in 2weeks
Price you charge for students shouldn’t be same with working class ladies.
The strength of your competitive advantage, and possibility of substitutes can affect the amount of value you can capture. Anytime you develop new product feature or any new addition that captivates market attention, do not be afraid to capture value by increasing the price.
Anytime you have new set of customers or customers with different profile, look on your pricing again.
Businesses fail because of pricing their products low but only few businesses have failed for setting right price for each customer segment. If you have the right value, don’t be afraid to charge the right price.
In conclusion, try your best to offer something different from what others offer. Find a way of building a monopoly power in whatever you do. That is only when you can create value and capture it effectively. In this new age, creativity and innovation is the key and not really the size of the business. The rule for becoming rich has not changed.
According to Napoleon Hill, you can only grow rich when you think.Napoleon Hill