Value Creation

Value Creation

The best businesses create the most value for other people.

5 Business Factors

1.     Creates/Delivers Value

a.     Value Creation

2.     That people need/want

a.     Marketing-Demand

3.     At a price they are willing to pay

a.     Sales-Supply

4.     Satisfies needs and expectations

a.     Value Delivery

5.     Profit to continue operation

a.     Finance

Creating economic value requires

·      Products

·      Services

o   Iron law of the market says a large group of people need to have what you offer.

Look before you leap.

·      Core Human Drives

o   1943 Maslows Hierarchy of Needs

5 Stages of Needs

1.     Physiology (lowest)

2.     Safety

3.     Belongingness/ Love

4.     Esteem

5.     Self Actualization (highest)

·      ERG Theory

o   Clayton Alderfers

People seek

1. Survival-Existence

2. Friends/Mates-Relatedness

3. Improvement/Enjoyment-Growth

4 Human Drives + 1 More

o   Paul Lawrence

o   Nitin Nohria

Driven: How Human Nature Shapes our Choices

·      4 Drives

1.     Acquire

a.     Retailers, Investment Brokerage, Political Consultants

                                                                                                     i.         Acquires Status, Power, Influence

2.     Bond

a.     Restaurants, conferences, dating service

                                                                                                     i.         Relationships

3.     Learn

a.     Academic program, Book workshop

                                                                                                     i.         Knowledge Competent

4.     Defend

a.     Alarms, Insurance, Martial Arts

                                                                                                     i.         Protect Ourselves

5.     Drive to Feel

a.     Sensory stimulus, emotional, pleasure, entertainment, anticipation

                                                                                                     i.         Status Seeking

b.     Clients will examine your influence on their social status.

10 Ways to Evaluate a Market

10 Ways to Evaluate a Market