On Tuesday (November 4, 2010), political chatter was all the rage as Republicans gained control over the House, sending a clear message to President Obama that the political landscape had shifted. The Democrats now occupy the US Presidency and Senate while the Republicans dominate the House of Republications.
Most experts wonder if Congress will ever get anything done. As a result of not passing a budget bill in 1995, the federal government was shutdown. With President Bill Clinton and Speaker Newt Gingrich at the helm, the shutdown was fueled by political fighting. Sadly, many people look to the government for all of the answers when their own ingenuity would work.
Yes, the government has an important role to play. I don’t believe that market forces are always the answer to societal problems…the market is not driven by morals or ethics. In fact, find a cheap labor force across the globe and some businesses will abandon their own creed of “America First.”
Individuals need to take control of their lives by developing strategies to produce results. If we are to equip people for the future as scholars, we need to make sure they understand that the future will belong to the aggressor, not the passive in the new economy. During this discussion, we will explore how companies develop value for their customers and how it contributes toward wealth building.
In uncertain times, it’s virtually impossible to navigate the market without fully engaging customers. Any operations that fail that economic maxim of the 21st century will fail. Management guru Brian Tracy argues that the duty of businesses is to create and keep customers: “The two most important words to keep in mind in developing a successful customer base are positioning and differentiation.”
Of course, it was possible several decades ago to create products and services without knowing the customer and later convince them to buy. Many companies during the Industrial Revolution built their success due to scarcity of commodity, limited competition, and uneducated buyers. This is not the case today.
Today’s operations must be value conscious as it relates to the market. Alvin Toffler and Heidi Toffler, authors of Revolutionary Wealth, research how tomorrow’s wealth will be created, and who will get it and the wealth method. Customer value is defined as the ‘difference between what a customer gets from a product, and what he or she has to give in order to get it.’ They argue, “Today’s wealth revolution will unlock countless opportunities and new life trajectories, not only for creative business entrepreneurs but for social, cultural and educational entrepreneurs as well.”
Daniel Spulber, author of Economics and Management of Competitive Strategy, further suggests that value creation is strategic: “Managers must pay close attention to value creation because it is the source of the company’s potential profits. The company generates value by providing products to customers, which it produces both by purchasing inputs from suppliers and supplying some of its own.”
Spulber further outlines a value-driven strategy in three ways: (a) to attract customers away from competitors, the company must provide sufficient customer value as compared to rival companies, (b) to attract key suppliers away from competitors, the company must offer sufficient supplier value, and (c) to attract investment capital in competition with other market investment opportunities, the company must increase the value of the firm for its investors.
Therefore, effectively managing the attribute of value creation will provide businesses with a competitive advantage.
Briefly explain how value creation has shifted from the Industrial Revolution to the Knowledge Economy and what attributes will be associated with wealth creation in the distant future?
© 2010 by Daryl D. Green