Module 1

Value Creation

The definition of value creation is giving something valuable to receive

something else that’s more valuable to you. This definition is broad and
captures both costs and benefits. Further, it applies to owners, customers, and
employees.

Isn’t it just profitability? It might be for shareholders of large businesses but

becomes less true for small businesses. A shareholder of a large business may
only care about profits. It’s a component in their investment portfolio and its
only role is to enlarge their wealth.

Some investors have gone beyond that to impact investing and want more than
just income from their investment. This has led to the rising popularity of B-
corporations. Impact investing and B-corporations balance financial returns
with producing a public benefit. They are driven by both mission and profit.

Value creation must be defined very broadly for small businesses because their
owners define value in many ways. Small businesses have even more non-
financial definitions of success. You have the freedom to define value creation
of your company for your specific values.

It may be how you can live out your values or achieve goals you couldn’t do
individually. You may want time or freedom. It may be your status or position
in the community. Owners often have a deep devotion to employees and are
willing to provide for them even if it means reduced profits.

Value creation for customers

You get value when you give value. Your business will only succeed if
you provide great value to both your customers and to employees.
Think of it this way:
Businesses fail when they can’t produce value for both owners and customers.

At one extreme, you could create a product with high value to you but
customers don’t see a need for it. You don’t make sales, which means you don’t
create much value for you.

For example, a business owner could create a high-tech gadget at a high price.
It’s a business failure if customers aren’t willing to pay the price or don’t see a
need for the device. These owners aren’t serving their customers and they aren’t
earning profits. They haven’t created value.

The other extreme provides value to customers but no value to owners. Owners
do this when they provide their services or products at prices near or below their
costs. The company is very business making little profit or cash flow. This
owner would need to find some other source of value to justify this. This may
be viable if it’s part of a larger pricing strategy that provides profits later.

The products often devastate company profits. Financial analysis has proven
many “great ideas” to be earnings disasters.

Value creation from how you build your business

Committing to what’s best
Many owners want too many good things because they haven’t committed to
what’s best. You can’t have it all. An old saying is “The person who chases two
rabbits catches neither.” Wouldn’t it be better to get the largest amount of what
you want the most?

It is necessary to clarifying your personal aspirations and the purpose (or aim)
of your company. The rubber meets the road of that purpose when you commit
to it at the expense all else. Saying yes to everything means saying no to large
amounts of what you value most. You must commit and be willing to make the
tradeoffs.

Clarity of purpose produces elegant simplicity. As the saying goes, “When your
vision is clear, the decisions are easy.” You aren’t wasting your time, energy, or
money. Your company focuses on providing that profitable overlap of what you
value and what your customer values.

Supportive team
You don’t achieve your goals alone. You need the support of mentors,
contractors, and employees. All but the smallest companies rely heavily on the
support of their employees.

We can’t just provide value to our customers to succeed. We must also provide
value to our employees.

Is this value just having a job and getting a good paycheck? It’s enough for
getting their bodies to show up for work but not their hearts and minds. They’ll
give the minimum when they’re given the minimum.

Effective employees want purpose, not just paychecks. You want employees
that are internally motivated to provide value for your customers. Employees’
parts in what the company is creating energizes them.

Money is a weak motivator. In research done by Sylvia Hewitt, she found that
both Boomers and Gen Y found motivators like “a great team” and “the ability
to give back to society through work” to be more important than money.

Value Creation in Terms of Special Events

Like any other area of business, values creation is essential for Special Events
also. Without value creation the event organizers will not survive in the market
both in the short run as well as in the long run. Value creation will enhance the
business of event management. There will be good growth and development of
the Event Management Enterprises which will attract clients, sponsors, vendors,
media, target audiences and various stakeholders of the event management
industry. Henceforth, value creation is of prime importance for event
management industry.