Concept of Value and Entrepreneurship (Part 2): Creating Value

What is Creating Value

If the value we discover necessitates significant reforms, whether internally or industry-wide, we are in the process of creating value. Discovering value requires companies to possess keen insight and strong learning abilities to identify and seize opportunities amid changes. Creating value, on the other hand, demands that entrepreneurs deeply understand their business models, constantly review and identify key potential area, and progress through transformation.

Focusing on the discovered value, entrepreneurs or managers must systematically analyze their business models to identify aspects where innovation can occur. This self-challenge practice and innovative process not only enhance the core competitiveness of the enterprise but also drive the entire industry towards greater efficiency and health.

In this process, we encourage entrepreneurs to dare to make significant changes. Simply adhering to existing industry models and becoming one among many is not true entrepreneurship but rather an ordinary businessman. True value creation does not lie in blindly pursuing market share expansion and short-term profit maximization but in rejecting mere opportunism, zero-sum thinking, and competitive gaming, committing instead to structural transformation of the market and industry.

In the startup ecosystem, the Business Model Canvas is commonly used for business model analysis. Value propositions and customer segment analysis fall under the scope of value discovery, whereas value creation can occur in five areas: customer relationships, channels, key activities, key resources, and key partnerships.

Key Activity and Creating Value

This section focuses on the key activity block. “Key activity” refer to the critical tasks or actions that a company must perform to create, deliver, and capture value for customers and achieve strategic goals. Identifying and defining these key activities is a foundational step in designing and understanding a company’s business model. It describes the most important actions a company must take to ensure its business model works.

In terms of creating value, key activities involve identifying which business activities are most directly related to and significantly contribute to value creation, then investing resources and altering their modes to operate more efficiently. At a deeper level, understanding the value we aim to create requires knowing which part of the process needs sufficient effort and continuous optimization to make a significant contribution to value creation. It is crucial to reassess the value composition of operational processes from the customer’s perspective. Only products and services that genuinely meet customer needs are true value creation.

Creating Value and Core Competencies

Creating value involves more than just strengthening key activities; it must also be enhanced to a competitive advantage and become a core competency. The process of creating value is complete only when a ‘moat’ is built around the created value.

In simple terms, the nature and content of key activities should ideally involve technical tasks with high barriers rather than short-term advantages, making them significantly superior to competitors and difficult to imitate. This can include technical patents, brand influence, customer loyalty, network effects, and more.

Core competencies are not just a simple aggregation of internal resources and capabilities but the ability to consistently provide unique value to customers in a specific field. For instance, Apple’s design and user experience, Amazon’s supply chain management and customer service are core competencies that are difficult for competitors to replicate.

This requires continuous innovation and optimization of core competencies to adapt to market changes and technological advancements. Continuous R&D investment, keen insight into market demand, and flexible strategic adjustments are key factors in maintaining competitive advantage. By continually enhancing core competencies and building a ‘moat’, enterprises can remain invincible in fierce market competition and truly achieve long-term value creation.