While the goal of most businesses is to earn a profit, doing that without focusing on value creation is a formula for failure in today’s market.
Value can be seen as intrinsic worth that isn’t strictly tied to monetary gain. Value creation can deliver business success by improving the customer experience, upgrading the workplace environment, and enhancing shareholder returns.
Let’s explore what value creation is and how it can lead to increased business success.
- Value creation is focused on improving value in three areas: customers, employees, and shareholders.
- Businesses with a strong focus on value creation typically have more satisfied employees and better job creation and retention rates.
- With a dedication to creating value, most businesses also work towards reducing waste, both in employee time and resources.
- Value creation also works well with promoting ESG goals and sustainability.
What Is Value Creation?
A business cannot dictate its own value. It is customers, employees, and stakeholders that establish its value. However, businesses can improve their perceived value using value creation principles.
Value creation should be a primary aim of any business and should focus on increasing value for customers, shareholders, and employees. When this happens in all three areas, businesses experience success.
Image Source: deskera.com
Creating value for customers means producing products and offering services that customers find useful and want to keep buying. For employees, value creation is fostering healthy work environments and receiving attractive benefits and compensation. For the shareholders, value creation means attracting new investment, which leads to increased profits.
Each of these areas affects the others. When employees are happier, the quality of products and services increases, and profits go up. With these things in place, a company’s value should naturally increase.
One of the best examples of a company’s dedication to value creation is Apple. When it released the first iPhone, it convinced customers that it was something that would improve their lives. Since then, Apple has created one of the most loyal customer bases with a loyalty rate of over 90%. It is also one of the most valuable companies in the world and is considered an excellent place to work. Apple has fulfilled all three principles of value creation to achieve its success.
4 Benefits of Value Creation
The key to successful value creation is a long-term perspective. There may be times when it seems like your strategies are failing. However, by promoting a positive work environment that also improves the customer experience and shareholder dividends, your work should pay off in the end with a solid reputation and increased profits.
Here are 4 benefits directly related to value creation.
1. Job Creation and Retention
A business with inherent value recognized by its customers, shareholders, and employees is likely to have more success and create more jobs than those that don’t. Recently, McKinsey found that over a 15-year span, companies that created more value for their stakeholders also had better employment growth.
Image Source: McKinsey
Businesses that try to increase profits by skimping on the workplace environment will have difficulty attracting and keeping quality employees. High turnover rates and low-quality employees lead to lower quality products, a damaged reputation, and fewer profits.
With a positive working environment, your employees will be encouraged to stay on the job. Increased job satisfaction is fostered when employees feel appreciated and valued. One of the simplest ways to ensure you are keeping your employees happy is to ask them what they need. Routinely send out anonymous employee surveys to uncover pain points and then work quickly to resolve those issues.
2. Improved Efficiency and Productivity
Another benefit to value creation for your employees is increased productivity. As job satisfaction improves, this typically increases productivity and efficiency.
Your business can make small changes to encourage productivity and enhance job satisfaction:
- Provide ample break time
- Identify which employees need more training
- Have employees work towards deadlines
- Avoid unproductive meetings
- Focus on consistency instead of perfection
- Encourage exercise or stretching during breaks
- Create an organized and visually appealing workspace
3. Reduces Waste
A natural progression of value creation is a reduction in waste. As you improve the efficiency of your workforce, you may discover inefficiencies in your supply chain and use of resources.
Some businesses overlook the use of some resources because they don’t have an easily identifiable monetary value. However, finding ways to reduce waste can improve the bottom line.
Here are some simple ways to reduce waste in your business:
- Reduce packaging: Do you use packaging materials for your products? Finding ways to reduce the packaging, reuse materials, or use alternatives can save you money.
- Eliminate bottled water: By providing your employees with reusable water containers and plenty of places to refill, you could save money. Bottled water costs dramatically more than tap water and produces a significant amount of waste.
- Audit your business: Take time to audit your business and see where you can make changes. How much trash are you throwing away each day? Are there water leaks somewhere? Unnecessary paper being printed? Id good waste being thrown away instead of composted?
4. Promotes ESG Goals
Many businesses are being encouraged to become more attractive to investors by creating ESG goals. These are goals focused on environmental, social, and governance factors. With a commitment to value creation, these goals should be easier to achieve
Some employees, customers, and investors consider a business’s ESG goals before partnering with them. They want to make sure a business is focused on improving employee satisfaction, creating environmentally friendly products for their customers, and delivering profits in a sustainable way.
This video explores how ESG adds value to a company.
Enhance Your Value Creation with Televerde
Improving your business practices with a focus on creating value for everyone will create a better, more sustainable future. Choosing the right partners is an important part of the value creation process.
At Televerde, for example, we are committed to transforming lives by investing in the futures of incarcerated women. We also use our marketing and sales expertise to help businesses grow and positively impact their communities.
If you are ready to add more value to your business and make positive changes, Televerde can help. Contact us today to learn more about our unique approach to business and revenue growth.