How We Define Business Value

What is the point of business? What is the purpose of all of this?

Certainly when we look back at history, business comes out of solving critical human problems. 

We look at our need for food, our need for medicine, our need for health, our need for transport. All of these different areas create a business.

But there’s this idea that business is about profit. That it’s all about making profit.

And I fundamentally disagree with this principle and approach. I really think business is about creating value and the value that we exchange between human beings, because this goes back to the origin of it all.

And I do think that if we run a business properly, we run a business in a people-centric approach, where we look at the value that we create. You’re creating the foundation to something that sustains itself, because profit comes through the value exchange.

It doesn’t come as a result of just taking it.

In most societies that is called theft and corruption. Something we know all too well in the world today. 

But certainly when we look at the value that we should be creating as a business and how that translates into the value for the other person, I think that’s where the point in value of any business actually sits.

But if we’re able to translate that value, we’re able to increase the revenue. 

Certainly there is the operational element to grow that net profit and ultimately to free cash flow, etc. 

But if I just step back here and look at the broader picture, the big disruption that’s ultimately happened is the product market fit. Which really talks to the value exchange between a company that is providing the service and the customer who needs that service. 

Whether it’s at a B2B level or at a B2C level, it actually doesn’t really matter.

But this disruption that’s happened and the way the market has shifted out: we now have a form of digital that’s really disrupted the integration between these two. 

And you think about black cabs in London – they’re solving the question of where you want to go. This is exactly the same question that Uber is solving. Just done in a digital manner.

We’ve now got this AI disruption coming in. 

So the way that value gets created is redefined. And this is where most companies are really struggling to deal with this challenge. 

It’s this breakdown of understanding what is valuable to the customer: actually understanding how to deliver that value digitally and utilising AI, as well as how that translates into personal value for my staff.

So for me, that’s really what I think business is about and I think it’s a topic that needs far more conversation and just simply saying business is about making a profit. 

It’s about creating value. Which, in turn, translates into profit.

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