Value Creation

What is Value Creation and why does it matter?
To understand the concept of Value Creation let’s consider the example of an MBA student. A student invests significant time and money to attain a state where he/she qualifies oneself as a candidate with increased knowledge, refined skills and a rich and diverse experience. Value creation is the process of achieving this state of superiority but at a cost governed by several factors like time and money invested during this transition. In simple words, Value Creation refers to the transformation from ‘what we are’ to ‘what we become’ under the assumption that our gains exceed our invested inputs.
In today’s world, Value creation is being looked upon as one of the most important factors to determine the success of any initiative, project and moreover, the organization as a whole. It has turned out to be the primary goal for any organization irrespective of the fact whether it is profit oriented or not. Value creation needs to be implemented in perspective to every stakeholder of an organization that includes the customers/clients, the employees as well as the investors associated with the company.
The term value creation has a different meaning when viewed from the perspective of a customer, employee or investor. A customer sees value being created in a product/service that is innovative, useful and rightly priced. An employee may find value creation in a job that is dynamically evolving and he/she is being given the opportunity to be involved in decision-making process at the project/organization level. Investors find their value creation when they are benefited with improved returns on their invested capital.
Value creation for customers result in improved revenues and/or profits. At the same time, value creation also need to exist at the level of the organization’s workforce to sustain the ongoing motivation and enthusiasm for the people who actually bring in the value creation for the customers. The third...