Creating Value

If you understand the principles of creating value, you can reliably avoid financial hardship.

It’s not to say that other difficulties and obstacles won’t pop up in life. They most certainly will. However, all potential issues aside, if you know how to create value, you have no excuse for going broke. You will be able to confidently take steps in the right direction to build a better future.

To some, these concepts might seem fairly rudimentary. But I feel it’s important to review them so that we might develop a more polished framework for how we think about our businesses.

So the question remains: how is value created? Where does it come from?

Going by Daniel Priestly’s book “Oversubscribed,” there are varying levels of value you can provide on a spectrum.

Let’s start with the most basic form:

Information is no longer as valuable as it used to be and ideas are cheap. Why? Internet technology and smartphones have made information and ideas too available.

Not to mention that plenty of people have ideas. Few have the dedication to see them through. This isn’t to say that information is worthless. You can still make some money selling ebooks and courses, but not as much as you used to be able to. Your offers need to be remarkable. And eventually, competition is going to catch up with you and create something similar.

This is why many smart entrepreneurs are moving away from selling information to giving it away for free. Business leaders are creating great content and sharing it over their social channels. They understand that high quality, free information is the best way to build goodwill and develop an audience. They also know that providing qualified information is the best way to attract clients or customers.

Gary Vaynerchuk is an excellent example of someone who has made a name for themselves by providing massive amounts of free content and building intimacy with this audience through social media.

The thing to keep in mind here is: when you release a book, the amount of responsibility you accept for your readers to get the outcome they desire is minimal. So if you buy an ebook, the onus is mostly ON YOU to get value out of it. This is why an ebook is generally LOW VALUE.

The next level in creating value is building and selling parts. These are the nuts and bolts of an outcome that other people can assemble for themselves. Examples could include things like turnkey businesses, tools, kits, materials, commodities, and essential services.

In selling components, you are required to accept a little more accountability to deliver something useful to your clients and customers. Moreover, because you’ve gone through the trouble of assembling something they would need in advance, the amount of value you provide increases.

Though it’s subjective, I would say that creating components for customers or clients is like a 10/90% division of responsibility – with the customer still assuming the lion’s share to get the results they desire.

Helping someone achieve an outcome by supervising their progress is much more valuable than spilling the components in their lap and telling them to have at it. In this sort of scenario, you have to provide close and ongoing feedback to make sure that your audience gets the outcome they desire.

Daniel says this is probably the lowest form of actual implementation work you can do. If you don't step in and make sure things transpire as they should, you’re pretty much back in the “selling information” capacity again. But if you can stay on top of your client’s progress and help them avert disaster, your value starts to skyrocket.

In my subjective rating system, supervising or coaching a client is like a 30/70% division of responsibility, with the customer still mostly accountable to get the result they want.

You’re probably starting to see a pattern here: The more responsibility someone assumes to deliver an outcome, the more valuable they become, and the more money they can potentially make.

The next level in creating value is taking a kind of partnership role with your client. Similar to consultant work, this is when you work alongside a client and get your hands dirty. This type of dynamic is of moderate value to your client.

The highest value you can provide for someone is a complete solution where you are 100% accountable to achieve the outcome they desire.

As stated in Daniel Priestley’s “Oversubscribed”: “The more your business takes on the responsibility of delivering an outcome, with little or no external input, the more value it creates. We see solution products in a variety of industries, from telecommunications, software, accommodation, financial services and countless others. These solutions are ready to go; you can buy them, and no further input is required from you in order for them to be implemented.”

VALUE = ACCEPTANCE OF RESPONSIBILITY FOR ACHIEVING AN OUTCOME + COMPETENCE

The more responsibility you can accept and the more competently you can deliver an outcome, the more valuable you become. Also, one thing I would like to point out about this fact is that its value transcends superficial identity indicators. If you are capable of being responsible and competent, anyone who needs your services has an incentive to hire you, no matter who you are.

One of the challenges of this reality is that accepting responsibility for an outcome is difficult to scale. The more hands-on you are, the more difficult it is to serve multiple clients at once. So it seems that value and scalability have an inverse relationship.

So now that we have a reasonable understanding of the Spectrum of Value, what can we do to put these concepts into action?

The first thing that we need to do is to find an outcome that is in demand. This might not be as easy as it sounds.

What outcome do people want and are willing to pay anything to obtain?

The traditional way that some entrepreneurs have advised to find people’s true desires is to out is to look for complaints. What kinds of things are people having problems with? What outcome would satisfy them?

Here’s a clue: ever go to a community on Reddit and enter the words, “I hate” in the query field to see what comes up?

Getting deep into the research and evaluation of potential customer complaints are a little outside the scope of this article. But here I would like to take a moment to recommend the best books and courses that might help you with this crucial step.

One book that I think covers this well is Pat Flynn's "Will it Fly." The advice therein is a bit general, but the concepts and their conclusions are sound. He has an excellent system of steps you should follow if you want to get started in business.

The course that I would recommend is Justin Jackson’s Marketing for Product People. It has an excellent section on doing market research. I also really enjoyed the book that came with it. I bought the course during the AppSumo promotion and was pretty surprised by how practical and useful it was. 

In “Oversubscribed,” one of the things Daniel talks about is the importance of delighting your customers. This is a big-picture kind of consideration that I feel many businesses miss. Different people may have different ideas about what properly constitutes delight.

I feel that Japanese toy culture excels at promoting a sense of delight in people. And one of the things I’ve been thinking a lot about recently is Gachapon. I feel that Gachapon may hold a secret to the mystery of promoting delight. 

Gashapon (ガシャポン) or gachapon (ガチャポン) is onomatopoeic from the two Japanese sounds: "gasha" (or "gacha") for the hand-cranking action of a toy-vending machine, and "pon" for the toy capsule landing in the collection tray.

Some may call it a monetization strategy, but I think there’s more to it than that. There is something deeply satisfying about opening a plastic bubble to find a highly-detailed collectible. And different kinds of mobile apps have used similar strategies to get people to pay real-world money for in-game items.

Between capsule toys and crane games like UFO catcher in Japan, I feel there could be an inspiration to draw to improve your business model. So, I invite you in the future to think about how something like Gachapon could be used to delight your customers.

Take a moment to consider how these concepts could help you create more value when building businesses abroad. Ready to take action? Take a look at my guide on Making Money while Traveling.