There have been incredible changes in the business landscape over the past few decades. Technology and globalization have made it possible to see the entire world as a market that is always on. Industries that have been rock solid find that their foundations are rapidly eroding, and new start-ups are given valuations in the millions without having a proven revenue model. The options available to consumers are rapidly expanding, and at the same time, consolidation is the strategy chosen by some businesses to ensure that they can continue to meet consumer demand and provide returns for shareholders.
All of this raises the question: How does anyone stay in business? How do you stay in business? Or perhaps the more appropriate question for the majority of us is: How does the company we work for stay in business? Most of us engage in a process that creates value for someone else—our customers. We create enough value that they are willing to pay money in exchange for it. And we stay in business by charging more for this value than it costs us to create it.
Value is predicated on asymmetry. The Merriam-Webster Dictionary defines value as “a fair return or equivalent in goods, services, or money for something exchanged.” Inherent in this definition is that one side has something that the other desires. This is the basic asymmetry. But in many cases, there is an underlying asymmetry in information. Someone knows how to make something that another doesn’t; someone has used knowledge ...