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Falling prey to a company’s marketing = no value

Why is creating value so difficult? Is it a problem with measurement? Perception? It all began in a lively discussion a few Sunday’s ago on Twitter. It all started, with a one tweet by Max McKeown:

Why creating value is difficult

Profit can be proof of value, but key is understanding which metrics matter to customer. In other words, how does the customer measure value?

Storified by Jorge Barba · Mon, Apr 30 2012 12:27:21

Profit is no proof of value.Max McKeown
Disagree @jorgebarba @MaxMckeown profit can be proof of value if one KPI metrics, sad reality is too many are clueless in defining KPIsSteve Koss
@SteveKoss @jorgebarba @MaxMckeown A new product can fill an existing need & deliver value, but magnitude of need may be < production costJose A. Briones
@SteveKoss @jorgebarba@MaxMckeown Ben Franklin on financial innovation, profit = value for sports teams and venues the pro side =)Steve Koss
The real issue is defining innovation?
@SteveKoss @Brioneja @jorgebarba I’ve defined Innovation as "new ideas made useful" leaving usefulness, or value, as question for us all…Max McKeown
@SteveKoss @Brioneja @jorgebarba For me, value, should be a judgement beyond profit of an individual firm, industry or product…Max McKeown
@MaxMckeown @SteveKoss @jorgebarba I tackle the question of value in this preso http://slidesha.re/9ivSG2 Feedback welcomeJose A. Briones
Value is a measure of desirability. A measure of the magnitude an unmet need is met.
RT @Digitaltonto: The Profit Paradox http://p.ost.im/p/eqCSeSJorge Barba
Creating Sustainable Advantage Through Thick Value

I earlier wrote about the difference between thick value and thin value.  Thin value might bring in money for a while, but it’s merely a transfer from one entity to another, like telecom companies who add extra instructions to voicemail so that consumers use more minutes. That creates value for the business, but only by taking it from the consumer.

Thick value, on the other hand, creates value for society.  Companies like Southwest and Wal-Mart do it by being so efficient that they save us money.  Apple and Google have created new products that enrich our lives.  Whenever you see a long track record of success, you’ll find thick value created.

And that’s the profitability paradox.  Businesses who profit without purpose will ultimately end up with neither (unless, of course, they have very good industry lobbyists).  Companies infused with purpose, on the other hand, will have the passion to seek out the think type of value that confers advantage.

RT @nickbilton Disruptions: With no revenue, an illusion of value: http://nyti.ms/IfGAwR – cc @SteveKoss @Brioneja @MaxMckeownJorge Barba

Yet an even more bizarre activity in the Valley than shushing the talk of a bubble is how some start-ups are advised by investors not to make money. This concept may sound ridiculous from a business standpoint, but for investors, it fuels the get-richer-quicker mentality that exists here.

“It serves the interest of the investors who can come up with whatever valuation they want when there are no revenues,” explained Paul Kedrosky, a venture investor and entrepreneur. “Once there is no revenue, there is no science, and it all just becomes finger in the wind valuations.”

When small start-ups I’ve spoken with do make money, they often find it difficult to recruit additional investment because most venture capitalists — and often the entrepreneurs they finance — are not interested in building viable long-term businesses. Rather, they’re interested in pumping up enough hype and valuation to find a quick exit through an acquisition at an eye-popping premium.

@SteveKoss @Brioneja @jorgebarba A firm may make immense profits yet contribute very little in value, or cause damage to society…Max McKeown
@MaxMckeown @SteveKoss @Brioneja That’s what I though you meant in your original tweet. Falling prey to a company’s marketing = no valueJorge Barba

Falling prey to a company’s marketing = no value

What do you think?