What a great experience it was to have been part of the Value Creation Challenge Zimbabwe and to have made the top 25 ideas selected to progress to the finals. Fast forward five months down the line and we are under an unusual experience which has made business operations, growth and survival a lot more difficult. Zimbabwe’s lockdown started on March 30th which was eventually extended by a further 14 days and is now expected to end on May 3rd 2020. Government in an effort to prevent the spread of the coronavirus which is showing no sign of abating has been faced with grave socio-economic problems. With at least 2,2 million people in the informal sector and an enormous and ever-increasing set of possible ways to create value, how do we as individuals decide which type to pursue? Is each way of creating value useful to us as another?
Before I go further into explaining success outside the economic theory, let me give an insight into the definition of value creation. According to the business dictionary value creation is the performance of actions that increase the worth of goods, services or even a business. Creating value for customers helps sell products and services, while creating value for the shareholders in the form of increases in stock price, insures the availability of investment capital to fund operations. As we look at the changes in the global economy which have created value in the past 100 years, we have shifted from a focus on huge mechanical production during industrial revolutions to a more creative and customized production through the information era. Software associated services dominate more and more of value creation.
Value creation in this generation is therefore based on an economy which is creative: mass customized and has a high value of bringing a new product or service improvement to the market, with the ability to find a solution to an annoying customer problems or the way a new product or service is vended and supplied. Because value creation is the starting point for all businesses, successful or not, it’s a fundamental concept to understand. The rapid spread of digital technologies is transforming many economic and social activities internationally. While creating many new opportunities, widening digital divides threaten to leave developing countries, and especially least developed countries, further behind.
Peter Thiel in his incredibly useful book, Zero to One says that if your industry is in competitive equilibrium, the death of your business wouldn’t matter to the world, some other undifferentiated competitor will always be ready to take your place. This is the condition for most businesses because what they sell is not unique, but generally substitutable. If you want to create the kind of value that builds a lasting and successful business, Thiel says you must be unique. All happy companies are different each one earns a monopoly by solving a unique problem. To solve that unique problem, you must develop unique skills or processes. In the real world outside of economic theory, every business is successful exactly to the extent that it does something others cannot. In conclusion, I think each business informal or formal operating in Zimbabwe should understand the notion of value creation to enhance creativity within the economy.