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The Key to Creating Intrinsic Value in Business

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Value creation is the essence of business. Value is what attracts and keeps customers. Value is what attracts and retains employees. It’s also what attracts and maintains relationships with investors, suppliers, distributors and the wide range of other stakeholders who are critical to the firm’s long-term success.

A business that does not create value will eventually fail.

How to Create Value as a Means to an End

To know how to create value in business, it’s helpful to understand what it is. It may seem a simple matter, but it is actually a topic that philosophers have debated for millennia. For many business people, value roughly translates into price, the amount someone else is willing to give us in the marketplace, in exchange for our good or service. This is the notion of “exchange value” and it is the secret sauce of supply and demand and what makes a market whir.

Economists also talk about a slightly different notion of value, which is its “use value,” or utility.  Here, we’re talking about how valuable something is to me. It’s not the exchange value that you and I both agree on, but how much use I as an individual get out of particular product or service. Our different perspectives or circumstances might well result in wildly diverging valuations for the very same thing.

Use value and exchange value are critical things to get right when you’re running a business. If you don’t know how to assess the use value, or utility, of a particular technology, process, or even of a person, you are going to misunderstand how they fit into the overall value-creation process of your firm. If you don’t know how to properly assess the exchange value of your resulting goods and services, you will fail to read the market, and falter in marketing and sales.

Use value and exchange value undergird modern economics and our understanding of the way business works. They are also both examples of a broader notion of value called “instrumental value,” which is to say value, as a means to some other end. With use value, a machine or a person is as a means to create products and services. With exchange value, those products and services are a means to earning money.

If you’re getting the instrumental value of the inputs or the outputs of your business wrong, you’re probably not going to be in business over the long-haul. There is a class of businesses, however, that work with instrumental values, while also keeping an eye on another type of value.

How to Create Value as an End in Itself

While instrumental value is a means to some other end, “intrinsic value” is a fundamental consequence of something’s very existence.

Intrinsic value is not the kind of topic you find most economists spending their days contemplating. Although value investors use the term in a specific sense, the kind of intrinsic value I’m talking about is more the domain of philosophers, spiritualist, psychologists and anthropologists, musicians and artists.

Every once in a while though, you will bump into a business person who seems to operate in this field of intrinsic value creation. You tend to find them in those businesses that focus obsessively on quality or on design. You can also see their telltale marks in firms that seem to pay inordinate attention to how their products and services are actually being used by customers – not just whether those customers are satisfied with them, but whether they are successful with them.

Creating Intrinsic Value for Customers

From a customer perspective, we all know that there are some products whose value extends far beyond mere economic calculation. It might be our child’s teddy bear, our wedding ring, or a book whose message or story touched us deeply. The same is true, of course, with services. It might be an ambulance driver going above and beyond the call of duty, a sympathetic person at an airline call center during a family emergency, or a college professor who changed the direction of your life.

For these people, and in some cases, the organizations behind them, the product or service is not just a means to make money. These offerings have intrinsic value in themselves. In other words, with this rare breed of business, the object of production and the act of service create meaning through the ways in which customers interact with them.

One might say that these products and services have a certain something, a quintessence, that cuts to the essence of their value proposition, channeling a kind of invisible, intrinsic value to their users.

Every time a child hugs a teddy bear as she nods off to sleep at night, value and meaning are created. That value isn’t captured in the books of the teddy bear manufacturer, designer or retailer, but it is there, quietly accruing in thousands of little beds throughout the world, invisible to the calculations of the economist.

Creating Intrinsic Value for Employees

As important as these myriad sources of uncalculated value truly are, it still undervalues the full intrinsic value creation of most firms. This hidden component of value centers on the meaning we create through our work.

For every kid whose life takes a change for the positive as the result of some professor’s extra little bit of attention, there is a teacher who derived some sense of purpose from trying to make a difference. For every beautifully designed car, there is a team of designers who gained a wonderful sense of meaning from getting that one right. In some of these cases, there may be financial rewards associated with these employees’ extra effort, but that’s not the reason they do it. As author Dan Pink explains so wonderfully in “Drive,” they do it for reasons that go far beyond rational economic considerations. They do it for a sense of “autonomy, mastery and purpose.”

In other words, part of the reason we go the extra mile in our work centers on a type of value that goes beyond our traditional notions of economic exchange.

There is something tremendously powerful about our drive for meaning. When we find meaning in our work, it can act as a powerful aphrodisiac, an injection of inspiration capable of getting us through the most trying of times. It might be the firefighter who has seen her work translated into a saved life. It might be an engineer whose solar panel design single-handedly resorts in the reduction of millions of pounds of carbon that might otherwise be dumped into our atmosphere. Or it might be that teacher who has seen the effect his connections with students can have on the long-term direction of their lives.

For these people, work is not simply a means to a paycheck. For these people, work creates value through helping them to create meaning of their lives. It is what enables them to be of service to the world and the company’s that offer this type of work create a powerful attractor for the best and brightest employees.

Meaning, Mission and Value Creation in Business

Businesses that know how to engage this quintessential quality of intrinsic value creation have a huge advantage over firms that wield purely instrumental notions of value creation.

Firms that create intrinsic value through meaning face a kind of paradox. That meaning and purpose, that desire to serve a mission, is what creates economic value for the firm. It’s what brings people to work and what draws customers in. No mission, no money. And yet, missions are ultimately dependent upon the firm’s ability to generate revenues. No money, no mission.

Managing this paradox of value creation requires that firms get a much deeper understanding of the nature of the value they create – both value as a means to money and as an end in itself. Businesses that know how to master the tension between instrumental and intrinsic value creation are businesses that know how to translate meaning into money.

These are the truly great mission-driven companies, the ones that attract and engage us the deepest.

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About the Author

This article was written by Gideon Rosenblatt of The Vital Edge. Gideon ran an innovative social enterprise called Groundwire for nine years. He worked at Microsoft for ten years in marketing and product development, and created CarPoint, one of the world’s first large-scale e-commerce websites in 1996. The Vital Edge explores the human experience in an era of machine intelligence.

Callum Connects

Jonathan Oh, CEO & Co-founder of Supplycart

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Jonathan Oh’s enquiring mind and love for learning has led him on an entrepreneurial journey, with him starting Supplycart which helps businesses manage their offices better.

What’s your story?
I am a person that just can’t sit still. I was always intrigued by how the world spins and how people connect. Spending a lot of time outdoors, I had an affinity with exploring new paths, thus leading me to become a serial entrepreneur with experience in creating, operating and building new companies. I am a firm believer there is so much to learn in the world and I love talking to people about ideas, what they are passionate about and what drives them.
Starting off my career in the medical industry, I realised I had a flare to create something that mattered, something that impacted other people’s lives. After exiting my first company in 2014, I continued my journey with two other ventures with a purpose to look towards impacting businesses in the region together with like minded individuals, and here I am.

What excites you most about your industry?
Being able to part of the SME tech industry and seeing how technology is moving SMEs to go digital to improve workflows and efficiencies is an exciting space to be in. Users are consumers. More and more, they are familiarising themselves with using technology in their everyday lives. We foresee the SME space to be the next area where adopting new technology would become vital for any organisation to remain relevant. As I have dabbled in this industry for close to nine years now, I am really looking forward to working with more people in the business community to make a change.

What’s your connection to Asia?
Born in Malaysia, I had the opportunity to go abroad and I realised there was so much to do back home. Spending time in Melbourne, Australia for a couple of years and recently Silicon Valley, it has provided me with experiences and insights into the difference a multicultural community can make. It also made me aware that Asia is still a very culture driven economy, as each country has its unique differences. I believe that the time is right to be in Asia now. We are a growing economy and a lot of exciting stuff is happening in this region.

Favourite city in Asia for business and why?
Malaysia. I believe Malaysia is still a very attractive destination for business as it’s close to other neighbouring countries within the region and travelling between the countries is easy. There is also proper infrastructure in place, an affordable cost of living and a sizeable pool of talent. The government also has numerous initiatives for technology companies to apply for MSC status that permits companies to hire foreign companies without restrictions. Malaysia is the perfect launchpad to start growing businesses regionally. From a culture perspective, we are multicultural, which promotes diversity in business and language is never a barrier here.

What’s the best piece of advice you ever received?
“The difference between a businessman and an entrepreneur; one does a markup and the other creates value.”

Who inspires you?
I would say the people around me inspire me. I wouldn’t narrow it down to a particular person but lump it up with family, workmates, entrepreneurs and friends. From my eyes, everyone has a certain drive, a certain glow and strengths that sometimes they do not see, and that inspires me. I believe the journey to success is never alone, it’s with people.

What have you just learnt recently that blew you away?
Something recently that blew me away, made me realise, visually about how much time I have left. I was reading and stumbled upon the writer doing this. This might sound morbid but I drew a horizontal line and started plotting the year I was born all the way up to when I think I might go. It showed me that I have spent 25% of my life growing up, I am going to spend another 55% of my life working and the final 20%, maybe retirement. It got me remembering all the milestones I have achieved and to be thankful for and above all, how I want to spend the 55% of my life doing what matters the most.

If you had your time again, what would you do differently?
I believe that I am exactly where I need to be because of the experiences I have had before. Thank god for the journey so far. It has been filled with ups and downs, new experiences and people along the way these have moulded me. I guess a small thing, if I had my time again, would be to pick up playing a musical instrument which I think still possible now. You are never too old to learn anything.

How do you unwind?
Unwinding for me would be spending time with my family and my two little boys. The little ones are such a bundle of joy. Reminding myself to have balance in terms of not missing the early years with them. Other than that, having coffee with other entrepreneurs, sharing ideas and learning from them is also another way I unwind.

Favourite Asian destination for relaxation? Why?
A term I would use would be “cuti cuti Malaysia.” This means heading to a local destination for some R&R to save on the cost of going on overseas to travel. Top of my the list would be heading to a farm or the jungle with clear river waters and a waterfall all to myself. Staying the night, out in the open under the stars, with a campfire and heading back to nature. The other option would be taking a boat to one of the furthest islands in Malaysia, just before the border of Indonesia, to get away from civilization.

Everyone in business should read this book:
I would actually recommend two books that everyone in business in the early years should read. ‘Founder’s Dilemma’ and ‘Start with Why.’ After being in a couple of businesses and many mistakes later, I came to realise the importance of starting it right. Both these books address the whole mind-set on what founders need to have from selecting who is it we start a business with to why are we starting the business. The business foundation is built from the founders and moving forward everything is built from there. Sometimes we are so into the business that we forget we need to be on the business as well. I would have definitely avoided a couple of bumps if I came across these much earlier on.

Shameless plug for your business:
Manage your office better, that’s our motto. We are always on the lookout to work with organisations, suppliers and partners in this field for partnerships and collaborations.
Supplycart is a B2B procurement platform addressing a need for a change in the way companies manage their office supplies, products and services. We enable suppliers and companies to adopt digital technology when selling and procuring for their business, resulting in a more efficient and productive workforce.
Supplycart provides an easy to use, convenient platform that streamlines the whole procurement process by allowing users to quickly order and reorder, receive instant quotations, obtain quick approvals from necessary approvers and fulfilment items are coordinated/planned to ensure a timely a speedy delivery.
Businesses can now focus on the more important matters in growing and sustaining their business while leaving managing the office to Supplycart. Our vision is to be the number 1 office platform for businesses across South East Asia. “Your office will never be the same again.”

How can people connect with you?
https://www.linkedin.com/in/ohjonathan/
e : [email protected]
w : www.supplycart.my

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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Trung Nguyen, Founder & Managing Director of Advertising Vietnam

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Having initial success with his first start up in the ad industry, Trung Nguyen went on to start other ventures in the ad world in Vietnam. He now has the largest agency community in Vietnam.

What’s your story?
Three years ago I got my first job in the advertising industry. I worked for a local agency in town, and I fell in love with the creative industry. In June 2015, I founded Agency Life Community in Vietnam. It quickly became the most engaging community in the ad industry. The main content focuses on entertainment. After six months we had over 30,000 organic followers, now we have 120,000 followers.

Because the industry had been good to me, I decided I had to something for the industry to help the industry be better. So, I opened http://AdvertisingVietnam.com – a creative industry ad site which keeps advertising informative, creative and inspiring.

After more than a year in the ads industry in Vietnam, I figured the industry needed a better solution for the recruitment of good staff. Given I own the largest advertising community platform, why don’t I utilise Agency Life to help connect talent with ad agencies. So, I founded job site, AdJob.Asia in January 2017.

What excites you most about your industry?
The ad industry is a creative one with very passionate people who are always challenging themselves. The exciting part for creatives, in the morning they might be working on a baby brand and in the afternoon they are answering a beer brief. There is so much diversity. Every day is the new journey.

What’s your connection to Asia?
I am Vietnamese.

Favourite city in Asia for business and why?
Thailand. The Thais are the kings of the creative industry in SEA. Thai ads are very smart and creative.

What’s the best piece of advice you ever received?
Do what you love.

Who inspires you?
My friend, mentor and partner Mr Nghi Nguyen, founder of BrandsVietnam.com. We started our businesses at a similar time. He doesn’t see us as a competitor but rather, he believes that we share the same passion and we are working to provide better knowledge for the ad community.
Mr Nghi also guided me a lot when I first opened the business. I am inspired by his vision to make our marketing industry better.

What have you just learnt recently that blew you away?
Our business is a startup company and as a founder I do everything from operations, business development, planning and strategy. However, this is not the good way grow our business. You have to share the workload – find a co-founder or hire a great employee to help share the workload. “If you want to go fast, go alone. If you want to go far, go together.”

If you had your time again, what would you do differently?
Quit my full time job sooner.
During the first year of running my business, I was still working as an ad manager for an agency. However I lacked focus at work due to the overload of work and it affected the company I used to work for. I strongly recommend people who have an idea to start their own business, quit their job early on and focus 100% on it from the get go!

How do you unwind?
Play with my cat.

Favourite Asian destination for relaxation? Why?
I love to travel throughout all of Asia. I enjoy new places and meeting new people.

Everyone in business should read this book:
The Carpenter: A story about the greatest success strategies of all.

Shameless plug for your business:
AdvertisingVietnam.com is a site where you can quickly update yourself on the advertising news in Vietnam. We have 15,000 unique monthly readers who are professional people in the advertising and communications industries.

The Agency Life, https://www.facebook.com/agencylife is largest agency community in Vietnam. This is the right place for ad agencies to share their creative work.

AdJob.Asia now has more than 160 agencies in Vietnam who use our services. We are a leading recruitment service for the advertising industry in Vietnam.

How can people connect with you?
You can connect with me:
Facebook: https://www.facebook.com/trungnx26
Email: [email protected]
LinkedIn: https://www.linkedin.com/in/trungnx26/

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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