Wednesday, July 05, 2006

Different levels of value creation

There are different ways to create value and different levels of value creation, although most people usually refer to "business" as "making money." However, to make serious money, one has to get technical about the science of value creation.

The following technical distinctions are important if one is to properly design a way to get to business profitability as soon as possible:
  1. Sub-commercial: this is where you are able to create value, but not quite able to price that value. As a result, a lot of market testing is required. Sometimes called the "beta" phase.
  2. Commercial: this is where you begin to make money and the price is somewhat right: customers accept to pay that price in order to get the value you provide.
  3. Trans-commercial: This is where you control and master your commercial operations well enough to teach it to others (or to package it into a franchise-like system, and license that system to others).
  4. Meta-commercial: finally, this is the "grandmaster" stage where you master business so well that each SBU or company in your portfolio is just a chesspiece in your global game of imperial capitalism, the goal of which is to conquer and control as much cognitive estate as possible (cognitive estate being the mindshare that you control, that is, how many people engage with your mass media which, of course, promote your products and services).