Is There A Metric For Value?
In a free-market based economy, money is simply an echo of the value that’s been provided. After all, why should anyone willingly give you their money unless they feel they are receiving value equal to or — even more preferably — greater than the money they are exchanging it for?
The key, as I posted recently on my Facebook page, is to focus on the giving of value…and allow the receiving. Remember, not only must we breathe out, we must also breathe in.
As part of an exchange with entrepreneur, Duane Adolph, he asked:
“I’ve been thinking about this for a while, as well. in order to aid ‘focus’ which ‘Metric’ would you use to measure Value Delivered? Income Statements and Balance sheets measure only echoes’.”
I responded: Duane, thank you for your question. Value is ALWAYS in the eyes of the beholder and is measured by THEM. When THEY see “it” being of value, that’s when the echoes begin to form.
“Agreed. And they “vote” with their wallets. Thus the “Metric” or “KPI” (Key Performance Indicator) I was looking for to determine if we the company are delivering value can be measured by the Metric “REVENUE”. So when we as a company ask ourselves…”Did we Deliver Value today?” we can look at our Daily Revenue number to determine how much.”
I appreciate how he phrased that. One important point, however, is that the value provided and the resulting monies don’t necessarily occur on the same day. So, there can be a lapse in that regard.
Which is why, whenever I’m asked for examples of companies that are “Go-Giver Companies” my answer is always to simply look at any company that has a record of sustained profitability.
The reason is that, assuming they are operating in a truly free-market economy — without benefiting from cronyism or corporatism — the only way they can sustain profitability is by providing exceptional value to many people on an ongoing, consistent basis.
And, yes, that value is judged by the consumers and only by the consumers.
And, as Duane so eloquently put it, they vote with their wallets.