Value Creation Process
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A Value Creation Process is an economic process that generates additional worth through the transformation of inputs, application of capabilities, or development of solutions that yield net-positive outcomes for stakeholders.
- AKA: Value Generation, Worth Creation, Value Addition, Value Production.
- Context:
- It can typically transform Resource Input into Enhanced Output through value-adding activity.
- It can typically satisfy Stakeholder Need through targeted value delivery.
- It can typically leverage Organizational Capability for differentiated value provision.
- It can typically require Resource Investment for future value realization.
- It can typically involve Innovation Process for novel value development.
- It can typically generate Economic Return through value exchange mechanism.
- It can typically be assessed through Value Creation Measure for value creation process performance evaluation.
- ...
- It can often occur through Value Chain Activity across organizational boundary.
- It can often combine Tangible Resource with Intangible Asset for comprehensive value delivery.
- It can often require Strategic Alignment for sustainable value creation process.
- It can often involve Ecosystem Collaboration for compound value generation.
- It can often respond to Market Change through value proposition adaptation.
- It can often build upon Digital Technology for value creation process enhancement.
- It can often consider Environmental Impact for responsible value creation process.
- It can often integrate Social Benefit with Commercial Return for shared value creation process.
- ...
- It can range from being a Tactical Value Creation Process to being a Strategic Value Creation Process, depending on its value creation process scope.
- It can range from being a Shareholder Value Creation Process to being a Stakeholder Value Creation Process, depending on its value creation process beneficiary focus.
- It can range from being an Efficiency-Based Value Creation Process to being an Innovation-Based Value Creation Process, depending on its value creation process primary mechanism.
- It can range from being a Transactional Value Creation Process to being a Relational Value Creation Process, depending on its value creation process exchange timeframe.
- It can range from being a Tangible Value Creation Process to being an Intangible Value Creation Process, depending on its value creation process output materiality.
- It can range from being a Linear Value Creation Process to being a Network Value Creation Process, depending on its value creation process structural arrangement.
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- It can be driven through Business Model for systematic value delivery.
- It can be analyzed using Value Chain Framework for value creation process mapping.
- It can be enhanced through Digital Transformation for value proposition expansion.
- It can be guided by Organizational Purpose for value creation process direction.
- It can be embedded in For-Profit Organization Process Model for commercial value creation.
- It can be optimized through Process Improvement for value creation process efficiency.
- It can be distributed through Value Sharing Mechanism for stakeholder benefit allocation.
- It can be protected through Intellectual Property for value capture enablement.
- It can be communicated through Value Proposition Statement for value articulation.
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- Examples:
- Product-Based Value Creation Processes, such as:
- Manufacturing Value Creation Processes, such as:
- Toyota Production System, demonstrating efficiency-based value creation process through waste elimination and continuous improvement.
- Apple Product Development Process, illustrating design-centered value creation process through user experience optimization and ecosystem integration.
- Software Value Creation Processes, such as:
- Agile Development Methodology, showing iterative value creation process through incremental delivery and customer feedback incorporation.
- DevOps Implementation, exemplifying continuous value creation process through development-operations integration and automated deployment.
- Manufacturing Value Creation Processes, such as:
- Service-Based Value Creation Processes, such as:
- Professional Service Value Creation Processes, such as:
- Management Consulting Methodology, demonstrating knowledge-based value creation process through specialized expertise application and organizational capability enhancement.
- Healthcare Delivery System, illustrating integrated care value creation process through multidisciplinary approach and patient-centered experience design.
- Digital Service Value Creation Processes, such as:
- Content Recommendation Algorithm, showing personalization-based value creation process through user preference analysis and content matching.
- Cloud Service Provisioning, exemplifying scalable value creation process through infrastructure virtualization and resource optimization.
- Professional Service Value Creation Processes, such as:
- Innovation-Driven Value Creation Processes, such as:
- Research and Development Processes, such as:
- Stage-Gate Innovation Process, demonstrating structured value creation process through idea evaluation and development stage management.
- Design Thinking Methodology, illustrating human-centered value creation process through empathy building and rapid prototyping.
- Open Innovation Processes, such as:
- Research and Development Processes, such as:
- Sustainable Value Creation Processes, such as:
- Circular Economy Processes, such as:
- Closed-Loop Manufacturing, demonstrating regenerative value creation process through material recapture and waste elimination.
- Product-as-a-Service Model, illustrating lifecycle value creation process through extended producer responsibility and performance-based revenue generation.
- Shared Value Creation Processes, such as:
- Circular Economy Processes, such as:
- ...
- Product-Based Value Creation Processes, such as:
- Counter-Examples:
- Value Extraction Processes, which transfer existing value rather than creating new value.
- Value Destruction Processes, which reduce net worth through inefficient resource utilization or negative externality generation.
- Rent Seeking Processes, which capture value through market distortion rather than productive activity.
- Zero-Sum Transaction Processes, which redistribute fixed value rather than expanding total value.
- Negative Externality Generation Processes, which create private benefit while imposing uncompensated societal cost.
- Financial Engineering Processes, which often reconfigure ownership claims without underlying value enhancement.
- See: Value Creation Measure, Value Chain, Value Proposition, Value Capture Process, Value Delivery Process, Economic Value Added, Shared Value, Value Network, Value Driver, Value Stream, Sustainable Value Creation Process, Value-Based Management, Economic Offering, Business Model, Competitive Advantage, Innovation Process, Stakeholder Theory, Resource-Based View, Dynamic Capability, For-Profit Organization Process Model.
References
2011
- (Michael E. Porter & Mark R. Kramer, 2011) ⇒ Michael E. Porter and Mark R. Kramer. (2011). "Creating Shared Value: How to Reinvent Capitalism and Unleash a Wave of Innovation and Growth". In: Harvard Business Review, 89(1–2), 62–77.
- QUOTE: "The concept of shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic conditions and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal progress and economic progress."
2007
- (David P. Lepak, Ken G. Smith & M. Susan Taylor, 2007) ⇒ David P. Lepak, Ken G. Smith, and M. Susan Taylor. (2007). "Value Creation and Value Capture: A Multilevel Perspective". In: Academy of Management Review, 32(1), 180–194.
- QUOTE: "Value creation depends on the relative amount of value that is subjectively realized by a target user (or buyer) who is the focus of value creation and that this subjective value realization must at least translate into the user's willingness to exchange a monetary amount for the value received."
2001
- (Raphael Amit & Christoph Zott, 2001) ⇒ Raphael Amit and Christoph Zott. (2001). "Value Creation in E-Business". In: Strategic Management Journal, 22(6–7), 493–520.
- QUOTE: "Value creation in e-business is the value created through novel transaction structures, transaction content, and participant involvement enabled by a digital technology."
1985
- (Michael E. Porter, 1985) ⇒ Michael E. Porter. (1985). "Competitive Advantage: Creating and Sustaining Superior Performance". New York: Free Press.
- QUOTE: "Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset a higher price."