Value Added as Output

The Output (or Production) Approach basically means: Add up the quantities of all final goods and services produced in an economy within a given time period and weight them by the market prices of each of the goods or services in the output stage. Your customer in fact determines whether what you produce has value or not, but remember that this is based on Needs and Wants. Value will always be in the eye of the customer, so a consumer may want a particular product or actually need a particular product. Food and water are of course needs, whereas wants are created by marketing. It is also arguably one of the most challenging steps in the formulation of the decision regarding the "transformation process", because what is a need vs. a want can vary from person to person. It is also easy to miscategorize wants as needs if you are so accustomed to them that you have trouble imagining living without them. This can be related to conspicuous consumption. So you may need a wristwatch, but you may want a Rolex. But you can also see what the time of day is by looking at your cell phone. So are wristwatches entering the decline phase of the Product Life Cycle, and if so, you will have to analyze inflection points at which stage you may have to change your strategy completely. So a pivot strategy will have to be considered - just an example.

This is of particular importance for marketers and branding. Disruptive market products are in a saturated marketplace, but nondisruptive products are new ideas and innovations. There are several advantages of pursuing?nondisruptive?innovation. For one, it’s a less emotionally and politically difficult means of innovation within established organizations - “Many people forget that Kodak created the first digital camera,” - “But since the digital camera would disrupt its film business, the company faced insurmountable emotional and political conflicts among its people, hindering the change.” So therefore, organisations and staff do encourage innovation, but do do not necessarily enjoy change - and remember, all that endures is change. Additionally, companies faced with disruptive innovation can sometimes leverage their existing competencies to pivot and create a new market, rather than fighting against the current of new technology and industry change, an example being Digital Business Transformation. For new companies,?nondisruptive?innovation helps avoid butting heads with the big existing players who fear a challenge to their supremacy, such as bringing out a new cell phone.

There are three business-focused drivers (business growth, efficiency and experience) and three technology-focused drivers (agility, cost and assurance). The value added of an industry, also referred to as gross domestic product (GDP)-by industry, is the contribution of a private industry or government sector to overall Gross Domestic Product (GDP). The current value stream map enables everyone involved in the value stream of an organisation to visualize a shared understanding of how each step in the process delivers value to the customer, including the material and information, and of course to identify areas of improvement.

Because the output of one organisation often becomes the input of other organisations, the total value of goods sold by organisations greatly exceeds the value of the actual output of final products. So the error that would arise in estimating the nation's output by adding all sales of all organisations is called "double counting". We must therefore distinguish between two types of output: intermediate and final goods. The term "final demand" refers to the purchase of final goods for consumption, for investment, for use by governments, and for exports. Therefore it does not include goods that are purchased by organisations for use as inputs during the period under consideration.

A value-added product is a saleable commodity that has been enhanced with "additional" qualities that make it worth a higher price than the raw materials actually used to make the product or service. It may be made more convenient, more attractive, more palatable, or easier to use than its actual raw ingredients. Part of this is of course articulated by the marketing function.

Adding value explains why organisations are able to sell their goods or services for more than they cost to produce, of course profit is of the essence, but quality and differentiation in terms of isolating mechanisms, which draw on the resource-based view (RBV) theoretical framework—which suggests IMs offer useful strategic barriers to competitive imitation, contributing to competitive advantage, such as the ownership of specific assets or resources, or the possession of formal intellectual property (IP) rights in facilitating the commercialization process. This represents a value proposition that is a declarative statement that explains why a customer should purchase your product or service. It clearly explains what differentiates you, or makes your offering "unique," and why you are the best choice on the market, so it is also termed a Unique Selling Proposition (USP). A unique selling proposition (USP) refers to the unique benefit exhibited by a company, service, product or brand, that enables it to stand out from competitors. This is usually focused upon disruptive creation where there are many competitors. The unique selling proposition must be a feature that highlights product benefits that are meaningful to consumers, satisfying consumer "wants".

In marketing, the added value is a succinct message to the consumer about the characteristics that make a product worth more than its raw ingredients or inputs in the transformation process, and, just as importantly, why it is preferable to similar products from competitors. It is advisable that research and development are intimately connected to the operations and production functions. Inputs in todays business environment include Digital Business Transformation.

Digital transformation in fact takes a customer-driven, digital-first approach to all aspects of a particular business, from its business models to customer experiences (marketing initiatives) in order to harness processes and operations. It uses AI, hybrid cloud computing and other digital technologies to leverage data and to drive intelligent workflows faster with smarter decision-making, and real-time responses to market disruptions. These market disruptions occur during disruptive creation, as mentioned earlier, and ultimately, it changes customer expectations and can create new business opportunities and hopefully creating growth and sustainability, and that can also be reflected in the Adoption Curve (diffusion process) as well.

Prof Rory Dunn.