Strategy

3rd August 2017

Cause and Effect

We live in a world that is governed by natural laws and one of the most important laws to understand is that of cause and effect. Things don’t happen randomly and for no reason. The results that we get are, in fact, the effects of the things that we have set in motion.

Even winning the lottery (effect) can only happen if we have bought a ticket (cause). So, if we don’t like the results we are getting the first place we should look is at the things that we are doing that generate those results.

If we don’t like the money we are earning we should look at the value we are providing for our employers or our customers. The more value we provide, the more we are capable of earning. If the value we provide is just the same as everyone or anyone else is capable of providing, then we can rightfully expect to earn no more than everyone else. If we can learn how to provide more value then we can expect to earn more as a consequence.

The same is true for individuals as businesses. If one business is doing exactly the same thing as the next business, in exactly the same way, the only option they have to compete for the customer’s business is on price. The trouble with that is whoever wins, ultimately loses. They are in a race to the bottom, where there are no winners. They have created a commodity market where price is the only differentiator.

To earn more we must learn how to create value. To create value, we need to understand the pain that we solve. How we create value is not, simply, what we do. A gardener tends gardens, but he or she creates value by giving the client time back, that they can use for something more valuable to them. A successful gardening business will understand that.

Jeffrey Gitomer once said “Differentiate with value, or die with price.”. That is a truism for both individuals and businesses. Now that you can understand the link between the results and the causes how can you begin to understand, articulate, develop and leverage your very own value proposition?