(I can feel my need for caffeine to pull this together, but barring that, I’ll still take a stab.)
I communicate with very smart people every day. Some of them are creative and artistic. Others are great with software. Some know how to work well with people. Others seem to glide effortlessly between roles. And some just have great repetitive skill and can execute, if nothing else.
Raw Goods
Ideas are like a raw good. They can be amazing and wonderful, but in their raw form, it’s a little hard to extract value from them. If you are a farmer, you have soil, and crops, and a sense of how to bring a plant from a seedling to something that produces a yield. And you might sell that yield at a farmstand, or to a wholesale buyer, but the money you’ll get for that raw good won’t be nearly what someone with some skill might get from deriving something from it.
Craftspeople
It’s a wonderful thing to take something raw and shape it into something that’s of value to people. Seeing the raw material bent to fit a form that can be taken up and used by others is where a sense of reward can come to what you’ve done. Knowing how to make your idea useful to the outside world would make you akin to a craftperson.
But what is the reach of your craft? And how do you know that the finished good isn’t even MORE useful when applied in a slightly different way? Knowing how to expertly roast coffee beans such that anyone who tries your coffee finds it delightful is a craft that’s worth knowing how to do. It’s easy to conceive that you as a craftsperson could live off the payment you’d receive for knowing how to execute that process.
Merchants
But Starbucks created the “third place.” Dunkin Donuts is out there making a great tasting cup of coffee (these are ubiquitous in New England; if you’re from somewhere else, accept that it’s reasonably good coffee- those of you in Canada, think Tim Horton’s). Starbucks added “lifestyle” to the mix. You’re not buying a cup of hot wet bean juice. You’re buying a moment of relaxation, music, wood paneling, and accessories to color your lifestyle.
And here is where the real money changes hands between your idea and those willing to pay for it.
Value Chains
One of a handful of books that truly opened my eyes to the understanding of business and how I might eventually find my way from being a craftperson to being a merchant was The World Is Flat, by Thomas Friedman. The book taught me a lesson about value, and where value should be derived, and how one should focus hard on that, and detach the rest to other sources.
In the case above, Starbucks found the heart of value, and got someone else to farm, and someone else to cook. They also got someone else to deliver, someone else to do pretty much everything that isn’t related to the value proposition the people paying money most understand.
Find YOUR Merchant Value
Up until now, you’ve been nodding your head. I haven’t told you anything new, though maybe you are now assessing where you are with the value of your idea / product / thing you do. Maybe you’ve started wondering what you’re doing that isn’t the true value. Maybe you’re realizing that you are a craftsperson and not the merchant.
What will you do differently? How will you extract the greatest value from the time you’re spending in a day? How will you translate that into a reward for yourself (or your cause, your organization)?
But Do You REALLY Want to Blow This Open?
Starbucks makes money on the coffee you buy. But they also make money on real estate deals. They make money on licensing deals (people pay Starbucks to use their name in places like airplanes, hotels, etc). They make money on recipe books. They make money cutting deals with music companies to put the music company’s CDs in their stores.
So even if you figure out where your value is, you have to move past seeing it linearly. You have to see if there are multiple ways you can extract value from what you’re doing, and whether you can properly take advantage of those opportunities. Or else you’re still seeing only part of the picture.
You
Where is the value in what you are doing? How are extracting that value? How are you shifting away from low-margin efforts into the things that might yield the most overall value?
And THEN, how are you sharing that value or helping others find their value? What are you giving back in other words?
Because that farmer creating raw goods knows that if you don’t feed the soil, rest the soil, and care for your plot of land, there won’t be beans for the craftperson to cook, and that means nothing for the merchant to sell in the coffee shop. It’s all a system.
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