Everybody (read every system) has a market within. Every action, is governed by the price determined in this marketplace. The price (read value)of a resource or action and its consequence(s) in time is determined on the basis of individual (read system) experience (read knowledge), energy (read energy), and the likely opposition to the flow of energy (read mass) of a person.(read system). It also depends upon the extent to which the various components of the system are integrated (read dimension I -- for Integration).
Thus, the value of time would vary from time to time for every individual.
This raises several issues and questions. What are they? Ask me if you wish to.
Yadav Chandna
Tuesday, December 23, 2008
Saturday, November 8, 2008
Value of a free customer
What is the value of a free customer? The poorest of the poor -- Does he have a value? Is money an appropriate unit f value? Is valuation the sole preserve of human beings? Is it different from other entities?
Link to an interview with Prof. Sunil Gupta of Harvard Business School at http://hbswk.hbs.edu/item/5595.html
The interviewer says: "Business people understand that not all customers are created equal—the 80-20 rule suggests that over time a small percentage of a company's customer base can generate a high percentage of its sales and profit. Models for calculating customer lifetime value are built on just such a premise.
But new research is starting to look at customers whose value is not as readily apparent, and where CLV calculations break down. In a recent working paper, Harvard Business School professor Sunil Gupta calls them "free" customers—think of buyers at an auction. Traditionally auction houses make most of their profit from fees paid by sellers; buyers don't pay fees. So although buyers are a necessary ingredient to the deal—no buyers, no sellers—their value is more difficult to quantify. To the auction house, is one buyer worth four sellers? Is one buyer worth one seller?
The answer is critical for the auction house, which must determine how to allocate marketing and other expenditures between buyers and sellers to attract new business.
As more job seekers sign on to Monster.com, more employers are willing to be paying customers for the firm.
Gupta's work provides a model for determining this value and is related to research being done by colleague Andrei Hagiu and others into the dynamics of multi-sided markets: platforms that serve two or more distinct groups of customers who value each other's participation. Just how that participation is valued is a question Gupta's research begins to answer."
Link to an interview with Prof. Sunil Gupta of Harvard Business School at http://hbswk.hbs.edu/item/5595.html
The interviewer says: "Business people understand that not all customers are created equal—the 80-20 rule suggests that over time a small percentage of a company's customer base can generate a high percentage of its sales and profit. Models for calculating customer lifetime value are built on just such a premise.
But new research is starting to look at customers whose value is not as readily apparent, and where CLV calculations break down. In a recent working paper, Harvard Business School professor Sunil Gupta calls them "free" customers—think of buyers at an auction. Traditionally auction houses make most of their profit from fees paid by sellers; buyers don't pay fees. So although buyers are a necessary ingredient to the deal—no buyers, no sellers—their value is more difficult to quantify. To the auction house, is one buyer worth four sellers? Is one buyer worth one seller?
The answer is critical for the auction house, which must determine how to allocate marketing and other expenditures between buyers and sellers to attract new business.
As more job seekers sign on to Monster.com, more employers are willing to be paying customers for the firm.
Gupta's work provides a model for determining this value and is related to research being done by colleague Andrei Hagiu and others into the dynamics of multi-sided markets: platforms that serve two or more distinct groups of customers who value each other's participation. Just how that participation is valued is a question Gupta's research begins to answer."
Saturday, November 1, 2008
Laws Of Value
Anyone interested in discovering the Laws of Value?
Are there any such laws at all?
Are they contextual or universal?
Are there any such laws at all?
Are they contextual or universal?
Monday, October 13, 2008
Tuesday, September 2, 2008
Value Cells
Value Cells vs Value Kernels
This piece has been triggered by article Organising for Value in The McKinsey Quarterly. They have enunciated the concept of Value Cells therein. The concept of value cells is not novel.
As a youngster at Tata International,India, shortly after my MBA, I was heading a “Value cell” for this trading organisation. The bank accounts and books of sixteen such “value cells” employing 1500 persons were separate; we had our own budgets, business plans, monthly review of Profit & Loss accounts and Balance Sheets, with a small summary, describing milestone events. The turnover of the company (Then called Tata Exports Ltd.) was USD 100 million. The smallest division was USD 100,000 strong. Iwas the sole signatory of my “Value Cell” bank account and have never understood why all other companies that I worked for could not follow this simple system. It was Perhaps the most satisfying experience of my life. The Tatas of India have a more sophisticated and advanced system which could be called “Nested Value Cells” than has so far been expounded by any of these articles. They thus easily control a conglomeration of more than 50 companies in diverse fields, present turnover exceeding USD 15 billion; something which would be unthinkable for proponents of focussed organisations ( I recall the papers in HBR several years ago on the subject).
I have no commercial interest in the subject at present, as I am a manufacturer entrepreneur who continues to take interest in academics as well. For years now I have been talking of “Value Kernels” and my first reaction upon reading the Mckinsey article was to forward it to friends with whom I had shared the concept. Those intersted in knowing more, could go through internet archives where I wrote a few pages using the term “Value Kernels”
I am willing to share details with academicians and other professionals who would like to join hands to develop the Laws Of Value. I see a great commercial potential as well for those in consulting and computing.
Only a deep and clear understanding of the concept of value, structure of value cells, quantisation of value can help us unravel the Laws of Management which should withstand the test of time and not change by the decade.
Yadav Chandna
This piece has been triggered by article Organising for Value in The McKinsey Quarterly. They have enunciated the concept of Value Cells therein. The concept of value cells is not novel.
As a youngster at Tata International,India, shortly after my MBA, I was heading a “Value cell” for this trading organisation. The bank accounts and books of sixteen such “value cells” employing 1500 persons were separate; we had our own budgets, business plans, monthly review of Profit & Loss accounts and Balance Sheets, with a small summary, describing milestone events. The turnover of the company (Then called Tata Exports Ltd.) was USD 100 million. The smallest division was USD 100,000 strong. Iwas the sole signatory of my “Value Cell” bank account and have never understood why all other companies that I worked for could not follow this simple system. It was Perhaps the most satisfying experience of my life. The Tatas of India have a more sophisticated and advanced system which could be called “Nested Value Cells” than has so far been expounded by any of these articles. They thus easily control a conglomeration of more than 50 companies in diverse fields, present turnover exceeding USD 15 billion; something which would be unthinkable for proponents of focussed organisations ( I recall the papers in HBR several years ago on the subject).
I have no commercial interest in the subject at present, as I am a manufacturer entrepreneur who continues to take interest in academics as well. For years now I have been talking of “Value Kernels” and my first reaction upon reading the Mckinsey article was to forward it to friends with whom I had shared the concept. Those intersted in knowing more, could go through internet archives where I wrote a few pages using the term “Value Kernels”
I am willing to share details with academicians and other professionals who would like to join hands to develop the Laws Of Value. I see a great commercial potential as well for those in consulting and computing.
Only a deep and clear understanding of the concept of value, structure of value cells, quantisation of value can help us unravel the Laws of Management which should withstand the test of time and not change by the decade.
Yadav Chandna
Saturday, August 30, 2008
Introduction
I have been toying with the concept of Value Cells, talking to my friends at times I have been using the term "value kernels" for value cell is a common term amongst Programmers). Communication was never my forte. Analysis has been a good pastime. It is very difficult to initiate a new concept, until it has been, ironiically, pre validated by a biggie. The recent article in Mckinsey Quarterly, "Organising for value" has provided the much needed trigger for writing in the public domain.
While I use a borrowed term "Value Cell", I feel the term VALUE, which is central to the term Value Cell, needs to be better understood. I shall try to explain it in the near future.
Those interested in the topic are welcome to give their comments.
This blog should interest, among others, the following:
Thought Leaders in Management Strategy
Management Consultants
Thought Leaders in Philosophy of Management,
Economists
Environmentalists
Mathematicians, in particular Game Theorists
Physicists
Chemists
Technologists
Mathematical Biologists
Cyberneticians
Software specialists
Why such a motley crowd?
Value is not confined to economics and management. While all players above would be intereested in developing the concept, the software guy will come, package a solution, and market it. Some economists will say he "created" value. Let it be so, for the time being.
The Concept of Value
Wikipedia defines value in eleven contexts --economic, philosophical, et al. Is it possible to have ONE definition and ONE way of understanding it -- atleast in its generic form? With all other forms being special cases of the general? We try to do so in this blog.
A Starter
To give an idea of what to expect frrom this site, we give below one of the Laws of value.
LAW1
Value of the Universe remains constant. It is not mass or energy but VALUE that remains constant.
Please do not think about it. Meditate on the statement.
Does it not take you closer to developing a holistic vision of the universe? Do we really create value or simply integrate it--- unto ourselves or our system.
Implications of this statement are far reaching, but in our opinion, intransitory. Call it a hypothesis or postulate if you want to. After all, Euclid's Geometry, based upon postulates like "shortest distance betwen two points is a straight line" survived for more than 2000 years, much more than any economic or management theory.
Sources Of Inspiration
Organising For Value - Mckinsey & Co.
Theory of Price -- George J. Stigler
The Turning Point - Fritzof Kapra
The Tao of Physics - Fritzof Kapra
A Brief History of Time - Stephen Hawking
THE PROCESS AND PROGRESS OF ECONOMICS - Nobel Memorial Lecture, 8 December, 1982 George J. Stigler
While I use a borrowed term "Value Cell", I feel the term VALUE, which is central to the term Value Cell, needs to be better understood. I shall try to explain it in the near future.
Those interested in the topic are welcome to give their comments.
This blog should interest, among others, the following:
Thought Leaders in Management Strategy
Management Consultants
Thought Leaders in Philosophy of Management,
Economists
Environmentalists
Mathematicians, in particular Game Theorists
Physicists
Chemists
Technologists
Mathematical Biologists
Cyberneticians
Software specialists
Why such a motley crowd?
Value is not confined to economics and management. While all players above would be intereested in developing the concept, the software guy will come, package a solution, and market it. Some economists will say he "created" value. Let it be so, for the time being.
The Concept of Value
Wikipedia defines value in eleven contexts --economic, philosophical, et al. Is it possible to have ONE definition and ONE way of understanding it -- atleast in its generic form? With all other forms being special cases of the general? We try to do so in this blog.
A Starter
To give an idea of what to expect frrom this site, we give below one of the Laws of value.
LAW1
Value of the Universe remains constant. It is not mass or energy but VALUE that remains constant.
Please do not think about it. Meditate on the statement.
Does it not take you closer to developing a holistic vision of the universe? Do we really create value or simply integrate it--- unto ourselves or our system.
Implications of this statement are far reaching, but in our opinion, intransitory. Call it a hypothesis or postulate if you want to. After all, Euclid's Geometry, based upon postulates like "shortest distance betwen two points is a straight line" survived for more than 2000 years, much more than any economic or management theory.
Sources Of Inspiration
Organising For Value - Mckinsey & Co.
Theory of Price -- George J. Stigler
The Turning Point - Fritzof Kapra
The Tao of Physics - Fritzof Kapra
A Brief History of Time - Stephen Hawking
THE PROCESS AND PROGRESS OF ECONOMICS - Nobel Memorial Lecture, 8 December, 1982 George J. Stigler
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