Value Creation

There are three activities associated with value: creation, sharing and claiming. Suppliers’ solutions may help create value for the buying organisation, so when pricing their offering, suppliers will seek to charge a price for their solution which reflects the value created for the buyer. In doing so, they are seeking to claim some or all of the value created for the buyer. In cooperative relationships, the parties may agree that rather than seeking to claim value from the other, they will share the value between them. As an example, if a supplier provided a solution which reduced their client’s electricity consumption by 10% and the client saved $100,000 as a consequence, the supplier has created the value and the relationship between the parties will determine whether the buyer claims the value, whether the supplier claims the value, or whether the parties decide to share the value between them. See also Muda.