Have you ever thought of added-value of your life? Sounds MBA-"jargony"? I agree.. but it is a nice point.
I was watching a movie - The wonderful life - which talks about how the world woudl be if a person was not born. In this movie, the protoganist plans of committing suicide becuase his company is going to go bankrupt. An angel comes down to show him how valuable his life is and the way he does that is pretty enlightening - he shows the world -how the present would have been if he were not born. The people whose life he had saved or whom he had supported to do whatever they wanted to do were all leading miserable lives. The others whom these direct beneficiaries would have helped also were leading miserable lives ( see this is the tranistive property of maths; he was not there to help some x and that x was not capable of helping some y).... Also, the villain who wanted to acquire all the businesses in the town and monopolise the whole town ( impose high charges on the bus fares, high rents , etc.. ) had free hand to do whatever he wanted to as the protoganist was not there to lead the fight against him. Then, you and he realise the value of his life. So, the added value of his life woudl be something that if you take the world in which he exists and "subtract" from it a world which would exist if it were not there, that is the added value of his life.
If it is philosophical, ignore it! Let me illustrate through an example - Lets calculate the added value of McDonalds chain ( specifically Ray Kroc who started it ). Now, if there were no McDonalds chain, the whole fast food culture would probably not have come up, which implies people would have to spend at least $20 per meal. So, people in effect would pay $10 more if there were no McDonald. Note that there is still competition, but in a different form - the competition is from normal restaurants and not from food chains ( becuase say if McD were not there, the other chains would not exist). Now $300 M people ( population in US ) - assuming 1 in 10 people would eat in McDonald ( which is a very conservative estimate), $30 M people would be eating in McDonalds everyday. If McDonalds were not there, the $30 M people would be spending atleast $10 more. So, the value-addition of McDonald is $300 M. Sounds cool right?
Anyway, the two points that I wish to make are : One, the movie is awesome and a must watch for everyone. The second point, is every one needs to think about the added-value of their life - what difference are they making in this world and what would it have been if they were not born! The same thing applies to companies too - they need to bring some value addition to the consumers. (Now, the entire value addition that they bring in - they might be able to capture part of it only in the form of profits/revenues depending on the bargaining power and other factors), but immaterial of that , they are adding value to the consumers. Sounds ideal and theoretical? Not, not actually.
If you carefuully observe, this is what all the big companies have done.... More on this later...
Thursday, August 09, 2007
Ever thought of the added-value of your life?
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4 comments:
The benefit or value add of something can only be calculated if we know what incremental benefit its providing vis a vis its competition. If there were no McDonald's there would have been another xyz chain in its place! Its extremely difficult to calculate the "what if" scenario unless we have data points. The most often used approach is to look at the difference in value-add u bring over your competitior(say month on month and then annualize the figure ) to get a rough estimate.
but then I think i've lost the point of the whole post :D
Sreejith,
I agree with your view points. One has to consider the situation when McDonald woudl be there. My implicit assumption is that if not for McDonald, there would be no other chain. Because McDonald was the one which started the whole fast food chains concept...
Remember that there is still competition, but the competition is in the form of restaurants ( and not fast- food chain).
Thanks for reminding me about the implicit assumption that I was making... It shows the fundamental mistake people make - of making assumptions! It is so difficult to eliminate making implicit assumptions...
Btw, this was a test to see if the visitors at my blog were reading my blog "actively" ;) And you passed it :)
Anyways, the point that I was making was each of us add value to others life or to the society. It is important to do that. If you have not watched the movie, you should definitely watch it - it talks about the life of a human being and how he benefitted others and how would the world be if he were not born!
Point 1 - Good idea and great way of driving home the point
Point 2 - Let me be cynical. All of us add value to others lives. All of us , in some way devaluate others too. Had there been no me, there would have been less value in lives of 10 people, but may be more value in lives of 20 .
Point 3 - Your example - McDonalds does not add any value as such. The market dynamics decide that, there are people who think their food to be half as cheap as teh restaurant prices and are ready to sacrifice the good ambience and stuff like that there would be always alternatives coming up. And the free market would take care that it is priced $10, just like the Mc. Now, had there been no Mc, may be there would be no other popular chains like Burger king or KFC and may be there would even have been a wave of healthy bio 'fastfood chains' at the same price. That is Mc , may have actually taken away value from our lives.
Hi Nishkala,
Apologies for trying to contact you this way. I am the same person who commented on the google adsense T&C few days back. Wanted to speak to you about your Tuck experience. Would it be possible for you to spare few minutes of your time? I am planning on visiting campus on 09/11/2007.
Thanks,
Ashutosh
hiashhere@gmail.com
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