We're gonna start the value proposition conversation by defining value. Because if you don't know what value is, is going to be hard to identify what your value proposition is. So value I put up the value equation, value is benefits minus cost. I'm going to start this course by setting expectations around this seemingly simple equation, when you actually get into the math of it can actually be very, very complicated. And defining everything in here, depending on the process. And the context can also be very complicated.

So my friendly warnings everyone who's engaging with the course right now is to say, Don't underestimate the complication of calculating value and what value actually means and from whose perspective and we're going to talk about a lot of these things through the course. But essentially, value is just the difference. It's the benefits in excess to the cost you spend and engaging with a process. In the process science language, value is defined as the output of any process that's sustained over time. So energy goes into processes and creates value for clients. You could say that process, the definition of the process science handbook is, is the mechanism that transforms energy into value.

So when you're thinking about what are benefits, benefits can be anything, this is the subjective component to the value equation, and always has to be compared to somebody's perspective, or from somebody's perspective, rather. And a benefit could be looking cool. You know, getting somewhere faster, saving money, spending more money, if they're trying to get rid of money. I mean, things that could be one person's benefit, could be another person's curse. I mean, it's really, you know, one man's junk is another man's treasure. It's completely subjective.

Now, I say that at the individual level, but when you're looking at markets and you're looking at businesses, value can be brought up or benefits can be brought up and it'd be really considered fairly stable across different markets. If you're looking at population But in any case benefit in the value equation is subjective. It's whatever you're trying to achieve, and how much you think it's worth to you. And then cost, we usually think about it, at least here in the United States as US dollars. It's the objective comparing factor. It's the cost of energy to do something, it's the cost you spent, it could be your cost and time, it could be your cost in you know, body energy, but whatever it is, in the value equation, we usually like to say it's going to get down to $1 amount.

Okay, so that's the value patient. Now let's go talk about what the value equation is in the business context. As you can see here, it's exactly the same. So value in the business context is the same thing. And it's kind of a it's kind of a joke transition here. But it's good for you to internalize that value always equals benefits minus cost.

What's the difference between the personal perspective and the business perspective? Not much. The thing here is the business to complicated and unintuitive thing, the business, if you're looking, if you are pretending you are your business, the businesses benefit is always the opportunity to make a profit. A lot of people find this a little bit confusing, but it's not the revenue. You could be a company that's making millions of dollars in revenue. But you could actually be profit negative and you could be a dying company.

How is that possible? Well, there's a lot of reasons you have too high cost, or you're not charging enough, we can go on forever about that. But don't confuse the benefit of a company with revenue when it's actually the opportunity to make a profit. So if you're pulling in revenue, it depends on a lot of other factors where that revenue is actually going to be a benefit to you because that revenue could be a curse to you, if every unit of revenue actually causes you to produce negative profit. So just keep that in mind. And this is part of why this can get complicated, but the cost like everything else is dollars.

So a lot of evaluation is just about perspective. But in any case, you want your value production to be high. Whether you're person or business is always unique, providing more benefits than it costs to produce it. That's the main point here. And if you're trying to produce it for your market, you have to understand what that value is. And that's why this equation is so important to start the conversation with because what is the benefit?

And what is their cost? You've got to research that that's part of building good value proposition. And that's really what we're talking about in the slide where healthy businesses create value. Sick businesses do not, it seems fairly intuitive, but that's really in the process world. That's the simple truth, which is you could blame your business troubles or struggles on a lot of different things. But it's always gonna come back to do you have a strong value creation potential, do you have a strong value proposition?

Are all your processes in line to creating value, the healthier value you create, which means you're giving a lot of benefits out at a low cost to the market, you're going to continue to grow. If you don't, then you're not So let's talk about what the value proposition is to end the section. Because we talked about what value is, but we haven't really talked about what is the value proposition, the proposition and where the target of this training is. It's the statement, it's the articulation, the communication of it, because the value equation is going to tell you, there could be a number of complicated factors that actually say your company's building value. But what is it? And how do you quickly connect with your customers, your investors, your employees, it's very important to be able to communicate the aspects of your business process that create value.

So the value proposition is that statement. It describes that unique value creation that drives someone to engage with you and not your competitors. So that's really what we want to start with this training with. That's the introduction to what is your value proposition