Value creation

In recent years, a dangerous discourse has been gaining ground, “demonizing” those who venture and legitimately earn the much-maligned “profit.” This discourse completely disregards the phenomenon of value creation. Perhaps this concept is the least understood. Creating value means developing something useful for which someone is willing to pay. In the collective imagination, there is the idea that this is due to a stroke of luck or a moment of inspiration. The famous “Eureka!” of the legendary Greek mathematician Archimedes. Nothing could be further from reality. Penicillin is a good example. Alexander Fleming “accidentally” discovered the phenomenon. However, it took more than 12 years and a series of complementary studies to turn Fleming’s discovery into a viable product that someone would be willing to pay for and use. That’s why Fleming shares the 1945 Nobel Prize in Medicine with Boris Chain and Howard Florey. 

When you hear someone say that value creation does not exist, or makes you think that it is only due to an abusive labor relationship, please do not let it pass. Help them overcome these 19th-century ideas. Encourage them to move beyond their confusion by sharing some very simple and close-to-home cases of value creation, such as: a musician who composes songs and then, through their copyright, receives royalties for the use of their creations. An institution that replaces the lights in its facilities with new, high-tech LED lights. With energy savings, it pays off the investment and generates significant savings in the future. Or a designer who uses software to create a chair. Useful, with an attractive design, and high demand from the market. This allows them to charge a higher price than that of an ordinary chair. Like Apple, Tesla, or John Deere in their respective industries. 

Now add an additional factor: the risk that the entrepreneur is willing to take to change the status quo. Stories of failure are much more common than those of success. Yet many dare to take the risk. Like in a poker game, they go “all in,” attempting to make their vision a reality. Entrepreneurship is not a simple task. Just look at all the companies that unfortunately have disappeared during this pandemic, and the difficulties their owners have had to endure. I invite you to highlight all the positives behind entrepreneurship, innovation, and the phenomenon of value creation in 2021. The Chile of the next 30 years largely depends on our ability to convey the right ideas to the coming generations. 

Column originally published in El Mercurio.