Clear Thinking in a Complicated World
“Ideology asks for acceptance—Intelligence asks for evidence.”
Why Socialism Struggles
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Do you create value or merely work? When I started this website, my first article was 'Don't Work-Add Value'. I chose this topic because it is the most misunderstood aspect of economics that directly impacts personal well-being. It's such an important topic that I plan to revisit it from time to time. The basic idea is simple enough: most of us think we work for a living, but that's not true. Work has no inherent value; the value is in the result of the work. Sometimes, work only has value for the worker. Examples would be working out at the gym, digging in the garden, doing crossword puzzles, or hiking. These activities all require effort; they are work, but they are only of value to the doer. They are working but aren't doing things to earn a living. To earn a living, doing something that creates value for someone else is necessary. Why? Because someone is paying you. They are giving you something you want in exchange for something they want. But there's a catch. Most of the time, we think that the person we are working for is the person paying us, but that is usually not true, except for the self-employed. The person paying you is typically a middleman. A middleman is the one who brings the producer and the consumer together. The person we are working for is the end consumer. It is the end consumer for whom we must create value to make a living. Creating value for the consumer is often more complicated than it may seem. This subtlety is true because creating value for someone else means we must first learn what they value. This concept is more evident for the self-employed. To financially succeed as an artist, it is essential to create art that someone else values and is willing to buy. Doing art for art's sake is fine, but it's just like lifting weights or hiking; its only value is to the doer. Who cares? How is knowing this helpful? It's useful in two ways, one internal and one external. The internal way won't directly lead to greater success but will make you happier. Whatever the job is, it helps to focus on the result for the end consumer. That consumer is paying because they value what you are doing. Sometimes, seeing that is easy. If you are a nurse, you deal directly with the end consumer, so you can see how they appreciate it when you do a good job. Sometimes, it's a little more complicated. If you are a mechanic working at a dealership, you may never meet the end consumer. If you focus on your boss or the car you are working on, you miss the reward of the happy consumer whose car now works perfectly. On the other hand, if you focus on the end consumer, you can imagine how glad they will be that an expert like yourself was able to repair their car successfully. Sometimes it's even more complicated. Sometimes, there are several middlemen between the producer and the consumer. But it's usually possible to see who the end consumer is and how they benefit from your effort. However, sometimes, employees are too far from the end consumer to focus on them. For example, a professional athlete doesn't typically focus on pleasing the fans in spite of the fact that the fans are their actual consumers. No fans—no professional sports. This problem becomes even more complicated because the professional athlete can rarely have the kind of effect on fans that someone like Caitlin Clark has had in the WNBA. This conundrum leaves the producer with the task of finding other motivations. It might be personal pride, it might be team pride, it might be the money. The other benefit, the external benefit, is that people who focus on the end consumer perform better. The mechanic we mentioned earlier who thinks, "I have to get his right, the client is counting on me," will always do a better job than someone just trying to keep their job. Doing a better job leads to higher pay and faster advancement. Creating value is far superior to merely working. Value creation focuses on generating tangible worth and making substantive contributions that move the needle on goals, while simply working often emphasizes time spent rather than impact achieved. Value creation gives employees a greater sense of purpose and direction; rather than just clocking hours, they feel they are doing something meaningful, leading to increased motivation, engagement, and pride in their work. Employees who focus on value creation tend to be more productive and innovative. A Stanford study found that engineers evaluated on their contributions to innovation and problem-solving were over 50% more productive than those assessed merely on hours worked. Culturally, shifting from a work-centric to a value-creation mindset would be highly beneficial. As a society, we must celebrate and encourage value-generating activity rather than the time or amount of work spent. We must reward contributions to innovation, problem-solving, and achieving core objectives rather than time spent. We must foster a culture where employees are encouraged to develop new processes, find cost-efficient ways to produce existing products, and create new offerings that satisfy customer needs. The ability to create value is a critical differentiator between success and failure. Individuals and organizations prioritizing value creation over simply doing work or spending time set themselves up for greater success, satisfaction, and impact. A culture of value creation has the potential to provide upcoming generations with a mindset that will make them happier and wealthier. This shift from a work-centric to a value-creation mindset requires a fundamental change in how we approach life. It requires asking ourselves, "What am I doing to create value for others." This perspective gives individuals and organizations a more fulfilling and purposeful work experience. Today, those who have mastered this mindset enjoy a tremendous advantage over those who haven't. Tomorrow, we could have a culture where everyone shares this mindset, and we can create value for each other and build a better world.
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