People don’t realize that most individuals who have become wealthy were able to assemble the resources instead of being a resource in someone else’s wealth building process.
My daughter is an engineer and a very smart one at that. When she was in college for chemical engineering and taking what arguably are some of the hardest college level courses in a college or university’s course catalog, I had been managing a multi-faceted division where I worked. One of those divisions was the engineering department.
My daughter was amazed but mostly aghast. She came right out and verbalized her shock. “How could YOU be the person to manage the engineering department?”. What she actually meant was how could somehow ‘like me’, a non-engineer without any engineering credentials, be the person who was actually selected to be in charge and oversee those individuals who were clearly intellectually superior to me.
It’s the individual who can assemble the resources that gets to lead
I think my response was appropriate. Actually, I think my response was something that got my daughter to step back and fully assess the world of work and may have actually put her on a different employment trajectory.
“It’s not the individuals that know the subject matter that run companies. It’s the individuals that can assemble the right people and the right resources needed at the right time that run companies”.
What does this have to do with wealth building or financial independence? Surprisingly, everything. In today’s economy where information and the delivery of it is so crucial and highly valued, it’s not the smartest person in the room who is necessarily the most highly valued or compensated.
In fact, it’s usually the person who can put together that solution, provide value to the customer and successfully deliver it that is the most highly valued and highly compensated individual.
Package the value for the customer
That’s why in this new economic reality we all need to seek out an economic situation where we are responsible for ostensibly packaging the value being sought by the customer and delivering that value to the customer. The closer we can emulate that in our employment situation the better we stand the chance of being in a position of being ‘disproportionately’ compensated versus the time that we spend.
Let’s use an example. In a past life I interacted with a lot of residential and commercial real estate developers. They relied heavily upon really smart engineers and technicians to draft up the land use plans, construction documents, blueprints, etc. for the proposed development.
Their involvement normally involved acquiring the interest of the underlying property, selling the vision to prospective investors, pre-selling the end product, getting the project permitted and overseeing the construction and marketing of the project.
It could be argued intensely that the developer knew very little about the construction aspect of the project and in most cases, probably didn’t even know how to hammer a nail!
The person who creates the vision and opportunity gets paid the most
Yet, the developer always seemed to make a ‘disproportionate’ amount of compensation for his/her time spent on the project performing what could be debated as being ‘less valuable’ individual activities than those activities responsible for actually building the product. For the most part, the developer was paid for making the opportunity available and assembling all the pieces.
Although in this example the individual ‘pieces’ of the project have inherent value in their own right, the value becomes disproportionate when they are assembled together to create the ultimate value proposition being sought by the customer. This is the same when creating a brand.
A good brand can enjoy a significant mark-up multiple on its price simply on the strength of its brand far in excess of the base value of the individual componentry and ingredients in the product to begin with. This is what essentially elevates a product from being a non-differentiated commodity into a highly in demand brand.
Taking this example a bit further, this is why a plain t-shirt derives its value from the quality of the material and construction while a t-shirt with a particular logo on it seems to transcend the underlying quality and construction of the shirt onto another level.
That is why you routinely see a significantly better constructed non-logo t-shirt sell for far less than an inferior constructed t-shirt but with a highly recognized and desired brand logo on it.
This behavior would make no sense unless there is somehow value in the assemblage and packaging of the ‘resources’ that command value.
When you’re the resource your value is limited
Going back to our employment example, when you are hired to be the resource your value is limited to simply the value that your information or contribution is worth. Taken another way, if you were on an assembly line and made a critical component such as a steering box it would undoubtedly have its own inherent value.
The raw materials to make it, the labor being spent to manufacture it. However, the value of that component by itself doesn’t get the multiplying benefit of the collective value of the overall finished product as it would should it be part of the final assembly of say a brand new Porsche.
Conclusion
Just as in the world of work, if we find ourselves simply being a component responsible for just one function in an overall system we are going to be paid accordingly.
Even if that function requires us to be the smartest person in the room, such as highly educated and credentialed specialist, or the most skilled individual on that task.
We need to become the individual in that system whose role it is of ‘assembling’ all the components of value up into a final product or service.
In effect by doing so, we get to add a small markup on each component as we go along until we have reached a significant ‘margin’ that we are able to charge the customer for performing that role.
In order for us to build wealth, we need to be the individual who is in the position of being able to see the opportunity and recognize how to assemble all the pieces of value in the chain that are required in order for the customer to derive the value they are seeking.
Just as the saying “it’s better to be the hammer than it is the nail” goes, in wealth building it’s better to assemble the resources than to be the resource.
