Let’s think about a business that makes and sells physical goods. This business creates value in a chain of processes, such as
- purchasing materials
- processing the materials to make products
- marketing the products to customers
The point to pay attention is that even if you need the materials, you do not need too many materials. In order to sell goods, you need to purchase materials. But purchasing materials does not create value by itself. It is important to perform all three steps of purchasing → processing → selling. These three steps are closely related to the three elements of the learning cycle: information gathering, modeling, verification described in (1.1) The learning cycle.
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