From Profit chain to Value chain

I noticed that many companies don’t know in which business they are in. They lack meaning. Internal focussed companies. These are the”Profit Chains”. Most likely control, holding on and  closed are elements which can be found back in the strategy and in the culture/people working in these companies. They have become rational companies/people. Focussed on measurable elements.

Meaning and purpose is not measurable..

To be succesful in modern business(transparant, low entry, technology) we need to decide which role(function) we have in the “Profit Chain”.

Further we need to add new dimensions to the “Profit Chains”: Value(contribution, purpose) and Openess(together, open source)

Please have a look at the presentation on Slideshare..

As usual feedback very welcome..

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This entry was posted in Connected Society, Contribution Marketing, Intrinsic Values, Strategy, Sustainability, Uncategorized, Valuechain. Bookmark the permalink.

4 Responses to From Profit chain to Value chain

  1. Neok says:

    Hi,

    Interesting presentation. Seems this is build on the Business Development 2.0 concept that was discussed a while ago on the A VC blog.
    See: http://avc.blogs.com/a_vc/2006/08/business_develo.html
    Also on the blog from Flikcr’s Caterina:
    http://www.caterina.net/archive/000996.html
    (I see AVC is on your favourite blogs as well)

    I agree on the concept of traditional value chain having become profit chains. Survival of existing ‘traditional’ companies will depend on the way they innovate around their ‘core profit chain’. Opening up is indeed one of the key challenges. As always there will be many newcomers to the industry that don’t have to tackle their legacy business practices and can design and build radically new business models from scratch.

    For the more traditional companies I believe that risk-taking (decision making) and strong leadership are crucial elements to survival and renewed success.

  2. thinkmobile says:

    @Neok

    Thanks for your post!

    I realize that what I am saying is not rocket science. It is a very relevant topic, discussed by many in different words and ways. I always try to boil it down to the core. Make it easy to understand. Visualize if possible.

    I found out that it also shows similarities with work of C.K. Prahalad: http://en.wikipedia.org/wiki/Core_competency

    About risktaking See the Manifesto of Jaffe:
    http://www.jaffejuice.com/2007/01/the_manifesto_f.html

    Looks like we are on the right path..

  3. Normann and Ramirez wrote a piece in the HBR in ’93 in which they coined the term ‘Value constellation’. It’s an interesting concept.

    From the summary:
    “…strategy is no longer a matter of positioning a fixed set of activities along that old industrial model, the value chain. Successful companies increasingly do not just add value, they reinvent it. The key strategic task is to reconfigure roles and relationships among a constellation of actors–suppliers, partners, customers–in order to mobilize the creation of value by new combinations of players.”

    [From Value Chain to Value Constellation: Designing Interactive Strategy]

  4. thinkmobile says:

    @Rutger

    Thanks for your info. Reminds me of the Blue Ocean Strategy from W. Chan Kim and Renée Mauborgne

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