In the book Unlocking The Customer Value Chain, professor Thales Teixeira explains it as a framework of all the steps or activities that customers have to go through to acquire products and services. The customer value chain then helps to map the journey of our customers from their viewpoint.
- Why the customer value chain matters
- Customer-centrism as a market force
- From vertical integration to unbundling
- Key takeaways
- Customer Value Chain Waves: From Bundling To Unbundling, back to Deintermediation and Re-intermediation
- Related Innovation Frameworks
Why the customer value chain matters
There used to be a time when the value chain was primarily intended as “the process or activities by which a company adds value to an article, including production, marketing, and the provision of after-sales service.” (source: Google)
While this is still a valid definition, if we change perspective and we look at it from the customer viewpoint, the value chain is “a conceptual idea that explains in a framework all of these steps or activities that customers have to go through in order to acquire products and services.” (Thales Teixeira in the FourWeekMBA interview)
This is one of the most valuable concepts to internalize if you’re launching or running a business in a market controlled by large tech players.
If they disrupted old players, there is always a step of the value chain that you can unlock.
Customer-centrism as a market force
The penetration and maturity of the web favored those companies who could tap into customers’ wants and needs, to also to understand better than anyone else the products they wanted.
This focus on customers enabled companies to build competitive advantages by building valuable business models.
Where in the previous era, companies could gain a competitive advantage by optimizing business processes. In the new era, those companies that built value for customers could gain a lasting advantage.
From vertical integration to unbundling
A classic way for companies to build a lasting advantage in the previous era was the optimization of the supply chain and the integration of each step of it to produce products at a lower cost.
Some key elements to take into account are:
- A business model is about delivering value and capturing a portion of that value in the form of revenues and profits and figuring out who this value‘s captured from is very important.
- The customer value chain is a conceptual idea that explains in a framework all of these steps or activities that customers have to go through in order to acquire products and services.
- The web-shaped the business world with three waves: unbundling (breaking the product), disintermediation (breaking the supply chain), and decoupling (breaking the customers’ value chain).
Customer Value Chain Waves: From Bundling To Unbundling, back to Deintermediation and Re-intermediation
The customer value chain is the best place to start when it comes to identifying entry points incumbents’ weak spots.
In a decoupling mode, instead, a startup can simply offer part of the product or service, which the user/consumer value the most. While avoiding carrying the cost associated with offering a “full product.”
Coupling is a way for startups to move to adjacent areas as they create options to scale.
Related Innovation Frameworks
- What Is Business Model Innovation And Why It Matters
- Successful Types of Business Models You Need to Know
- The Complete Guide To Business Development
- Business Strategy: Definition, Examples, And Case Studies
- Blitzscaling Business Model Innovation Canvas In A Nutshell
- What Is Market Segmentation? the Ultimate Guide to Market Segmentation