Decoupling of the Value Chain

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email

Professor Thales Teixeira from Harvard Business School took 8 years to write his book ‘Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption’. His observations of dozens of startups, tech companies, and traditional players led to an understanding of how business is being disrupted. We’ll discuss his findings while uncovering the question: Why now?

DECOUPLING OF THE CUSTOMER VALUE CHAIN

The publisher explains: “There is a pattern to digital disruption in an industry, whether the disruptor is Uber, Airbnb, Dollar Shave Club, Pillpack or one of the countless other startups that have stolen large portions of market share from industry leaders, often in a matter of a few years.”

“As Teixeira makes clear, the nature of competition has fundamentally changed. Using innovative new business models, startups are stealing customers by breaking the links in how consumers discover, buy and use products and services. By decoupling the customer value chain, these startups, instead of taking on the Unilevers and Nikes, BMW’s and Sephoras of the world head-on, peel away a piece of the consumer purchasing process.”

A customer value chain is a business concept that represents the creation of value for a customer. It is similar to the supply chain, which charts the various stages of production and supply from raw materials to the sale of the final good to the end user. The big difference is that while a supply chain often measures costs, the customer value chain is based on the increase in value to the end user.

This idea is somewhat similar to a ‘value stream‘. Value streams describe how a stakeholder – often a customer – receives value from an organization. As opposed to many previous attempts at describing stakeholder value, value streams take the perspective of the initiating or triggering stakeholder rather than an internal value chain or process perspective.

What Uber, Amazon, and Airbnb have in common is that they aim to make the customer’s job-to-be-done a lot easier. Uber made ride-hailing a breeze, Amazon made it simple to search for exotic books, while Airbnb made it effortless to find a cheap and fun place to stay. They all took the customer’s job-to-be-done as a startingpoint and created a service that significantly improved customers’ lives.

While Teixeira’s viewpoint does hold merit, what’s even more important is the question: Why is this happening now? How could these startups disrupt markets and industries that have been under the control of large corporations for so many years? To get to an answer, we need to look at another surge of decoupling ─ in particular, one that took place almost 100 years before.

DECOUPLING OF WORK AND craftmanship

Around 1890, Frederick Winslow Taylor was one of the intellectual leaders of the Efficiency Movement, a pioneer in applying engineering principles to the work done on the factory floor.

What Taylor described, often referred to as the division of labor, was, in fact, the decoupling of work and craftsmanship. Instead of having to hire exceptional people with a broad skill set, he suggested to break down work into smaller pieces. This allowed a factory manager to hire specialists that were much cheaper, easier to train and replace, more skillful, and therefore more productive.

Throughout the years we’ve applied the same scientific management principles, not just to factory workers but throughout the entire organization. Even today, people are compelled at a young age to make a choice of their area of specialization. Polymaths are not allowed.

Subscribe To Our Newsletter

Get updates and learn from the best

More To Explore

Beyond News

Decoupling of the Value Chain

Professor Thales Teixeira from Harvard Business School took 8 years to write his book ‘Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption’. His

Beyond News

The Trinity of Design Thinking

The inconvenient truth is that an estimated 93% of Customer Experience (CX) initiatives fail, while in 2016, according to Gartner, 89% of companies expected to

Do You Want To Boost Your Business?

drop us a line and keep in touch