Value-Chain-Building

Value Chain Building

With Value Chain Building, disruptive business model thinking in Innovation Horizon 3 becomes a rationally comprehensible arithmetical task.

The current VUCA world keeps organizations and companies in every industry constantly on their toes. For some years now, we have been living in a new reality in which permanent adaptation to new circumstances against the backdrop of a rapidly changing environment has become the norm.

Whereas in the not too distant past, core innovation was still classified as an absolute value driver for organizations and sometimes even merely as a nice to have, the picture today in the context of digital, disruptive change looks very different.

In the meantime, innovation in the core business of a company is essential for its continued existence – from a nice to have to an absolute must have, so to speak. If an organization does not continue to develop, it is threatened with a gradual loss of value and ultimately, in the worst case, with complete uncompetitiveness. Against this backdrop, where core innovation is no longer a value driver, companies need to identify new sources of growth. Value Chain Building (VCB) is a methodical approach that makes precisely such sources of transformative growth traceable in a risk-reduced manner.

Specifically, VCB involves establishing a link from one business model to a distant other in a structured way. This does not necessarily mean a logical vertical market connection between manufacturer and supplier, for example the bottle manufacturer delivers to the beverage bottler, but rather the question: how does company A fundamentally move from an ongoing, familiar business to an entirely new one – to its own vision.

For example, imagine a steel distributor suddenly wanting to open an eCommerce marketplace or a consultancy wanting to get into selling yoga mats. Of course, it seems reasonable to ask why such companies would do this; after all, they are probably good at what they do. However, the question here is rather what a company can do in an uncertain future, if a radically different vision is to be pursued or if the company focuses on radical diversification, e.g. because the traditional market is breaking away piece by piece. If you look back at the past, just think about the development of Nokia at that time – from a rubber boot manufacturer to a cell phone producer.

In the age of digital transformation, every company is faced more than ever with the discussion of how it can either expand its own business or put it on a solid footing through radical (not immediately obvious) diversification.

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