by Kenneth Rudich
[Editor’s Note: This is the first installment for an ongoing series. A continuation link is provided at the end of each post.]
The conceptual origin of the generic value chain in this series can be traced to the work of well-known Harvard Business professor Michael Porter.
He described the concept of a generic value chain in his 1985 best-selling book, Competitive Advantage: Creating and Sustaining Superior Performance.
If you study the diagram of Dr. Porter’s original model, his intent to construct an analytical tool for a manufacturing environment is abundantly clear.
It begins by dissecting the whole of this endeavor into separate processes or activities — obtaining the raw materials, turning them into finished goods, and then getting them into the hands of consumers.
Once these processes have been isolated, each is evaluated to see if an opportunity exists to generate more value from it alone; or alternatively, from better meshing it with those that surround it (e.g., a smarter weaving of the work process flows).
As such, value might be increased by making adjustments within an individual activity, or it might be enhanced by strengthening the connections between activities.
Even modest gains along the chain can yield a powerful cumulative effect, one that leads to significant improvement in overall value.
Porter’s Enduring Effect
Upon release, Dr. Porter’s book garnered considerable intrigue, and his brainchild soon became quite popular in business and academia. In many ways, it marked a pivotal moment, like an inflection point, insofar as it substantially raised the bar for creating competitive advantage by concentrating on customer value.
It also broadened the scope of marketing from mere selling and promotion to an integrated, holistic, enterprise-wide concern. Marketing acumen would take on a whole new meaning and level of sophistication because of it. One might even go so far as to say this book, in response to the onset and upheaval of rapid global business expansion during the 1980’s, laid the groundwork for a marketing revolution that has yet to end. Timing, as they say, is everything, and the arrival of this work could not have been timed any better.
Countless businesses have since re-purposed Porter’s seminal model to satisfy their own specific requirements for value creation. This trend has spawned a proliferation of value-based diagrams, perhaps different in appearance but nonetheless adhering to the same basic principles.
Then google “value chain for marketing,” click the images tab, and view what it retrieves — again, more variety but the same foundational principles.
These results show how a stellar idea can endure over time and become a springboard source of widespread thought and inspiration.