Monday, November 11, 2019

Unlocking the Customer Value Chain by Thales Teixeira

Unlocking the Customer Value Chain by Thales Teixeira was a very thorough business book featuring the subtitle How Decoupling Drives Consumer Disruption, with the things that stood out in it noted below...

From part 1 - The New Reality of Markets:

- Business disruption often isn’t necessarily driven by technology innovation, rather by a company decoupling, or breaking down steps in the Customer Value Chain (an example of a four step CVC being: evaluate, choose, purchase, and consume), and then fulfilling the need from a specific step.

- Business success can come from new ways, with an example of this Best Buy or supermarket chains now getting a substantial portion of revenue from manufacturers paying for prominent display space, or Costco losing money on sales to consumers, and making it on memberships.

- Innovative business models have to be more than simply the digital version of a traditional business. Instead, there should be an incremental innovation, leading to a disruptive idea.

From part 2 - Responding to Decoupling:

- Creating moats around your product, as Gillette did with their razors and replacement blades, isn't a customer-centric approach, and can be attacked by someone with a focus on the consumer.

- Established businesses facing decoupling threats can attempt to counteract them by recoupling, basically trying to force customers to not work with the decoupling. It's a risky approach, though, and an alternate approach would be for an established company to engage in preemptive decoupling. One way to decouple your own business is to actually rebalance, and then attempt to capture value, or revenue at the points that you create value, with the previously noted story of Best Buy getting fees from manufacturers an example of this.

- An established company in a market should calculate market share at risk due to decoupling, then if risk is high, calculate the cost of responding vs the risk, then if the decision is to respond, decide whether to decouple or recouple, and if decoupling, decide whether to rebalance.

From part 3 - Building Disruptive Businesses:

- A good way to begin as a disruption force is to operate on the fringe of a business, do well at a small aspect of the larger business. This helps in both having a focus and in not being as large of a target to take down.

- Growing as a business is about focusing on core competencies, and then moving into adjacent markets, particularly if there are things adjacent in the Customer Value Chain. Doing this can lead to growth by coupling, organically creating strong ties to the customer. It really is all about the customer, not innovation or competition, but the customer, and there should be incentives for employees to serve the customer.

- The idea of set-it-and-forget-it (SIAFI), where consumers receive products as part of subscription services is a fairly new and large consumer trend.