Book: Unlocking the Customer Value Chain (CVC)

“Decoupling” the value chain is the next big strategy for digital innovation and business models

Book: Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption

HBR: Disruption Starts with Unhappy Customers, Not Technology

New technology isn’t driving most disruption today. Consumers are. 

Stages of Digital

Unbundling

• Unbundling - as the internet became widely accessible. In the physical world, print-based newspapers bundled articles, restaurant reviews, and classified ads. Google unbundled the newspaper by offering readers one news article at a time. Yelp did the same for restaurant reviews, and Craigslist took on classifieds. Similarly, Apple iTunes unbundled the CD one song at a time, Netflix unbundled cable TV networks one show at a time, and Amazon Kindle unbundled textbooks selling one chapter at a time.

Disintermediation

• Around the 2000s, a second wave of business model innovation appeared: Disintermediation. This time, it was the intermediaries– travel agents, industrial equipment distributors, and full-service stock brokers–that got disrupted. In the case of the travel industry, hotels, airlines, and tour operators decided to bypass the travel agencies and offer their services directly to consumers over the internet. Disintermediation wreaked havoc.

Decoupling

In the past few years, a third wave of business model disruption has been gaining strength. Instead of breaking apart products or supply chains–as in unbundling and disintermediation, respectively–the customer’s journey, or value chain, is being torn apart. What’s a “value chain?” Your customer’s value chain consists of all the activities they do to satisfy their needs and wants. Whereas it used to be that established companies “owned” all aspects of the customer’s experience (aka value chain), we’re starting to see new players take over pieces of the experience, something Teixeira calls decoupling.

A Different Kind of Innovation

And that in turn means incumbents require a different kind of innovation in order to thrive — not technological innovation, but a transformation in business models

In other words, the business model needed must take into full account the given customers’ value chain. It must understand what they want and the main steps of activities they undertake to satisfy their desires.

A prediction by Alvin Toffler in Future Shock, published in 1984: “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” Companies don’t disrupt, couple, decouple, and recouple. Their people do. The foundation of a business relationship is the customer’s value chain. For a business to succeed, its leaders must understand how to replace a competitor’s “link” within that chain with its own and then secure it against all threats.

Unlocking the Customer Value Chain: A book review by Bob Morris

How Disruption Happens

What’s Really Driving Disruption (It’s Not Technology)

Decoupling Recipe