Customer value chain (CVC) Decoupling Recipe

As Jim Collins put it more than a decade and a half ago in his bestselling book Good to Great,

“Technology is an accelerator, never a creator of momentum and growth.”

How decoupling differs from unbundling and disintermediation

Step 1: Identify a Target Segment and its CVC

• Understand a group of customers with similar needs - a target segment - and map out all the activities in that group's typical customer value chain

• Decouplers often trip up on this step in two ways

  • First - they are overly generic in articulating the CVC

    • The generic process of awareness, interest, desire, and purchase isn't specific enough to help

  • Second - failing to identify all the relevant stages in the value chain

Step 2: Classify the CVC Activities from the Customer's Perspective

• Value Creating and Value Charging = Winning Combination

• Value-creation decoupling includes businesses that break the links between two or more value-creating activities. The decoupler offers one of these value-creating activities, while the incumbent that has been decoupled retains another value-creating activity.

• In value-eroding decoupling, disruptors break the links between value-eroding and value-creating activities.

• The third type of disruption, value-charging decoupling, includes businesses that decouple value-creating and value-charging activities.

Map the stages of your customer’s CVC to discover where you create value, where you charge for it, and where you sometimes erode it.

Then ask yourself three questions:

• Can you deliver more value in the value-creating activities without charging more?

• Can you afford to capture less in the value-charging activities, everything else being equal?

• Can you reduce eroded customer value without diminishing what you’re offering or capturing?

Step 3: Identify Weak Links Between CVC Activities

Step 4: Break the Weak Links

• Make it worthwhile for customers to decouple their activities from the incumbent

  • Reduce:

    • Money

    • Effort

    • Time

Step 5: Predict How Incumbents Will Respond

• Predict how incumbents may respond and then take preemptive action

• Preemptive Action

  • Re-coupling what the disruptor decoupled

  • Preemptively decoupling, directly offering their customers the chance to decouple