Leveraging the Dynamic Value Chain

Blog /Leveraging-the-Dynamic-Value-Chain

In my last post, I urged CIOs/CDOs to take a look at their organizations and question the following: Are my organization’s senior leaders and line-of-business managers focused on managing resources rather than managing value?

If the answer is a resounding yes, you are among the huge number of organizations experiencing financial pressure from stakeholders to focus on return on investment and return on assets. In that post, I concluded that it’s essential to not just understand the value chain, but also make it adaptable and dynamic. In this post, I’ll elaborate on my conclusion and suggest ways to bring it about.

Business conditions may change, but business fundamentals do not. Simply put, organizations still strive to launch best quality product at the lowest possible cost or carve out a niche for premium pricing in segments that are not well served. But businesses today are faced with escalating costs, thinner margins, and fierce competition, so even with efficient internal business processes, success is in no way guaranteed.

Rather, success requires flexibility and adaptability to changing business needs. And that means implementing a dynamic value chain that manages complexity and variability by increasing internal flexibility through superior visibility, decision making, and coordination.

Importantly, most organizations are not sufficiently digitized to achieve a level of flexibility that equips them to deal with marketplace variability. Today’s enterprises  need faster discovery, decision confidence to course correct, and fast action to achieve a competitive advantage. This can be achieved by setting up the foundation of superior visibility, digitized decision support, and internal coordination.

Typical implementation of a dynamic value chain starts with the following:

  1. 1Conduct a value-chain analysis
  2. 2Identify and prioritize the constraints
  3. 3Design an intervention strategy
  4. 4Identify tools and technology for sufficient digitization
  5. 5Implement and/or upgrade to scale up value creation
  6. 6Monitor performance

The process then evolves with inputs from organizational competitive strategy, market behavior, and observance of divergence from intended result.

The final step is institutionalizing the necessary processes, providing senior leaders and line-of-business managers the flexibility and skills to read emerging-market signals from your digitized decision support solution and respond with coordination. This will ensure your organization’s senior leaders and line-of-business managers are aligned to manage value instead of resources.

Post Date: 5/16/2016

default blog image Nabeel Siddiqui

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