The Post Industrial Company through the Value Chain Lens

If Social Business is really transforming the way we do business why are most of the stories and cases out there focused on changes to a single business function like marketing, human resources, or customer service? Shouldn’t it act as a change across several of these functions, or for that matter will these functions go away or change so fundamentally that we can no longer tell them apart?

…If these hold out commonly, then we are starting to see the cracks in the Value Chain model at least in terms of the separation of functional areas.

This is an interesting post (and follow-up), but an unfortunate mistake in Rawn Shah’s argument is that he appears to have interpreted the Value Chain as something that describes organisational structure, when in fact it is a model of activities.

Briefly: Porter’s Value Chain concept was introduced in 1985 as a tool to help large organisations make a more holistic cost analysis of their competitive position. It is true that this concept was developed primarily for product-based businesses, but has been adapted for service and knowledge-based organisations. Some people also use the model for qualitative analysis.

But Shah’s main question about organisational structure are worth considering through the lens of the Value Chain. My questions from this perspective are:

  • What is the impact of Social Business on different activities in the Value Chain?
  • Are organisations reconfiguring themselves enough to completely optimise the linkages between activities, bearing in mind what is possible as a Social Business?

Shah’s example of Social Learning is actually an excellent example of this shift in practice but isn’t a failure of the Value Chain. “Learning” activity is still happening, just in a different way. The question about structure is really about if the centralised corporate training function is actually adding enough value in this new environment.

More broadly I believe that Social Business is starting to have an impact, but most organisations have not fully optimised for it. Time to use the Value Chain to drive change, rather than throwing the baby out with the bath water.

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2 thoughts on “The Post Industrial Company through the Value Chain Lens

  1. Thank you much for the comments, Mr. Dellow; I do appreciate it. You’re right in that they do refer to activities versus actual organization in the literal sense. For example, “Production” in the Porter model is typically several different parts of the organization e.g., Research, Product Development & Management, actual Production/Manufacturing. However, the activities are still how most companies lay out their organization. The conceptual model has become the actual organizational structure. It is no longer art imitating life, but art defining life. In either case, what seems to be ill-fitting for the form is the linearity of the model because of the over-simplification of the activities. For that matter, do some of those activities still exist at all? Rather than take them for fact, I’d say we start to question that basic nature. Until we do figure that out and have a strong sense for what it really is, I agree we should not throw out the baby with bathwater (and because throwing out babies is generally a bad idea as well :).We know there are new properties and one of them which we are all still wondering about is the decentralization aspect. Is there a shape to this decentralization? How do you compare one decentralized model to another entirely. Using Dave Snowden’s (@snowded) Cynefin model is this a Chaotic entity or a Complex or Complicated one.

  2. All great points. I think we need multiple models to describe what is going on, what needs to change and what the new opportunities are. However, I also think many of these models already exist – we just haven’t applied them widely yet. For example, see Optimice’s overview of the differences between Process, Value Network and Social Network mapping.

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