In the book Unlocking The Customer Value Chain, professor Thales Teixeira explains it as a framework of all the steps or activities that customers have to go through to acquire products and services. The customer value chain then helps to map the journey of our customers from their viewpoint.

Why the customer value chain matters

There used to be a time when the value chain was primarily intended as “the process or activities by which a company adds value to an article, including production, marketing, and the provision of after-sales service.” (source: Google)

While this is still a valid definition, if we change perspective and we look at it from the customer viewpoint, the value chain is “a conceptual idea that explains in a framework all of these steps or activities that customers have to go through in order to acquire products and services.” (Thales Teixeira in the FourWeekMBA interview)

This is one of the most valuable concepts to internalize if you’re launching or running a Business in a market controlled by large tech players.

If they disrupted old players, there is always a step of the value chain that you can unlock. 

Some key elements to take into account are:

• A business model is about delivering value and capturing a portion of that value in the form of revenues and profits and figuring out who this value‘s captured from is very important.
• The customer value chain is a conceptual idea that explains in a framework all of these steps or activities that customers have to go through in order to acquire products and services.
• The web-shaped the business world with three waves: unbundling (breaking the product), disintermediation (breaking the supply chain), and decoupling (breaking the customers’ value chain).
• Decoupling consists of identifying activity in the customer value chain that can be performed separately from the others. In that case, the decoupler provides a better value for the consumer for that activity, while it captures business value away from the incumbent.
• When decoupling companies should take into account the costs for consumers. Costs are not just monetary, but they relate to three pockets of currencies: monetary currency: money. Time currency and effort currency.
• A brand is important, and while it helps to lower the risk for consumers in making certain choices; brand loyalty has become less relevant today compared to a few decades ago.
• Companies that succeed in decoupling are those that manage to be customer-focused, so to deliver better value at a lower cost (intended as monetary, time and effort).
• Specialization is the key to decoupling as it helps to deliver better value at a lower cost in a specific activity of the customer value chain.
• Coupling might be the next wave, where companies that are taking over several industries by moving in adjacent spaces that might benefit the consumers they are already serving.

Suggested resources:

• What Is Business Model Innovation And Why It Matters
• What Is a Business Model? 30 Successful Types of Business Models You Need to Know
• The Complete Guide To Business Development
• Business Strategy: Definition, Examples, And Case Studies
• Blitzscaling Business Model Innovation Canvas In A Nutshell
• What Is Market Segmentation? the Ultimate Guide to Market Segmentation

Read next: 

• Discussing Business Model Innovation With Felix Hofmann [Interview]
• Lessons On Running Lean With Ash Maurya [Interview]
• Pretotyping: How To Find The Right Idea To Avoid Business Failure With Alberto Savoia [Interview]
• Innovation Strategy Lessons With Greg Satell [Interview]

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