According to the book, Unlocking The Value Chain, Harvard professor Thales Teixeira identified three waves of disruption (unbundling, disintermediation, and decoupling). Decoupling is the third wave (2006-still ongoing) where companies break apart the customer value chain to deliver part of the value, without bearing the costs to sustain the whole value chain.

Understanding the Customer Value Chain

The customer value chain primarily represents all the steps customers take in order to get the product or service. Thus, that represents a journey, but from the customers’ perspective and what kind of value the customer gains at each step.

In short, at each step of the experience customers gain a different set of values which make up the whole customer value chain. For instance, if I walk into a local book store, the whole experience will have different sub-values I gain as a customer.

As I enter the store, the value I get is the immersive experience of being able to feel, touch and walk through the store to find the book I need. As I see various books, I can open them, have a quick glance within, and why not, also read some chapters.

While I might be able to do the same on my Kindle, the immersive experience of the bookstore, makes it very attractive for a voracious reader. And yet, as I’m about to buy a few books, I might have to find them in various local bookstores.

Or I could, for instance, check if they are all available on Amazon at a lower price. On Amazon I’ll be able to find them all and at a lower price (Amazon’s mission it’s all about variety and convenience).

While initially, as a customer I get the most of the experience. I can use any local bookstore to evaluate and choose the books I need, and yet finalize the purchase on Amazon, as I get convenience.

Over time, I might end up doing the whole process on my Kindle, as I can have right away books I need.

This is, perhaps, how Amazon decoupled the bookstores’ customer value chain. Where in disintermediation, the company disrupts the distribution process, by cutting out intermediaries.

In decoupling, it’s primarily about value and how it’s delivered to customers. So part of the experience is redesigned, and the decoupler identifies a core part of the value chain where it will add much more value compared to existing players.

The decoupler then, in theory, enhances the part of the value chain where there is the most business value (Amazon didn’t have to maintain physical stores) as it carries high margins and it is highly scalable (the whole experience can happen online).

This is an asymmetry which digital business models and platform business models have leveraged on to build multi-billion dollar companies.

Breaking down Decoupling

As discussed with Thales Teixeira: “Decoupling is this idea that I’ve observed across all these industries and these startups that I noticed is that they weren’t trying to really steal customers from what we call the incumbents, the large established companies.”

In short, as he pointed out “Airbnb wasn’t really trying to steal the customer in the traditional sense from all the hotels in the world. If it was trying to do that, it would create hotels and maybe build it and get hotel rooms and then steal customers from Marriott or from the Ritz Carlton or from any other hotel.”

Instead, what Airbnb wanted to do was just “improve the matchmaking between people that had homes to rent and people that were trying to find, and not just hotel rooms, but actually a different experience to stay in somebody else’s home for a while.” And so that key activity of matchmaking is what Airbnb decided to do.

Birchbox case study

An example is how Birchbox manufactured a different experience compared to Sephora, already a massive player in the beauty industry.

Birchbox, helped women sample beauty product more conveniently and with a subscription-based business model.

Thus, with a $10 per month the customer get five samples beauty products, delivered at home. Convenience, price and different kind of experience drove the Birchbox business model.

Therefore, Birchbox removed the hassle for customers to having to go to Sephora to source beauty products. While also pricing it at a convenient price, and delivered at home.

By identyiing the key activities Sephora customers have to go through. Birchbox understood they wanted to focus on sampling beauty product, as the most valuable part of the customer value chain.

And they specialised in that.

Initially, startups entering several markets choose to decouple as this makes them focus on one core and key activity in the value chain, which makes them grow more quickly and be identified with that .

How to decouple

To decouple you might want to ask a few questions:

• Why do people want to buy it?
• What do they want to buy the most?
• What is the most difficult part of the experience and yet the most valuable?

Usually, the decouplers to offer a better alternative, and gain traction quickly might enter the market with a sort of Blue Ocean Strategy, where they offer more, for less.

For that, we need to look at the three main currencies people use throughout the value chain.

The three customers’ currencies

Let’s take into account three main currencies:

• Monetary currency: (money).
• Time currency.
• And effort currency.

As a decoupler if you can reduce costs for customers, time and effort taken, this might unlock major disruptive changes. Airbnb reduced these three costs. Uber reduced these costs. Amazon did the same.

Key takeaways

Disruption moves in waves. Unbundling helped to break apart existing products to offer only the most valuable parts of them. Thus, it worked at product level.

Disintermediation, cut many intermediaries from the supply chain, thus working at supply chain level.

Decoupling instead, works at customer level. Where the customer experience (the customer value chain) gets broken down, and the decoupler focuses only on a few key value customers get to enter the market and quickly grow.

By reducing costs, improving convenience in terms of time and effort, the decoupler makes it a no brainer for the customer to go through this redesigned customer value chain, where the most valuable part, according to the customer, is offered at better convenience.

• What is Unbundling
• What is Disintermediation

• Platform Business Models In A Nutshell
• Network Effects In A Nutshell
• What Are Diseconomies Of Scale And Why They Matter

Other resources for your business:

• Types of Business Models You Need to Know
• Business Strategy: Definition, Examples, And Case Studies
• What Is Market Segmentation? the Ultimate Guide to Market Segmentation
• Marketing Strategy: Definition, Types, And Examples
• Marketing vs. Sales: How to Use Sales Processes to Grow Your Business
• How To Write A Mission Statement
• What is Growth Hacking?

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