Competing Value Chains

As the social networking grows more popular and web 2.0 starts making an impact on businesses world wide. I believe the corporates will have to change their thinking about their value propositions.

It will no longer be sufficient to be the most innovative product company or company that has the lowest cost of production. The demands from the empowered consumers will force companies to develop new set of the value propositions coming out of the collaborative value chain.

What is collaborative value chain ? To understand the concept let us look at a simple example from the world of mobile phones..

Mobile phone is designed in the high end sophisticated Nokia design labs or Sony labs, produced somewhere in Taiwan or China and distributed across the world through a complex distribution network but consumed by users like me and your self either through nearest mobile gallery or in a shopping mall or of late over Internet.

What does it translate into … Let us take a look at a  product consumption behavior of a well designed mobile phone being consumed by two consumers one in Mumbai ( financial capital of India)  and second in Khurja (a small town in India). The consumer in Mumbai will mostly check with his friends / colleagues for reviews before deciding on buying the product …will go across to next door mobile gallery and opt for the product he liked and will have it in his hands in less then 20 minutes.  On the other hand the consumer in Khurja might have got information about the product from his friends across big cities and now have decided to buy as it is going to be unique in the small town. He goes across to the shop in the nearest market and find that it is not available. He asks the shop owner about availability ( which is answered as next month). He is dejected but then the shopowner suggests him a competing product with some discounts and after slight hesitation the consumer buys the product and the well designed product will never be bought.

The above example illustrates how a well designed product lost its battle to a well supplied prouct.

This is the future.. in future success of Sony or Nokia will not depend on the product design which they can control internally but will be determined by their their logistics partner, as well as their distribution partner, stockists and lastly the courteous person who is manning the shop floor when the consumer walked in the shop to buy.

The success will depend on the end-to-end value chain.

The future belongs to “COMPETING VALUE CHAINS” , the value chain of SONY with its suppliers, vendors, logistic partner with it retailer will be competing with the value chain of NOKIA with its own set of suppliers, vendors, logistic partners etc. The success will be determined by the effective operations across the value chain.

The purpose of competing chains will be to bring  “RIGHT PRODUCTS… FASTER…and CHEAPER..to…CONSUMERS…WHERE they WHEN they WANT THEM.