Guide to…Value Chains

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Overview

1. A holistic method of examining the major activities a firm performs and how those activities add value to the customers or supporting business functions

Why You Do It

1. Disaggregates a firm into its strategically relevant activities in order to understand the behaviour of costs, deployment of resources (i.e., people, assets), and potential sources of competitive differentiation
2. Graphically depicts the business
3. Establishes a common framework of data and vocabulary to use with the client
4. Highlights critical business processes
5. Provides a first step for other diagnostic tools by showing where
   resources and costs reside

How You Do It

1. Create a straw man (high level overview) during the first week of a project (if needed) using a large visual map
2. Introduce to the client during initial structured interviews (focus interviews)
3. Breakdown and display operating costs (work with the client finance/accounting department)
4. Define people resources and tie them to value chain components (work with the client human resources department)
5. Pre-present to all client influencers, decision makers, and authorizers

Helpful Hints

1. Don’t intellectualize all the fine details, put a stake in the ground and build from there
2. Get client validation (they must accept your findings) early on so you are certain they will understand it and accept it
3. Focus on hypotheses that are key to the assignment, avoid out of scope activities (things that are interesting but not part of the project)

Team Lillilooloo