Technique 2.27 Understanding Your Value Chain

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(linkages between disrupted technologies and life-cycles)

There is a recurring pattern that helps explain why organisations so often make strategic errors in choosing where to focus their efforts and resources. These questions will assist your analysis:

1. Where will attractive profits be earned in the value chain of the future?

2. Under what circumstances will integrated organisations wield powerful competitive advantages?

3. What changes in circumstances will shift competitive advantage to specialised, non-integrated organisations?

4. What causes an industry to fragment?

5. How can a dominant, integrated organisation determine what to outsource and what to hold onto as its industry begins to break into pieces?

6. How can new entrants figure out where to target their efforts to maximise profitability?

(source: Clayton M Christensen et al, 2002)