The Biology of Business – Do You Have A Supply Chain or A Value Chain?

I believe companies operate as systems similar to our bodies. In our bodies, we view individual organs as part of an overall system, and when something impacts one part of our bodies it often can be traced back to other things going on in our system. Our bodies could not perform if the individual parts (organs, blood, skin, etc.) were forced to work in isolation of one another. In a sense, the individual components of our body can best be understood in context to the relationship each element has with the others and with other systems, in which, we as humans interact.

Businesses are very similar. Each business has a community of partners it interacts with in order to fulfill its business mission. The community of partners makes up an eco system called your stakeholder value chain, or your value delivery system. And in order for business to really work well, leaders must examine the linkages and interactions between the stakeholders that compose the entirety of your value chain, understand everyone's interests, and align them all in the same direction. You cannot look at stakeholders singly or in isolation because their actions have an impact on the whole system. Therefore, we must view a value chain as holistic ecosystem and leadership's role is to strive for win/win outcomes and profit for all stakeholders.

Who are your stakeholders? Every value chain is made of stakeholders in three categories: 1) those who receive the value, 2) those who deliver and communicate the value, and 3) whose who develop the value. The key stakeholders are listed below:

  • Your customers are critically important.  Without customers to serve, you would not have a business.  They receive the value generated by your stakeholder value chain.  You have many different types of customers you must pay attention to – each with considerably different needs.  Your Economic Buyers are the key people who make the decisions about purchasing your products/services.  Your End Users are the actual users of your products/services.  They may also be the key decision makers as well, but complex value chains have both.   Company employees must know that your customers are the reason your company exists, understand what’s important to each customer type and assure that your employees are empowered and have the tools/systems in place to deliver exceptional customer service.
  • A large group of your value chain partners are your suppliers.  A conscious company refers to suppliers as partners and builds trusted relationships with their partners to fulfill customer needs and expectations, to build stronger communities, and improve society.  Taking a biology view, suppliers would be considered an integral part of your organization, similar to the organs in your body, and would leverage and share knowledge and information across the entire system to increase innovation and process to improve everyone’s operations and profitability and health.
  • A large part of your value chain partners are your suppliers.  A conscious company refers to suppliers as their partners and they strive to build trusted relationships and aligned processes in order to best fulfill customer needs and expectations and to build support community and society needs.  Value chain partners either help your company ‘develop the value’ for customers, or they ‘deliver and communicate the value’.  Value chain partners are an integral part of your organization, similar to the organs in your body.  They leverage and share knowledge and information across the entire system to increase innovation, and to create aligned processes to improve everyone’s operations, profitability, and health.
  • Your employees are another critical stakeholder. Employees are the largest group who is responsible for ‘creating the value’ for your customers. And they are responsible to align the rest of the value chain to create seamless solutions for customer. It takes an enlightened leader to truly understand the value of creating ‘shared visions’ and trust with employees; understanding their desires, dreams, and skills and supporting them each to reach their highest potential.  Everyone wants to be a part of a team that also supports their personal passions. When employees have an opportunity to see themselves in the company’s vision, alignment and motivation is a natural outcome.
  • Shareholders of companies are often not considered part of the value chain, but they drive critical business decisions.  Shareholders, like customers, are ‘receivers of value’ from the value chain.  They are a critical component of the value chain due to the need for organizations to show solid returns to stakeholders and not cave into the demands for short-term earnings.  The demand for short-term earnings can create separateness across the value chain and can force management into trade-off decisions that impact value chain partners, the community/society, and our customers. As consciousness continues to increase in businesses, leaders are able to make more authentic choices in how they manage their value chain and organizations are beginning to attract investors/shareholders who resonate with its values.
  • Community/Society/and Industry Partner stakeholders are beginning to have more impact on businesses today.  A company who is viewed as a good citizen in the community, supporting local laws, honoring sustainability and quality of life values will gain increasing value over time.  Leaders who fail to consider the above society factors will soon lose favor and move into decline.

Understanding who your stakeholders are and that they need to work together is one thing, but how to create a successful, integrated value chain is quite another.

There are a few key things leaders of conscious organizations can do to begin to align their value chain partners.

  • First, assure that you have your organization’s mission, values, customer experience needs, and community/society goals clearly outlined.
  • Begin by identifying your largest value chain stakeholders and contacting them to complete an assessment to understand the following questions:
    • Who are they?  (80/20 rule – pick your most important stakeholders first)
    • What compels them?
    • What value do they add?  (This relates to the value they contribute to the overall customer experience)
    • What do they need from you in order to be successful?
    • How will they evaluate the value they receive from you?
  • With the above information, you can begin to formulate value chain strategies to create win/win scenarios for everyone.

Stakeholder Value Chain alignment and partnership management are becoming increasingly important and valued in today's businesses. If you have questions, or would like to speak with me regarding your own stakeholder value chain, please give me a call or e-mail me at: (208) 384-8573, lynda@strategiccrossroads.com

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