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6 August 2013 0 Comments

Your Link in the Value Chain

Part 2 of 2 in a Series on Good Value

Since Harvard Business School professor Michael Porter first used the concept of Value Chain* it served as a framework to help business leaders understand how specific activities can combine in unique ways to create value. Organizations that can maximize and sustain that differentiation can maintain a competitive advantage.

The previous post explored how value is created. Even when the perceived value of a resource is exhausted (such as with scrap metal), the resource can actually gain value when placed in the hands of another who understands its potential value and connects it with the next member of the Value Chain.

The person who creates value is often innovative, enterprising and resourceful. They view the world from a different perspective than most. Sometimes we call these people odd; sometimes we call them entrepreneurs.

But understanding the potential value of a resource is useless if the person does not have the means to connect with the next member in the value chain. Barriers that prevent potential value from being realized can exist at any level: team, division, organization, society. Sometimes these barriers can be so frustrating that they turn potential entrepreneurs into saboteurs.

Such was the case when an overly zealous scrapper “collected” the cover to my barbeque grill.  This was not a fancy grill, but the cover was worth more to me than the few cents the collector received for it from a recycler. 

The initial value destroyed was the replacement cost of the cover (although I have not yet replaced it). But there is also an ongoing destruction of value: the additional time and gas used each time I cook without the cover (and the associated increase in pollution).

Although less tangible, another negative result could be a less beneficent attitude toward my community – which could intensify if I gripe about it to my neighbors.

Every day, each of us has the opportunity to create or destroy value. How we treat others and how we use the resources available to us determine our link in the Value Chain — whether our net impact is positive or negative. 

What About You?

  1. Have you been frustrated and tempted to destroy value because your idea or perspective was not recognized?
  2. As a leader, do you consciously foster an environment where creative thinking is encouraged, and people who are different from the norm are afforded dignity and respect?
  3. Can you identify ways that potential value is not being realized and take steps to capture that added value?

Leave a Reply and share your experience.

At ENTERCHANGE we help leaders maximize their value and create new value through their organizations.  Contact Us so we can help maximize yours.

Porter, Michael. E. (1985) Competitive Advantage: Creating and Sustaining Superior Performance. New York, NY: The Free Press

© ENTERCHANGE 2013 All Rights Reserved.

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

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