The World we live in, is just as relative as the Simulation (Marketplace). Maybe, worse. Some argued that the marketplace was just a guess, and isn’t fair. And that, we weren’t able to implement our strategy. And, things didn’t pan out as we expected them to be. Well, I agree. Those are nothing short of “Hello World” sign (theuglytruth). There is a high probability that we are in a Matrix, and our Neo is preoccupied with coursework. You never know.
If Business Model Canvas is the ‘magic wand’. Then, Value Chain is the ‘spell’ you cast. They coexist.
It took me two Quarters to understand the above. In Q2, our team was so engrossed in developing a cool product for customers. Thereby, underplayed the importance of other factors such as labor costs, advertising, research, indirect costs, finance, etc. When you fine-tune something, you might tend to miss the bigger picture. This is often the case in startups that couldn’t sustain.
In order to withstand in a market and have a competitive advantage, it is critical to understand how the enterprise creates values. Value Chain is the activities that a company performs to create value for its customers. The chain of activities is used to determine costs and how it affects profits, and understand the sources of value. Primary Activities are related directly to sales, maintenance, product support, service. Support Activities play a role in each primary activity. For instance, Procurement is how the company gets the resources required to operate. It also supports primary activities such as marketing and sales.
Sarangi had pointed out the major reasons why companies collapse. I would like to add one more to that pile. Companies fail to recognize that innovation is a chain, that requires strength at every links to succeed.
Innovation isn’t all about great ideas.
Value Chain Innovation starts with idea generation. The prioritized ideas are funded, which are then converted to Products. And the final act is, diffusing the products and business practices across the company.
For a startup, it is essential to analyze the entire process of innovation (Idea, Conversion, and Diffusion). The poor idea is pretty straightforward. Poor conversion means, companies are struggling to find the best idea. Diffusion poor denotes that, the company may have a great idea, but cannot generate a company-wide support necessary. These three elements define innovation broadly. Identify the weakest link and evaluate the links in the chain to improve.
If you are starting up a company, being optimistic is essential. But more importantly, you should be willing to address the elephant in the room. Like Mohit Ahuja described, there is a fine line between, being optimistic and cautious.
IMO, taking Entrepreneurship courses has not only helped understand the principles, but also, saved us from unwanted failures, expenditures and most importantly years of time. For me, a vital take away from this course would be, the importance of value chain.
It all boils down to this – “Never give up”. Aleksi had penned it out precisely on the aspects every entrepreneur should think about.