Value chains and operating models

At a recent workshop we were using value chain analysis to help us with operating model design. This has made me wonder whether it might be possible to do this work in a more structured way.

The idea in my mind is this. Lay out the offers that the organisation is making to each stakeholder. For example, the Ashridge Strategic Management Centre promises brilliant courses for executives, brilliant research about critical management topics for publishers, editors and managers and a thoughtful network that discusses strategic issues to heads of strategy.

Then lay out the value chains needed to deliver each offer. The value chain for running brilliant courses is as follows – develop course idea, test idea with sample audience, test out some sessions with sample audiences, assemble and enthuse faculty, test market, adjust marketing, full marketing, administer applications from participants, prepare materials, deliver sessions, collect feedback, revise sessions, etc.

This value chain or process map is different from that needed to do research and from that needed to create lively discussions in a strategy network.

By laying out these different value chains/processes, it is much easier to see the challenges that will need to be resolved in the design of an integrated operating model. In some places there are connected steps across different value chains. For example, research generates new ideas which are often best tested out in the classroom. Also, questions from the classroom often stimulate interesting new research avenues. It is quite challenging to design an operating model that will ensure these links work. The Strategic Management Centre does this by making sure that it is the same person who teaches, does research and interacts with the network. But this creates other problems, such as how you find people who are good at all three.

Also, the Centre has other stakeholders – the business school, the Centre’s directors, the Centre’s staff. The operating model must also deliver satisfaction to these stakeholders. Hence each value chain can be interrogated for its impact on the brand and finances of the business school, the motivation of directors and the engagement of staff.

So value chain analysis of this sort could be a structured part of the process of designing an operating model. I prefer thinking of it as value chain analysis rather than process mapping because what you are looking for initially is a high level process map with maybe only four or five major steps in each process.

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About andrew campbell

Ashridge Strategic Management Centre Focus on strategy and organisation Currently working on group-level functions and group-level strategy
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