Recently, Eoin Purcell posted an essay — one of those that touches on that taste of the profound — about the fact that the value chain isn’t breaking as much as it’s transforming into a value web.
As we all know, the serial production processes inside publishing companies have become non-serial, with loops and iterations and embellishments galore. We now manage a production web, not a production line. More people are involved in fashioning the social, online, real-time, multimedia outputs the modern world demands. Illustrations, videos, audio, feeds, UX, UI, and ML variations — they all cascade into and out of one another in a manner that still allows lines to exist, but those lines now intersect with other lines, forming a web.
The same holds for the value chain — value chains still exist, but because of the network, each chain intersects with other chains, creating a web.
What this means is that a new value chain can intersect with a current value chain at any point and divert unknown amounts of value away unexpectedly. As Purcell writes:
You only have to look at how companies like Apple and Amazon have facilitated self-publishing and in so doing excised huge swathes of the old chain from certain sectors of publishing. Certainly on Amazon’s part the ambition to disintermediate the publishing industry has been obvious for some time, at least if you were paying attention, it was certainly clear long before they made this announcement, but sometimes it takes BIG HEADLINES to make people pay attention.
There’s an added complication in that authors themselves (or some of them at least) might just wish for something that looks more akin to this:
Author > Reader
And what’s to stop that? After all there is no reason why using Paypal or some other selling tool, an author could conceivably sell ebooks directly to readers and maybe even turn a small trade by doing so. You could argue that Amazon’s Kindle Direct Platform is a close approximates of that, but I think the platform ownership position of that player means its role is greater than just a service provider.
As businesses think about value chains, perhaps a more useful model is the value web — an interconnected, unpredictable, multimodal, and byzantine set of relationships.
And while “value chains” were created to generate an end product, value webs are apparently designed to put a customer at the middle. Whoever is closer to the center is likely better positioned.
So, there’s your question for the day: Who is your customer? Who is at the center of your value web?
(Hat tip to Joe Esposito for the tweet pointer.)