What are your value-creating activities?

1 Value chain analysis

One of the most widely used tools for analyzing value creation is the value chain, developed by Michael Porter. The value chain is a way of breaking down your business into a series of activities that add value to your inputs and outputs. These activities can be classified into primary activities, such as production, marketing, and service, and support activities, such as procurement, human resources, and technology. By examining each activity in detail, you can identify how it contributes to your competitive advantage, how it can be improved or optimized, and how it interacts with other activities.

2 Value proposition canvas

Another useful tool for understanding value creation is the value proposition canvas, developed by Alex Osterwalder and Yves Pigneur. The value proposition canvas is a way of mapping out how your products or services solve the problems and satisfy the needs of your customers. It consists of two parts: the value proposition, which describes the benefits and features of your offering, and the customer segment, which describes the characteristics and preferences of your target customers. By aligning the value proposition with the customer segment, you can create a compelling value proposition that differentiates you from your competitors and attracts loyal customers.

3 Value stream mapping

A third tool that can help you identify and improve your value-creating activities is value stream mapping, a technique that originated in lean manufacturing. Value stream mapping is a way of visualizing the flow of materials, information, and resources from the start to the end of a process, such as a product development, a service delivery, or a customer journey. By mapping out the steps, inputs, outputs, and wastes involved in each process, you can identify the sources of value and the sources of inefficiency, and design ways to eliminate or reduce the latter.

4 How to apply these tools

These tools are not mutually exclusive, but rather complementary. You can use them in different stages of your strategy formulation and execution, depending on your goals and context. For example, you can use value chain analysis to assess your current position and performance in your industry, value proposition canvas to generate and test new ideas for your products or services, and value stream mapping to implement and monitor improvements in your processes. The key is to use these tools as guides, not prescriptions, and to adapt them to your specific situation and needs.

5 What are your value-creating activities?

Now that you have learned some tools and frameworks for analyzing value creation, it is time to apply them to your own business. What are the activities that add the most value to your customers and your bottom line? How can you enhance them or create new ones? How can you eliminate or minimize the activities that do not add value or create waste? By answering these questions, you can develop a more effective and efficient strategy that delivers superior value to your customers and your stakeholders.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?