5 Critical Steps to Move Your Business Up the Value Chain

Over the course of my career, I’ve come to understand the importance of moving up the value chain as a growth strategy. I learned this lesson first-hand when I led a small electronics components company through a successful turn-around culminating in a pivot towards offering highly integrated solutions. At the time, we were struggling with declining sales and a stagnant market position in an industry that was seeing significant work moving overseas to Asia.

We started by analyzing our current customers and their offerings, our current market, and adjacencies. We discovered that many of our customers were looking for integrated solutions that would simplify their supply chains and reduce costs. It became clear to me that if we wanted to stay relevant and return to growth, we had to find a way to differentiate ourselves and move up the value chain.

As a business leader, you should always be looking for ways to differentiate your company and stay ahead of the competition. Moving up the value chain can help you achieve these goals by enabling you to offer more sophisticated solutions, reach new customers, and create a growth step-function.

Here are 5 steps you can take to move your business up the value chain.

5 Key Actions to Move Up the Value Chain

1. Acquire Expertise

Moving up the value chain can be a daunting task, fraught with growing pains and uncertainties. One of the best ways to expedite the process is by hiring targeted expertise from companies that already exist at a higher position on the value chain than your current position. The key is to find and hire talent that “knows what good looks like,” and can help your organization bridge the gap between your current capabilities and the ones needed to succeed in higher-level markets.

Acquiring talent can take various forms, including recruiting experienced professionals, hiring industry experts to consult, or even acquiring a smaller company with complementary expertise. By bringing in outside talent, you can benefit from their expertise, experience, and network, while drastically accelerating your company’s learning curve.

2. Build Credibility

Once you’ve acquired the right talent and expertise, the next step is to establish your business as a credible provider of higher-level solutions. This requires a concerted effort to position your organization as one that is worthy of being trusted with complex and sophisticated work.

Building credibility can take many forms, including increasing your presence at relevant industry conferences and symposiums, actively participating in panel discussions, and securing speaking roles at industry events. It also involves utilizing inbound and content marketing to showcase your expertise and thought leadership in your respective field.

Inbound marketing involves creating valuable content that educates and engages your target audience. This includes blog posts, case studies, white papers, and webinars. By creating useful and informative content, you can establish your organization as a trusted source of knowledge and insight, and attract high-quality leads to your business.

3. Expand Current Scope

Once you’ve established credibility and convinced the market that you’re capable of moving up the value chain, the next step is to win that type of work. One of the easiest places to find this work initially is with your existing customers.

Your existing customers already know and trust your organization, and they are constantly evaluating whether to “make or buy” their current work scope. By identifying opportunities to expand your current scope with current customers, you can gain valuable experience and knowledge in higher-level solutions, and build a track record of successful delivery.

4. Execute Flawlessly

Now that you’ve been awarded work higher up the value chain, it’s time to execute flawlessly. This is critical because you’ve built enough credibility for your customers to “try” you in this new role, but executing poorly can quickly erode that trust and jeopardize your progress.

To execute flawlessly, you need to have a strong project management infrastructure in place, with clear roles and responsibilities, milestones, and metrics to track progress. You also need to prioritize communication, both internally and externally, to ensure everyone is aligned on the goals and objectives of the project.

5. Compete with Your Customers

If you’ve successfully completed the previous steps, you will eventually reach a point where you have to make a choice on whether to compete directly with your existing customers. Moving up the value chain means you’ll eventually begin to offer the same solutions that your original customers are delivering. While this can be a difficult decision, it’s also a necessary one to sustain your growth and remain competitive.

Before you start competing with your customers, you need to have built enough confidence and gained enough insight into those new markets that you’re comfortable with the possibility of cannibalizing your existing sales. This may involve conducting market research, analyzing the competitive landscape, and investing in new capabilities and resources.

Final thoughts

In my own turn around experience, we ended up being successful in our quest to move up the value chain. Doing so unlocked access to new markets, new revenue streams, new customers, and tremendous growth potential.

We followed the same steps outlined above… Most of the new leaders we hired to help guide the company through the turnaround came from larger companies that were higher up the value chain. This gave us the technical expertise we needed to provide these solutions. We invested heavily in acquiring talent and expertise in areas such as systems engineering, project management, and software development. We also began to focus on revitalizing our marketing and reputation, building strong relationships with our customers and industry partners. Through hard work and dedication, we were able to build credibility and win new business at higher levels of the value chain.

Moving up the value chain allowed us to access larger markets, diversify our revenue streams, and achieve faster top-line growth. It also gave the entire employee base a sense of pride and purpose, as we were able to solve complex problems and deliver more value to our customers.

This experience taught me that moving up the value chain is not just a smart business strategy, but often a necessary one. Moving up the value chain requires a significant investment of time, resources, and talent, but the rewards can be substantial. When we made the decision to make this pivot during my turn around experience it led to us booking the largest orders in the company’s 85 year history and set a new course of future growth for the company.

By following these five critical steps, you can position your organization for success in higher-level markets and achieve sustained growth and profitability by moving up the value chain.

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