Five Reasons to Model Your Company’s Value Chain

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Oct 23, 2018
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One of the select few techniques explicitly prescribed by the Business Agility Manifesto1 is value chain models. The Manifesto defines a value chain as follows:

value chain: the business knowledge and work needed to deliver products or services to a market organized according to their natural dependencies

Why does the Manifesto consider value chains so important?

Most of us are well aware of the problem of organizational silos and non-integrated applications and channels. The question is how can we plan to eliminate them?

The notion of a value chain is to take a 10,000-foot view of the business based on how value is created incrementally toward final delivery of products to end-customers. In other words, a value chain model looks holistically at the value-adding capabilities of an organization end-to-end, irrespective of organization lines of responsibility or existing functional activities.


The Manifesto makes several crucial points about value chains:

  • The role of each stakeholder in a value chain must serve the best interests of the entire value chain, including accommodating constraints of other stakeholders.
  • Measurements, targets and incentives for stakeholder roles should be aligned to the value chain outcomes that best serve customers.

The latter point is part of the Manifesto’s take on the all-important issue of customer centricity.

As a unified, business-oriented tool for eventual planning of application development, a value chain model provides the following:

  • A basis to explore, analyze and explain opportunities for integration.
  • A framework to challenge priorities and to rationalize project scope.

In other words, value chain models provide a means to bring sanity to what often seems like a chaotic and irrational world of application development.

Value chains are also essential to understanding and motivating business knowledge as a shared company asset. Unless you can justify how business vocabulary and business rules are inherently cross-functional, I’m afraid we’re doomed to a world of silos, both organizational and semantic.

Why should you model your organization’s value chain? In summary, here are five great reasons:

1. It provides the best basis to explore, analyze and explain large-scale opportunities for integration.

2. It provides a framework to challenge priorities and to rationalize project scope.

3. It lets you plan your escape from organizational silos and non-integrated applications and channels.

4. It’s essential to understanding and motivating business knowledge as a shared company asset.

5. It helps show why business vocabulary and business rules are inherently cross-functional.


Author: Ronald G. Ross, Co-Founder & Principal, Business Rule Solutions, LLC


Ron Ross, Principal and Co-Founder ofBusiness Rules Solutions, LLC, is internationally acknowledged as the “father of business rules.” Recognizing early on the importance of independently managed business rules for business operations and architecture, he has pioneered innovative techniques and standards since the mid-1980s. He wrote the industry’s first book on business rules in 1994.

With BRS’s client roster of Fortune 500 companies and governments, Ron consults, speaks and teaches worldwide. He has served as the chair of the International Business Rules & Decisions Forum conference since 1997, now part of the Building Business Capability (BBC) conference.

Ron is also the author of 10 professional books, as well as the executive editor of the Business Rules Journal. Through these publications, as well as on the online forum BRCommunity and his blog, Ron enjoys sharing his knowledge and experience in consulting and business rules.

Outside of work, Ron enjoys walking his dogs, travelling with his three children, and tweeting. For fresh nuggets of information, follow him @Ronald_G_Ross!


References/footnotes:

  1. The Business Agility Manifesto: Building for Change, by Roger T. Burlton, Ronald G. Ross and John A. Zachman, 2017 https://busagilitymanifesto.org/
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