In many businesses today, there is a stronger focus on the internal organization. People are looking at what is happening within the walls of the business. This makes sense, because as a business owner you control your own processes, not those of your suppliers or customers.
Moreover, it is not always immediately clear how your business's value chain contributes to the value of your business, because it is EBITDA that determines the valuation of the business, right?
Yet no one can get around it, every business is part of a larger value chain. The interrelationships in the chain determine how much value is really created. The following practical examples make it clear how the chain affects the returns and risks, and thus the valuation of your company.
'Chain thinking' crucial for added value
Chain thinking means looking beyond your own link and understanding how your contribution strengthens the bigger picture. Companies that fail in this risk becoming irrelevant. If your business no longer adds value, partners and customers choose alternatives, leading to loss of market share and growth.
By cooperating intensively and remaining innovative, you not only create efficiency, but also secure your position within the chain. Cooperation is the key to continued success and relevance. Do you ever wonder if your customers or suppliers could do without your company?
'Chain thinking' essential for growth acceleration
At several participations, we have experienced the crucial importance of 'chain thinking' to facilitate an acceleration of growth. It is essential to realize that your business is (only) one of the runners in the relay to get the product or service to the end user. When each link in the chain works together optimally and performs its role effectively, it creates a kind of flywheel that accelerates growth.
This requires transparency within the chain, mutual trust and a shared focus on the common end goal: creating value for the customer. Businesses that only think from their own position miss opportunities and slow down the progress of the entire chain. Ultimately, this makes the difference between standing still and sustainable growth.
'Chain thinking' source of competitive advantage
Consumers are increasingly aware of the origin and composition of products and services, and demand more transparency and sustainability throughout the chain. European legislation picks up on this with the upcoming reporting requirements (read: CSRD).
A lack of transparency or cooperation in the chain therefore directly undermines the value proposition of the final product. Businesses that sincerely and effectively manage their entire value chain - from the origin of raw materials to the recycling of finished products - not only build brand loyalty, but also create value and competitive advantages in the (medium-)long term.
'Chain thinking' is value thinking
A well-functioning value chain is, in fact, an ecosystem in which each business reinforces the other. It is therefore essential for entrepreneurs to look beyond their own company. By doing so, you not only increase operational performance, but you also build a more attractive company for buyers and thus a higher valuation when sold.
