Why Porter's Model No Longer Works

So I delivered a pitch this week at International Payments Summit 2012, in London.  Part of the pitch was that Value Chains are dead.  I was taken to the side immediately afterwards by a number of bankers who disagreed - so this is my response.....

source: http://blogs.hbr.org/cs/2012/02/why_porters_model_no_longer_wo.html

Essentially the article says: Most existing big organizations, the 800-pound gorillas, subscribe to Michael Porter's value chain framework (as we were taught it on our MBA programmes). This model optimizes for efficient delivery of a known thing. Organizationally it means Z follows Y, which follows X. It carries with it one fundamental assumption: that customers are tangential to the process. Which is different from where we are today where supply chains have given way to customer "data" eco-systems and there is no customer on the end. Control has been given up.

At the end of the old thinking is now who is offering you terms?  The diagram above shows the old model of control and the newer ideals of VRM.  The lower part of the diagram above shows that lots of companies can offer terms to the user and will be able to vary (Price, Quality, Delivery, Warranty, Personal Data) to create Brand Values.

However, as I present in the book, the model has also changed insomuch that the Business is not on one end with the customer/ user on the other - the business is now dependent on the user giving data to them and on their ability to guide the user based on this data.  This is why signals from the user are so important.

To restate my claim;  Value Chains are dead and probably so are those business that retain the belief that they are still alive and kicking RIP Encyclopaedia Britannica, Kodak, Blockbuster ......