Innovation in the value chain enables companies to change their business radicall. Particularly businesses that are currently in not-beneficial value systems could be able to innovate out of their position. Breaking the Chains is a presentation about innovating in the value system. The presentation consists of three parts 1 Value chain thinking 2 Value systems with issues 3 Breaking the chains of value eco systems

1. Breaking the Chains
From Value chains to value system innovation
Lecturer: drs. Ir. J.R. Helmus

2. Part 1:
Value chain thinking
Part 2:
Value systems with issues
Part 3:
Breaking the chains of value
eco systems

3. Objectives for this lecture
After this lecture you will be able to:
Map value systems in a pluriform way
Understand problematic value systems
Know about several ways to force breakthroughs
• have basic knowledge about value chains
• know about modelling techniques
• have basic knowledge of innovation management
• have basic knowledge of cash flows and economics
• are open minded and willing to learn
I Assume you

4. 4
Part 1:
Value chain thinking

5. Courtesy to Value Chain Partnerships for a Sustainable Agriculture

8. Extinct value
chains

9. 9

10. 10
We are the top management team of Philips Healthcare
We have invented a coocklemelooky
And we need to setup the value chain

11. 11
What Factors would you take into account?

12. 12
Let’s use the
Philips method
by prof dr. Elke den Ouden

13. 13
Four aspects should be mapped in
the Value network
Money
Goods & Services
Information
Intangibles

14. The value chain flow model
14

15. The value chain flow model
15

16. 16
One aspect is
missing in this
method
Size
determines
the power
of the
stakeholder
&

17. 17
One aspect is
missing in this
method
Size
determines
the power
of the
stakeholder
&

18. Mapping power and Effect of stakeholders

19. 19
Needs Barriers
What kind of decision maker is your stakeholder?
What ‘s inside the mind of a stakeholder

20. Barriers for stakeholders to overcome
What keeps potential customers from making the decision to buy an
electric vehicle?
There are three types of barriers that
must be overcome before taking difficult
decisions:
• Functional barriers
•Price, functionalities, effort, risk
• Emotional barriers
• fear of taking risk, failing,
•Social Barriers
• how people see you
•Attitude of others to you
Information pointed at the barriers is required to convince your
stakeholders

21. Always care about the metrics your stakeholders
cares about

22. Filling in your persona in a serious way gives you real insights

23. Carefully think about the difference between the decision
making unit and the stakeholder you are dealing with.
Your Audience
(e.g. Production manager)
His Audience (stockholders)
Your message to your
stakeholders could be
part of a broader
message to a broader
audience.
The Real
DMU

25. 25
Part 2:
Value systems with issues

26. The risk that a
stakeholder is
exposed to
within the value
system
compared to
others
The ownership of
product/services /
information and
the moment of
ownership transfer

27. The unbalanced value system of pears
Farmer Pear Cooling storage wholesale Super market Customer

28. 28
Clients Innovation PartnersKnowledge parntners
What is the state of culticavation of fruits in the NL in 2020?
Open innovation in the agri sector in the Netherlands

29. Value system of agriculture

30. Due to the power of the supermarket the farmer
is suppresed in its position in the value system
Farmer remains owner of his fruits till – and is exposed to risk 0- till
the moment of sales a supermarket. Only at that moment the
supermarket pays the farmer for each single piece of fruit

31. The key player is
the bottleneck in
the value system.
He determines
what passes
upstream to the
customer

32. Deeper analysis of value system
Type Farmer Pear Cooling storage wholesale Super
market
Customer
Goods /
service
Money
Information
Intangibles
Power
influence
risk
ownership
The cockiness of the farmers
– particularly not willing to cooperate –
appeared to be reason that the supermarket was
able to develop its power in the value system.
The supermarket simply asks a quote to all
farmers and picks the best.
Information streams within the value system are
optimized in favor of the supermarket

33. The news
value system
is known for
its issues

34. 34
What technologies will influence the value system in future?
What is the future of newspapers
Which innovations for which actors will be beneficial for them?
Open innovation session with all actors within the value
system

35. Value systems suit excellently with co-creation
sessions for they are an incentive for discussion.

36. Raw sketch of the Value system of the newspaper industry

37. Key findings of our research
Transforming value system:
Position of key player no longer sustainable due to new technologies
that enable information consumers to skip positions in the value
system.
Information enrichment is now performed by information consumers as
well
Information is old as soon as it is fixated and printed, whilst new
technologies enable consumers to continuously gain new information in
the value system.

38. Electric Vehicles and innovation
http://www.sissolarventures.com/EV_Electric_Vehicle.php

40. Value system of electric vehicles from the
perspective of the charging station
Network
administrator
Measurement
responsible
Data responsible
Energy producer
customer
supplier
provider
Owner
charging
station
I
H
B
C
D1
D2
G
A
F
TNM
Source:TNO
Courtesy to student’s research
TC. Gouw & J. Meijer

41. Cash flows within the value system
• Private (buy a charging station)
Courtesy to student’s research
TC. Gouw & J. Meijer
• Private (lease a charging station)

42. Results of financial modelling
Results cashflow calculation and simulation
Results:
- The total value system looses
money up to 2024
- The provider - key player – is not
profitable, because of the risks,
periodic fees for costs
- To make exploitation profitable a
subscription fee of at least €52 is
necessary
Courtesy to student’s research
TC. Gouw & J. Meijer

43. The key player within
this value system is the
weakest link

44. 44
Which Extinct car is this?
The Mazda RX-7 is a sports car produced by the Japanese automaker
Mazda from 1978 to 2002. The original RX-7 featured a 1146 cc twin-
rotor Wankel rotary engine and a front-midship, rear-wheel drive
layout.

45. 45
Which Extinct car is this?
The Mazda RX-7 is a sports car produced by the Japanese automaker
Mazda from 1978 to 2002. The original RX-7 featured a 1146 cc twin-
rotor Wankel rotary engine and a front-midship, rear-wheel drive
layout.

46. What actions were required at wich actors in the
value system to implement the Wankel motor
succesfully??
46

47. 47
Mazda should have
trained car mechanics
how to repair wankel
motors and arrange
spare parts
But they didn’t….

48. 48Cicada Innovation 2012
General
practitioner
District Nurse /
Home Care
Content
Monitoring
cocreation
communication
finance
Fragile elderly
Family care
Product-service Innovation for Elderly project 2012

49. Value system of the Dutch Healthcare sector
Point 1 no care needed
Point 2 minor care required
Point 3 intensive care programs for elderly

50. Value system of the Dutch Healthcare sector
Conclusions 1:
As soon as more than simple care for elderly is required, the case value
system gets needlessly complex. At first the general practitioner is first
vocal point for clients, but as soon as care becomes even a little more
intensive, the value system’s complexity increases.
Conclusions 2:
Key player in the value system are health insurance companies who are
more and more a decision making unit, although their function is
originally delegated from the Dutch government.
Conclusions 3:
Real innovation in healthcare systems is restrained for (positive) cash
flows are required for several sources (client, insurance, governement,
family) and cash flows are often not supported when particularly when
Nature of the innovation is prevention

51. 51
Part 3:
Breaking the chains of
value eco systems

52. #1 Why pay
for COGS
when other
partners are
willing to
pay?
How
In traditional business thinking it is often the
company who produces that pays the bills for the
Costs of Goods Sold (COGs). Some companies are
able to let the COGS be paid for them. Even better
to gain more money from embedding certain
suppliers than the total amount of COGs
Questions
-Which component suppliers are picked by clients?
-Are there any aftersales possibilities for your
product and which stakeholders gain benefit from
these aftersales?
-Which stakeholders within the value chain gain
benefit from endorsement branding?
Examples:
- Dell

53. How is that possible???
Dell makes profit on sales even before a
product is sold
Microsoft® Office Starter 2010

54. #2 money is
not the
determing
factor in 2.0
busines
models
How
In tradidional busiensses transactions are based on
cash flows. Goods or services are to be paid for, but
have you ever considered other means than goods
or services? You could sell influence, presence or
information as well.
Questions
-Which stakeholders gain benefit form having
influcence in decision making?
-Which stakeholders gain benefit from sponsoring?
Examples:
- Google adds
- interest groups willing to pay for decisions in their
favour (nature conservation, fauna protection)

55. Which stakeholders have stakes other
than money?
Lets assume we place a light bulb near a park….

56. How
Being present as a company in a certain area could
mean that other companies flourish by your
presence. Think about large factories being
offshored. This induces employment and a new
value system in the country being offshored to.
Questions:
-Which organisations profit from your presence?
-What would happen to them if you would suddnely
not exist?
-How well do you exploit your partners in the
ecosystem?
-Which crosslinks are made in your ecosystem?
-Where are the boundaries of the ecosystem you
are part of?
Examples
- Sillicon Valley ecosystem
-Outsourced university mess
#3
Build an
ecosystem
around your
service and
let others
pay for it

57. Cash Flows of RyanAir
• Cash flow
• influence
• Data flow
• Goods
• presence
• Sponsoring

58. Cash Flows of RyanAir
• Cash flow
• influence
• Data flow
• Goods
• presence
• Sponsoring
It is not the customer who pays for the ticket, it is
the ecosysem (taxi, hotel, catering, airport etc)

59. How
The cradle to cradle principle is well known in most
sectors. Have you ever thought about the value of
your products and services being regarded by you
as waste? In a flat world there is always someone
eager for you waste.
Questions:
-Which side products are produced in your
company?
- Is there any leakage of value in your company?
-What are you now selling for free to your
customers?
Examples
-Factories in chemical industry are often connected
and use each others output
#4
Your waste is
someone's
gold

63. How
Data is the new currency in our future world.
Imagine that within a few years everything you can
imagine will be stored on servers. Data is big Big
Data. Even your products/services generate date
(that is most probably currently not stored). Have
you ever thought about the possibilities of your
data?
Questions:
-What knowledge do you have on certain subjects
that your suppliers would like to have?
-What kind of data is created by your products?
-Is there anything you would like to know about
your products that you would pay for?
-If you would have an endless amount of endless
types of sensors, where would you put then?
Examples
-The batteries of electric vehicles subject of large
data gathering. The long term stamina and product
improvements based on usage data are of high
value.
#5
data is the
new
currency

64. Question: What kind of data generated by the Car2Go
product service system would be valuable for what kind of
stakeholders?

65. How
Values chains tend to be linear, which was
something from the past. With current technology it
is often possible just to skip parts of the value
system. The thought experiment of skipping them
could be a source for innovation.
Questions:
-Which parts of your value system are essential?
-What would happen if you eliminate certain actors
in the value system?
-Are there new technologies available that enable
new routes in the value system?
- would it be possible to swap certain actors in the
value system?
Examples
- social media and being connected everywhere
enables digital businesses
- Think about the new Albert iPhone app that
enables customers to buy groceries on an iPhone
-The news sector is an example. Imagine what
would happen if newspapers are printed in the
supermarket
#6
Skip parts of
the current
value system

66. What if you would print the lastest version of
your favorite newspaper in the supermarket?
+
+Even better, the newspaper could be
adjusted to :
-your news preferences
-the daily news you have already consumed
- Requested background information on news

67. How
People tend to think in patterns they already know.
We have always done it this way, is an often used
argument against change. Well, remind yourself
that the pattern that got you into trouble will never
be the pattern that gets you out of it.
Questions:
- ask the five Why why why why why?
- What do you see if you look at completely other
businesses? Are there things within the value
system they do different ?
-Ask someone new and totally blunt in your sector
for his vision on your value system.
Examples
-Why is it that in shopping centers first all shops
need to be supplied with goods and then the goods
are taken back home. That is 2x unnecessary
transport of goods
- Why
#7 Think
different
67

68. No problem can be solved from the same
level of consciousness that created it.

69. Why is it that shopping goods are bought in shops?
First
All shops in the Amsterdam center are
provided with goods by trucks. This causes
traffic within the city center on quiet times.
The shops need to have stockrooms. And
after suppling, the trucks drive back to the
wharehouse.
And then
Customers come to shops buy goods and
need to take them back home. Assuming
the customers live outside the city center,
the goods never needed to be in the city
center
Why not
Have empty shops where you can buy
products and as soon as you buy goods, they
are transported from warehouses to
customers home

70. How
Fixed patterns limit the space you have to innovate.
These patterns form a blind spot in finding
solutions. Open innovation gives you the
opportunity to work with partners from completely
different sectors to work together so you can relax.
Surprising solutions
Questions
-What patterns and assumptions are valid in your
business?
At what rate are these patterns based?
You call once a totally different industry, how these
life patterns that you accept as truth in this industry
and what patterns are formed there?
Examples:
-The government is slow
Bankers are just out on economic profit
In a non-profit sector will earn bad
A newspaper daily and always appears on paper
#7 break
through fixed
patterns
about your
business

71. To:transport is never necessary
From: Without transport there is no supply

73. To:All transport is done by…
From: Transport is always done by trucks,
boats, airplanes

76. 4-6-2013
Jurjen Helmus
@JRHelmus
J.R.Helmus@hva.nl
0645464751