1. National Community Reinvestment Coalition 2012
High-Revenue Positions in Value Chains
Leonard Greenhalgh, PhD
Professor, and Faculty Director, MWBE Programs,
Tuck School of Business at Dartmouth

2. What business has
high revenue potential?
• Growing industry
• Central value chain position
• Ability to deliver value
• Portfolio

3. Are you in a growth industry?
• Automotive • Housing

4. Are you in a growth industry?
• Automotive • Housing
• Geriatric care • IT staffing

5. Are you in a growth industry?
• Automotive • Housing
• IT staffing • Geriatric care
• Giveaways • Green solutions

6. Even if you’re in a growth industry:
Are you in a good part of the value chain?
• What is your place in the value chain?
• What actual value is being added?
• Are you getting your share of total
value-chain revenue?
• Can someone take over your position?

7. How do you fit into the value chain?
Raw
Components Assembly Distribution After End-Use
Materials Market Customer

8. Who is taking the profits in the value chain?
High
Level
of
Profit
Low
Raw
Components Assembly Distribution
After End-Use
Materials Market Customer

9. Who is taking the profits in the value chain?
High
Level
of
Profit
Low
Raw
Components Assembly Distribution
After End-Use
Materials Market Customer

10. An entrepreneur’s mission statement
that limits his value-chain position
“We train sewage-treatment facility employees
to operate the local water treatment plants”

11. Needs Design Build Train Operate Maintain
Assessment Treatment Treatment Workers Facility And Upgrade
Facility Plant Facility

12. Needs Design Build Train Operate Maintain
Assessment Treatment Treatment Workers Facility And Upgrade
Facility Plant Facility

13. Another Entrepreneur’s
Limiting Mission Statement
“We provide high-quality
janitorial services”

14. Workspace
Rent or Building Clean Determine Repair Tenant
Needs Locations
Build Mgmt. Premises Maintenance and Serves
Assessment
Needs Refurbish Customers

15. Strategic growth:
Occupying more of the value chain
Workspace
Rent or Building Clean Determine Repair Tenant
Needs Locations
Build Mgmt. Premises Maintenance And Is
Assessment
Needs Refurbish Customer
• Strategy is to grow in scope and to move into
higher-profit domains

16. Strategic growth:
Leveraging strategic relationships
Workspace
Rent or Building Clean Determine Repair Tenant
Needs Locations
Build Mgmt. Premises Maintenance And Is
Assessment
Needs Refurbish Customer
• Strategy is to grow in scale and scope—
through strategic business relationships

17. Think about the sustainable agriculture
value chain
Do you need to understand it?

18. Can you grow into areas of
greater long-term opportunity?
Avoid having blinders on:
Consider your core competencies

19. What are their
core competencies?
• Amazon.com and eBay?

20. What are their
core competencies?
• Amazon.com and eBay?
• Wal-Mart and The Gap?

21. What are their
core competencies?
• Amazon.com and eBay?
• Wal-Mart and The Gap?
• PayPal and American Express?

22. What are the core competencies
of a small
hotel/motel owner?

23. What are your core
competencies?
Are they applicable to business
opportunities that will make
more money?

24. Even in a high-revenue business…
You must not
“put all your eggs in one basket”

25. All products, services and
customers have a life cycle
TIME

26. Why a portfolio?
It’s better from a cash-flow perspective
+
Cash
Flow TIME
BREAKEVEN
(-)

27. A portfolio allows you to grow and be resilient
+
(-)

28. You lead with your value proposition
• Do it better
– Lower-cost, higher-quality, superior delivery,
more-flexible, etc.
– Operational excellence strategy
• Do it differently
– Segment, target, and position; or innovate
– Differentiation strategy
• Gain customer loyalty
– Repeat vs. conquest purchasers
– Customer relationship management strategy

29. Operations strategy falls into four
categories
Operational
excellence
Quality
Cost
Delivery
Flexibility

30. Operations strategy depends on
key customer needs
Operational Wal-Mart
excellence
Quality
Cost
Delivery
Flexibility

31. Operations strategy depends on
customer needs
Operational Wal-Mart
excellence
Quality 3
Cost 1
Delivery 2
Flexibility 4

32. Operations strategy depends on
customer needs
Operational Wal-Mart Red Cross
excellence
Quality 3
Cost 1
Delivery 2
Flexibility 4

33. Operations strategy depends on
customer needs
Operational Wal-Mart Red Cross
excellence
Quality 3 3
Cost 1 4
Delivery 2 2
Flexibility 4 1

34. Operations strategy depends on
customer needs
Operational School
excellence construction
Quality
Cost
Delivery
Flexibility

35. Operations strategy depends on
customer needs
Operational School
excellence construction
Quality 3
Cost 2
Delivery 1
Flexibility 4

36. Operations strategy depends on
customer needs
Operational School Luxury home
excellence construction construction
Quality 3
Cost 2
Delivery 1
Flexibility 4

37. Operations strategy depends on
customer needs
Operational School Luxury home
excellence construction construction
Quality 3 1
Cost 2 4
Delivery 1 3
Flexibility 4 2

38. Operations strategy depends on
key customer needs
Operational Emergency
excellence Department
Quality
Cost
Delivery
Flexibility

39. Operations strategy depends on
key customer needs
Operational Emergency
excellence Department
Quality 4
Cost 3
Delivery 2
Flexibility 1

40. Operations strategy depends on
key customer needs
Operational Emergency Methadone
excellence Department Clinic
Quality 4
Cost 3
Delivery 2
Flexibility 1

41. Operations strategy depends on
key customer needs
Operational Emergency Methadone
excellence Department Clinic
Quality 4 3
Cost 3 2
Delivery 2 1
Flexibility 1 4