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At the minimum level, a value chain consists of a supplier, consists of
component suppliers, sub-assemblies, final assembly, manufacturing, distributors,
retailers, wholesalers and, ultimately, would be the end consumers.
And this whole chain of network that
are engaged in the production of products and
services, that's the basic value chain.
But now, increasingly, value chain could include the government because they
could affect and they could limit, they could restrict, or
they could support your, your whole, whole delivery of products and services.
It could include even NGOs because they are also a stakeholder.
They could also include logistics providers, third party providers.
So, I call that the complete value chain or the ecosystem.
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So today, very few companies are completely vertically integrated, meaning,
that you make everything.
You make all the components yourself, you make all the sub-assemblies yourself, and
you distribute yourself.
Everyone depend on somebody else.
So you depend on your suppliers, you depend on your outlet, you dis,
depend on your distributor, you depend on some third party as a channel.
And if you're not able to integrate that value chain well synchronized,
then you could be very efficient.
You could be very successful.
But if your value chain partners cannot fulfill their job,
your products may not be successful or your services cannot
reach to the customers in your intended fashion and expectation.
So we're all interdependent, and in order for
a company to be successful, the whole value chain has to be successful.
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Most of the entrepreneurs in the developing economies recognize that they
have huge constraints because the government may not be supportive,
their roads are bad,
the infrastructures are not dependable, their suppliers are not on time.
So they all recognize these challenges.
Also, what I would tell these entrepreneurs is that
you can overcome this.
These barriers are not insurmountable.
And you overcome it by, sometimes, redefining what your roles are, creating
the right information linkages, creating the right relationships, sharing, sharing,
collaborating, and those challenges and constraints can be overcome.
And once they are overcome, there could be new business models and new products and
services that you have not even thought of today.
And so that's why I, my simple advice is, challenges are great but
they can be overcome by the right innovations and approaches.
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Innovations that could require you to rethink the way you deliver your products.
Rethink about the incentives that you give to suppliers.
So sometimes those barriers are because the suppliers do not trust you or
because the suppliers do not have the right information or
because the suppliers have their own constraints.
And so helping them by collaborating with them,
you overcome their barriers, which, in turn unblock your own bottleneck.
So I would say that, by going out having the right information shared,
having the right collaborations in place, having the right incentives in place,
can go a long way.
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When we went to Ghana, when we went to these developing economies, oftentimes
the entrepreneurs because of the experience and because of the limitations
that they have lived with all their lives, they only think of small markets.
They only think of, okay, what can I do to create this service so that I
can serve my village, so that I can serve my town, my own region, my own geography?
But, in fact, if they understand the complete value chain well,
they can export.
They can serve other countries.
They can expand what they're doing.
I'll give you an example of the farmers that I work with in Ghana.
These are shea butter Ghana's farmers, the women farmers.
So they roll shea butter, which are nuts.
But it turns out that the biggest value add is if they can also learn how
to process the nuts so that they become ingredients for cosmetic companies.
And that is a much higher value add than just purely growing the nuts,
using the nuts for food consumption, their own people consuming the nuts.
And so this is really about a way of understanding what role you play
in the big value chain, and can you add more value by doing more than what you're
doing today and by expanding the geographic span that you can cover.
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Such innovations are not just for the sake of helping the developed economies so that
they would create values for themselves and, and make people live better there.
I would have to say that if you are a multinational today, large corporations,
we also, our own students, MBA students, our own alumni,
we also better understand those economies better.
We also better learn how to leverage the entrepreneurial power
of those economies better.
We also need to leverage the innovations that could come from so called bottom
of the pyramid because those innovations can also be incorporated into these if,
even if you're a big corporation, because big corporations oftentime have to expand.
And you may, one day, go to those economies.
Those economies could be your market.
This is like about 30 years ago, 25 years ago.
People would think of China as a developing economy.
And you would only use China as a place where you
can have cheap labors source to build your products, to manufacture your products.
But today, China is no longer a developing economy,
even though pockets of China are still developing.
But China is a market.
China is a big market.
China is a source of innovation.
Same thing could happen in different parts of Africa,
in different parts of southeast Asia, in different parts of South America.
So I would say that,
why we go out there with the intent to help the entrepreneurs in the region.
But I think, regardless of whether you are looking at the interest of
big corporations in developed economies, this kind of value chain
innovations are crucial for the overall economic development of everyone.
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