Compressing Porter’s (Virtual) Value Chain, Eliminating Silos of Understanding, and Integrating Six Sigma

Posted on August 21, 2009


During my interview with Bob Copacino on today’s PI Window on Business Show, he indicated that with traditional BI methodologies and systems approximately 90% of an organization’s time and resources are spent on the up front gathering, organizing and selecting of data while only 10% of the time is spent on applying the intelligence in a meaningful way.

In the above scenario I cannot help but think about the inefficiencies associated with Michael Porter’s Value Chain concept, something for which he has been routinely criticized by some academics for presenting an inconsistent logical argument in his assertions.

While the advent of the Virtual Value Chain (VVC), in which its creators John Sviokla and Jeffrey Rayport propose that the value adding steps are performed with information involving a series of five events (gathering, organization, selection, synthesization, and distribution), transforms the value chain concept from one of tangible value-added activities to one that exists within the virtual realm of electronic data, the VVC concept is  still encumbered by a Porter-type physical thinking in a virtual Web 2.0 world.  Perhaps this is the reason why the recent Gartner Report on the Future of Business Intelligence highlighted the fact that approximately 35% of the top 5,000 global companies “will regularly fail to make insightful decisions about significant changes in their business and markets.”

Simply put, and referencing Copacino’s statements pertaining to the heavy up-front lifting that currently takes place, the VVC would carry greater creditability with the consolidation of the gathering, organization and selection elements into a single functional component of an intelligent virtual chain that would then more closely reflect the reality of the social software-business intelligence platform combination presented by Gartner in their report.  In other words, the VVC events would be reduced to a simple and automated 3 stage gathering, synthesization and application process that would leverage advanced technology to produce real-time, real-world outcomes.

There are of course other noteworthy points that were addressed during the broadcast including Six Sigma integration and the elimination of communication silos.  That said I would invite you to tune in to the live on-demand version of the interview through the Player below.

Vodpod videos no longer available.