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Life cycle of value chains

What is a life cycle of Value Chains?

The average lifespan of a company listed in the S&P 500 index of leading US companies has decreased from 67 years in the 1920s to just 15 years in 2012. It is expected that in next 8 years, the majority of the S&P 500 will be companies that we have not heard of yet. Many of the big dinosaurs of last decades are struggling to keep up with threats of new innovative entrants and are facing challenges to radically change their business models.

Business Models of Innovators and Mature Businesses

The business models of innovative fast-growing companies at the early stages of development are different than the business models of mature companies. In general, the business models of fast-growing companies are oriented primarily to how the company shapes, delivers and captures value from the market in order increase the value of the company and generate profits for the shareholders. On the other hand, business models of mature companies focus on balancing the objectives with respect to different groups of stakeholders. The governance of these companies tends to be more bureaucratic making them less agile.

Examples of Value Chains’ Life Cycles

Especially in the last years, due to the rapid growth of digitization, we could observe rapid shifts across the whole industries. Examples of such are Airbnb disrupting Hotel sector, Uber in Taxi industry or Youtube and Spotify disrupting music industry. Similarly, many organizations had been forced to rapidly change their industry focus, such as Phillips shifting to healthcare, ING Bank to become Fintech organization etc. Another example could be Apple, who was able to twist the typical product life-cycle of its smartphones, laptops, and tablets to a lifestyle life-cycle. To know more about these and other cases, subscribe to our community that provides further insights on today’s Business Models, Value Chains, and their life-cycles.