Trump Threatening to Rip Supply Chains from China? Investigate Your Value Network
Trump has long threatened to pull global supply chains from China, but it seems that the COVID-19 pandemic may have strengthened that resolve. This condition is a reminder to all of us: understand what constitutes the network within which you generate value—and never take it for granted.
Keith Krach, undersecretary for Economic Growth, Energy and the Environment at the US State Department, explained the initiative succinctly in a conversation with Reuters. "We’ve been working on (reducing the reliance of our supply chains in China) over the last few years,” he said, “but we are now turbo-charging that initiative.”
The Globe and Mail reports that the US could employ new tariffs, sanctions, and closer relations with Taiwan to punish China. The initiative is also considering tax incentives and re-shoring subsidies to incentivize companies away from China.
These are profoundly serious shifts—if the threats are to be believed. How should the average person respond? We say it’s time to take a good, hard look at your value network.
In our book Disrupted: Strategy for Exponential Change, we advocate for a wide-ranging systems perspective when you consider how you and your organization generate value. This means going beyond a simple “our suppliers and customers” model. It means thinking about who or what you depend on to do what you do —and keep on doing it.
Even if you’re not involved in manufacturing, the conditions rippling around the US and China should give you pause. It’s likely that somewhere in your value network, these developments are threatening to take someone out. At some point, you will feel that impact. It will manifest as a decreased capability or capacity for generating the value you need to have a secure place in the world.
Part of practicing agile strategic intelligence means having a robust sense of who your partners in an interdependent value network are. It’s all too easy to overlook both internal and external stakeholders in this network. When you overlook them, you leave yourself open to discontinuity.
So, what do we recommend for eliminating these blind spots? Systematically map out your value network. We briefly cover how to do that in the excerpt below from Disrupted.
Trump’s administration may not follow through on their threats. But conditions like these should never be ignored. Manufacturing is too powerful an industry to take for granted. As it shifts, other industries will feel it, in negative and positive ways.
The question to ask yourself today is: who would you miss if they suddenly disappeared from your value network?
Once you’ve identified critical nodes in your value network, you can map them out. Who are your partners in generating value? Do you have unexpected interdependencies? Who are the essential players and what value do they add to your value?
It’s ok to start simple. Begin with your customers and suppliers. But then look further. Who are your less obvious stakeholders? Would you take the step Whole Foods took and begin to identify players such as the natural environment itself as part of your network of sustainable value?
Now you should start to see your organization as a node in a web of reciprocal value generation. Whose problems are you solving, and who is solving your problems? How are you capturing value from this network, and how are you delivering value to it? And how long can this flow of value last? Is there anything, anywhere in that network that threatens to impede or redirect this flow of value?
Put it Into Words
You’ve observed conditions and SORs. You looked for all sorts of value, from the immediate and easily quantifiable elements to the less tangible (but still critically important) factors. You’ve put your systems intelligence to the test and moved beyond corporate “gross anatomy” in order to see your organization as part of an interdependent network of relationships.
You mapped it out. Now, it’s time to spell it out.
Define the sustainable value you are proposing to generate by answering the following questions:
1. What value will we deliver, and to whom?
2. What value will we capture, and from whom?
3. How will we measure the value generated (that is, captured and delivered)?
4. Is my entire team engaged, aligned, and committed to this value generation?
It need not be more complicated than this.
A Series of Insights from Disrupted, the Book
Written in 2015, Disrupted was, and still is, both a book ahead of its time, and a timely guide for those committed to understanding and addressing the complexity of disruptive change, preparing for disruption, and critically, leveraging disruption to generate sustainable value.
This series of articles are extracts — some with comment from the authors — from the book and are intended to highlight some of the key concepts captured in Disrupted.
“Larry Quick and David Platt give us an antidote to uncertainty, insecurity and complacency. Their strategy for exponential change can be applied across all organizational metaphors, from defense to advanced manufacturing, from education to logistics. Read Disrupted and rewrite your organisational future!” Di Fleming — Executive Director, Ducere Foundation
To find out more visit: www.resilientfutures.com/disrupted
