by Ross O’Brien
In his 1985 book Competitive Advantage: Creating and Sustaining Superior Performance, Michael Porter introduced the value chain analysis. Many business people are familiar with Porter’s Five Forces Framework as well as his three generic strategies. The five forces address industry-level issues that to a large degree shape the potential for a return on investment in any given industry. The generic strategies help business leaders select the appropriate strategy for operating within a given industry and market. Both are helpful tools in the strategy toolbox.
Many are not as familiar with the value chain analysis. This tool looks closely at each of the activities involved in a business to examine how each activity can add value to the company as it seeks to execute its strategy. These activities are divided into primary activities and support activities.
Primary activities are those in which employees are “hands on” with the product at any stage in its development or involved with the customer at any stage in the customer’s interaction with the company.
Support activities are those necessary for the business to carry out the primary activities.
It is important to see both primary and secondary activities as a whole system as well as component parts. In doing so, you can understand how a competitive advantage is only possible when the various activities operate in harmony, not in isolation. Below is an image showing each of these activities.
Dinesh Pratap Singh’s visualization for Porter’s Value Chain: CC BY-SA 3.0
For a Kingdom-oriented company, the value chain analysis not only helps managers strive for a competitive advantage, but when viewed through a spiritual lens can also help managers better realize the spiritual value of work within each activity and across the entire organization.
To fully utilize this tool, followers of Jesus must recognize that the sacred/secular divide is a faulty premise and that all work, when it reflects the character and purposes of God and performed to the glory of God, is sacred. As followers of Jesus, we have not only been redeemed and are in the process of being made whole, but we are given the unique privilege (and responsibility) of being co-laborers with Christ in the work of restoring creation. Those whom he has gifted with skills and abilities in business are to use those gifts to seek restoration in the marketplace. In fact, we need look no further than Jesus’ parable of the talents in Matthew 25 to see that we will be held accountable for the way we use these gifts in service of our Master.
Some limit the “spiritual” focus of their companies to activities such as managers praying daily for the company, Bible studies in the workplace, fostering a loving and grace-filled work environment, giving profits to charity and so forth. All of these activities are good and should not be abandoned. However, I suggest that examining a company’s value chain activities with a faith-orientation can lead business owners and employees to live out a spiritual calling more holistically and with greater impact.
What follows is a brief description of each of the activities in the value chain, based on Porter’s model. To help visualize each activity, a coffee shop serves as illustration. With each activity, I will add some observations on how it might be considered more deeply through a spiritual lens.
Inbound Logistics Through a Traditional Lens
Coffee shops do not generally grow, harvest, dry and ship their own coffee beans. Smaller coffee shops purchase beans from a wholesaler or distributor. Some shops buy green coffee beans and roast their own while others buy roasted coffee beans. In addition to coffee, these shops need a variety of supplies such as cups, napkins, milk, sugar and so forth. The actual purchasing activities will be discussed later (procurement), but the logistics of accessing these resources is a part of inbound logistics.
To gain a competitive advantage, a shop must find a reliable supplier from whom they can purchase quality beans in sufficient quantities in a timely manner. The search activity can take time, as can negotiating terms and then ensuring delivery. More and more, customers want coffee that tells a positive story. Finding a supplier that can provide coffee that is fairly traded or that enhances human flourishing among the farmers can help set a shop apart. Searching for, contracting with and monitoring suppliers is costly and time consuming but important in ensuring quality, timely and cost-efficient supply lines.
Inbound Logistics Through a Spiritual Lens
As stated above, all work that reflects the character and purposes of God and that is performed to the glory of God is sacred. Therefore, it could be argued that a coffee shop that does the above activities with excellence, and which does them with honesty and diligence, is working to the glory of God. The work is sacred. However, when performed with the intention of restoring creation, these same activities take on a deeper meaning. Viewing the coffee farmer, his family and community as God’s dearly loved ones shapes our desire for them to flourish. Recognizing that the shop plays a role in their development, even if indirectly, means we need to be mindful of the distributors we use, insisting on those who act ethically on behalf of the farmers.
In addition, we know that over 40% of the world’s population has limited or no access to the Gospel. Interestingly, many places in the world in which coffee grows naturally fall into those that are least reached. Many BAM businesses operate in the coffee industry in these places, seeking to holistically minister to these coffee growers. Could our little coffee shop purchase coffee from these BAM businesses, supporting their work among the least reached while also providing an excellent coffee for our customers?
As we negotiate with our suppliers, do we do so with integrity? Do we seek their best interest in addition to our own or do we pit one supplier against another, driving our prices down as far as possible regardless of the outcome to the supplier? Do we seek opportunities to build relationships to bless our suppliers and logistics providers? If we have an opportunity to share the good news of Jesus, do we take it? And, if we do, do our actions towards these suppliers show that we have their immediate as well as their eternal wellbeing in mind?
At the same time, we have a duty to ensure that the shop remains profitable and financially capable of growing. As we seek the best good of our suppliers we must balance that with being a steward of God’s business, the coffee shop. After all, the shop is God’s and we strive to be faithful stewards of it.
Part 2 in this series will examine operations and outbound logistics, two more of the primary activities of the value chain.
Read Part 2 >> Operations and Outbound Logistics Through a Spiritual Lens
Ross O’Brien has been teaching at Dallas Baptist University since 2003. Prior to that time, he started and ran a small Internet firm in Birmingham, Alabama after working for AT&T’s Business Network Sales division as an Account Executive. Ross’ Ph.D. is from the University of Texas at Arlington in Business Administration and his MBA is from Dallas Baptist University. He began the undergraduate entrepreneurship program at DBU as well as the Center for Business as Mission, in which he serves as the Director. Through the Center, Ross teaches undergraduate and graduate classes in Business as Mission, has taken students on travel study courses to learn about business practices in Israel, Chile, Sierra Leone and Bangladesh, and helps host The Lion’s Den DFW event each spring.