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How Converging Technologies Can Create a “Value Web” Rather Than A “Value Chain”

By Robin Higgons

I have just finished writing, with help from colleagues, a Qi3 Insights White Paper on the UAV sector, and it has raised some very interesting issues about the nature of the value chain. The background is that the capabilities of the UAV sector and of remote sensing are rapidly converging. UAV payload capabilities are increasing, while the size, weight and power consumption of remote sensing instruments is rapidly decreasing. The resultant ability to fly different remote sensing instruments on UAVs will open up a wide range of civilian markets in development, environment, natural resources, energy, communications, and disasters.

In these two converging worlds, there are already a number of value chains. In analysing how these may interact and form collaborations to exploit new markets, I came to the conclusion that these value chains are unlikely to merge together. They will probably form a set of connections to look more like a ‘web of value’. This is shown graphically in the White Paper.

As this happens, it raises interesting strategic questions over the best type of business model to use. Should a company focus on being a domain expert in one area, such as UAV operations, remote sensing instrument manufacture, or delivering specific applications? Or should a company go for world domination, adopting what I call the Schlumberger[1] business model of bringing all elements in-house that are necessary for the application (technology, operations, data, etc) and selling only the final service?

I am not yet sure of the best approach for different types of company. Why don’t you read the paper and see what you think.

Robin works for a wide range of companies helping them develop new markets and solve issues arising as the result of changing market conditions. If you would like to discuss his thoughts above or other such issues in your business, please contact him on robin.higgons@qi3.co.uk or 01223 422404.

[1] Trade Mark of Schlumberger Ltd

One Response to How Converging Technologies Can Create a “Value Web” Rather Than A “Value Chain”

  1. The concept of a ‘value web’ is an interesting one. It certainly fits the reality of a network of interlinked value creating entities rather better than a simple ‘value chain’ approach. Given that there is a convergence of half a dozen or so primary technologies, and a multiplicity of target market verticals, no one ‘systems integrator’ is likely to dominate this space.

    I’d like to explore whether this is any different from Open Innovation. Whilst much abused as a term (or philosophy), the Open Innovation model is one wherein each constituent entity on an ecosystem possesses its own distinctive competences. Organisations with market access then pick an eclectic mix of supply chain partners with the right technology and partnership approach in order to deliver a product or service to market. This contrasts with the ‘old fashioned’ philosophy of vertical integration, where the need to control the supply chain is expressed through ownership – typically characterised by in house R&D in this situation.

    What’s particularly exciting to me about the UAV opportunity is that convergent technologies are enabling a step change in availability of data gathering capability to markets that have need. Let’s face it, most of the destination markets have been talking about remotely sensed data for many years, and now its time has come.

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