10 May 2019

Opportunities for business growth in value chain disruption

Disruptive technology can often be viewed as a threat to the status quo in a long established value chain. This is no surprise when there are numerous examples of value chains that have been broken by disruptive technologies.  Consider the impact that online shopping has had on our traditional high street value chain, or how software/mobile/maps have impacted the taxi and automotive value chains.

Disruption is often considered in terms of specific businesses within the value chain, rather than the impact this has on businesses lower or higher in the chain, and this includes the customers and suppliers.

If companies within the value chain consider the impact on their suppliers and customers, then it becomes possible to start offering solutions which adopt the disruptive technology and take full advantage of the wider commercial benefits. This will, in most cases, move some of the existing boundaries between customers and suppliers up or down the chain, but will sustain the chain in some revised form. This then limits the opportunity for new entrants to break the chain completely.

A key requirement for the active defence of the value chain is the awareness of the disruptive technology, an assessment of the impact and the options to take full advantage within the chain, with strong customer-supplier relationships being an important enabler.

Disruption comes from innovation and that innovation will be protected by patents to capture the rights ahead of adoption where possible. Therefore, patent portfolios indicate the ‘health’ of a value chain to withstand disruption whereas an ‘unhealthy’ patent portfolio will be inward looking and linked to the existing chain.

Healthy portfolios contain patents related to disruptive technology with a view to exploiting those inventions in order to sustain the existing value chain against outside threats. This can be supplemented by in-house R&D departments within the chain seeking to acquire patents and other IP rights through acquisitions, investment funding and joint ventures.

Those value chains considered ‘ripe’ for disruption are often the older well-established chains which in many cases do not view R&D as a central part of their business activity or have a short-term focus.  CEOs often read about AI and robotics and think they does not apply to their business, yet they need to ask the question: ‘Will it affect my customers and suppliers?’. If the answer is yes, then this represents an opportunity to offer solutions to those customers and suppliers that moves the boundaries in favour of the company promoting those solutions within the chain.

Mathys & Squire offers patent portfolio ‘health’ checks to indicate the resilience to disruption and the opportunity for innovation to grow the business within the value chain. Get in touch with a member of our team to find out more.