Professor Thales Texeira, from Harvard Business School presents and discussed the concept of decoupling in his latest book: "Unlocking the Value Chain: How Decoupling Drives Consumer Consumption" (2019).
Teixeira defines decoupling as "breaking apart the chain of consumption".
Consumers decouple products and services constantly, seeking to:
- Optimize their user's experience (UX), by eliminating, simplifying or replacing non value-adding activities,
- Reduce cost;
- Increase performance;
- Increase satisfaction and/or
- Solve problems by re purposing or re framing the original products or services.
Large dominant companies usually sell or deliver their products and services bound in "packages" of a series of activities that consumers have to go through along their customer and user experience (UX):
"Traditional companies in these industries have enabled customers to conduct most if not all consumption activities in partnership with them as customers go about acquiring goods and services. These companies bind together as a single “chain” all the steps that consumers undertake in order to acquire products and services. In today’s new wave of disruption, upstart firms are breaking apart these chains, offering customers the chance to fulfill just one or a few activities with them, and leaving incumbents to fulfill the rest. I call this process of breaking apart the chain of consumption “decoupling."It all starts with a large, dominant company offering a long and complex package of services "all in one" to customers.
Teixeira exemplifies this process with the cases of Best Buy and Amazon, TV networks and Netflix, News and Facebook.
One of the most popular and impactful forms of decoupling is "show -rooming", or the process of separating exploration of the product from comparing and purchasing it. Consumers still go to Best Buy or Home Depot stores to look at the products or get ideas but don't buy the product at the stores. They only explore it and then go online to Amazon to compare and buy."Customers could purchase goods from Amazon, while turning to traditional retailers as showcases for discovering products and educating themselves about them. Netflix broke apart the chain of activities by which customers consumed video entertainment, offering only the delivery of content, while leaving it to telecom operators to provide investment- intensive infrastructure for customers to connect their households to the internet.Facebook targets and distributes news. But it doesn’t produce the news itself— traditional news organizations and users do. These disruptive companies, and many lesser- known firms that we’ll analyze, all deploy innovative technologies, but they use technology to enable their business models. The business models themselves represent the true innovations."
Amazon has successfully captured customers from Best Buy, in the same manner than Best Buy captured clients from Macy's or other less specialized department stores.
Decoupling requires looking at the value chain from the consumer's perspective and explore five main stages or segments that can be "captured" or separated to maximize the user experience:
- Searching for,
- Evaluating,
- Purchasing,
- Using, and
- Disposing of products.
Using a car, for example, can be separated from owning it by renting it through ZipCar or just hiring a ride with Uber. Each one of these options might maximize the experience for a large group of users.
Purchasing can be separated from finding, searching and evaluating can be maximized and simplified by combining a showroom provided by one large retailer with the reach and choice, shopping optimization of a large online portal such as Amazon.
Traditional organizations are constantly exposed to decoupling by customers and end users that create opportunities for new businesses and new customer experiences.
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