1. The Expansionists – Legacy Extension or Refresh: Created by successful companies to protect and extend their share, legacy growth demand chains are new ways to reach customers. They may seek adjacent markets by leveraging their brand, buying power or distribution capabilities. They may also seek to refresh an image in the marketplace by repositioning strong but stale capabilities. As an example, Nordstrom’s has recently acquired HauteLook which is an on-line clothing retailer that operates at a much more competitive price point than its brick and mortar stores. It also appeals to a younger audience who would be more comfortable shopping on-line than its typical suburban mall customer.
2. The Alchemists – Disruptive new entrants who create demand where there has been neither demand or supply: New entrants who launch demand chains that target inefficient, slower moving sectors of the economy, seeking to upset the established order. The “Tech Bubble” of the late 90’s was fueled by the belief that web start-ups were about to dis-intermediate the Fortune 500. A current example is Airbnb, which substitutes unused space in urban neighborhood residences for expensive hotel rooms, providing savings of up to 80%. They create demand where none existed before.
3. The Entertainers – Engage buying stakeholders or provide dramatic customer experience: : The legacy entity already has assets such as a customer base, systems, skills and a relatively massive investment in supply chain. The objective is to understand who the stakeholders are involved in the buying decision and to provide capabilities to those stakeholders that increases their preference for the host entities’ products or to identify new product or service offerings.
4. The Fulfillers – Use Demand driven supply chains: The front-end customer experience is provided in a way that it is directly linked to a supply chain that has been designed and operated to be directly driven by customer demand. This often requires a massive investment to build a superior, agile supply chain. It also requires a superior customer experience. While this appears to be an obvious thought, the reality is much harder to obtain. An early leader in this was Dell Computer, who thrived in the Personal Computer era by dealing directly with consumers through multiple remote channels and thereby avoided expensive retail partners.
5. . The Platform Impresarios – Create demand for an industry ecosystem or platform: : A demand chain can be created around or for an entire industry under the auspices of a customer-centric leader, typically self-appointed. Originating a mortgage loan involves over 1200 steps and up to fifteen intermediaries. On-line exchanges such as Lending Tree permit borrowers to attract and closely compare multiple lenders with a high degree of transparency. Such exchanges can also orchestrate or at least track the various players such as title insurers and home appraisers necessary to close. Such an approach is considered in detail in The Elastic Enterprise by Haydn Shaughnessy and Nicholas Vitalari.