The Value Chain Analysis for AI
Jay Banlasan
The AI Systems Guy
tl;dr
Apply Porter's value chain to find where AI creates the most value in your specific business.
Where does AI create the most value in your specific business? The value chain analysis for ai applies Michael Porter's framework to find the highest-impact opportunities for AI in your operations.
Most businesses automate whatever is convenient instead of what is valuable. The value chain analysis prevents this by mapping value creation first and automation second.
The Value Chain, Simplified
Every business has primary activities and support activities. Primary activities directly create value for customers: inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities enable the primary ones: procurement, technology, human resources, and firm infrastructure.
AI creates the most value when applied to primary activities that are currently bottlenecked or inefficient. It creates less value when applied to support activities that are already working fine.
Running the Analysis
Step one: list every activity in your value chain. Be specific. "Marketing" is too broad. "Lead generation through paid ads," "lead nurturing through email sequences," and "sales calls with qualified prospects" are specific enough.
Step two: for each activity, score the current pain level from 1 to 5. How much time, cost, or error is involved?
Step three: for each activity, score the AI potential from 1 to 5. How much of this activity could AI improve?
Step four: multiply the scores. The highest products are your priority targets.
The Insight
The value chain analysis usually reveals that 80% of the AI value is concentrated in 2 or 3 activities. Everything else is nice to have but not transformative.
Focus your resources on those 2 or 3 activities first. Get them running well before expanding. This is how you maximize return on your AI investment instead of spreading thin across a dozen small improvements.
Revisit Quarterly
Your value chain shifts as your business evolves. New products, new markets, new competitors change where value is created and where bottlenecks form. Run this analysis quarterly to ensure your AI operations are focused on the right things.
The Strategy Connection
The value chain analysis is not just an exercise in prioritization. It is a strategic tool that reveals where your business model creates and captures value.
Sometimes the analysis reveals that your highest-value activities are not where you think they are. A business that thinks marketing is its competitive advantage might discover that post-sale service is where the real value lives. AI applied to service then has more impact than AI applied to marketing.
Let the data guide you. The value chain analysis for ai removes assumptions and replaces them with evidence. That evidence-based approach to AI investment is what separates strategic operations from random automation projects.
Build These Systems
Ready to implement? These step-by-step tutorials show you exactly how:
- How to Automate Support Ticket Priority Scoring - Score ticket urgency automatically based on content and customer value.
- How to Automate Abandoned Cart Email Sequences - Build smart abandoned cart recovery emails that adapt based on cart value.
- How to Build a Customer Lifetime Value Calculator - Calculate and track customer lifetime value automatically from CRM data.
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