Value and knowledge chain in small businesses

The term “value chain” was coined by Michael Porter in 1985, in his book “Competitive Advantage”. For the Harvard Business School professor, the value chain is the entire set of activities performed by an organization that involves relationships with different actors (e.g., suppliers, outsourcers, workers, investors, R&D, clients, consumers, partners) to deliver value in the form of products or services. The evolution in value chain relationships reveals that companies started the outsourcing movement of activities that had no direct impact on the final product (known as support or non-essential activities) and, later, of activities directly related to the business’s production process. Thus, what we see today is a new configuration of business models: the outsourced value chain.

Increasing efficiency with the value chain

In practice, what is verified is a value chain formed by a central executing company — the one responsible for the entire network (contractor) — and outsourced companies (contracted). These contracted third parties are responsible for activities that have a direct impact on the contractor’s final product or delivered service, as a result of their production and technology techniques, allowing the central company to deliver increasingly more value to clients through the outsourcer’s specialization. Studies reveal that the Business Process Outsourcing – BPO market (Terceirização de Processos de Negócios, in Portuguese) has been growing worldwide and gaining more and more strength in Brazil in recent years. Research by Technavio, published in 2021, points out that the global BPO market could grow by US$ 40.16 billion by 2025. In the industrial sector, for example, production cost reduction, time savings, increased service quality, and the use of new technologies are the main factors driving this market’s growth, according to a publication by the National Confederation of Industry – CNI (2017). In addition to these benefits, this new model contributes to open innovation in collaboration with key partners in the business value chain. This allows for both the expansion of organizational capacity and the improvement of processes, products, and services, as well as the connection and generation of opportunities throughout the entrepreneurial ecosystem. Speaking specifically of small Brazilian businesses, according to research by Sebrae (2023), 21% of this profile of companies that closed in 2020 had poor company management as one of the main determining factors for the termination of activities. Considering this mortality rate, the outsourced value chain has been a recommended strategy to help these enterprises consolidate financially.

Knowledge and learning in the value chain

However, if on the one hand BPO is understood as one of the management strategies to overcome this survival challenge, allowing the central company to transfer the execution of one or several activities to third parties, thus taking advantage of their specialized knowledge base, on the other hand, it is clear that this business model can bring knowledge-related risks for the central company in the value chain. Through experiences in client projects, Impakt Consultoria highlights some risks:

• Repetition of errors and loss of productivity
• Reactive / fragmented training activities / without strategy
• Difficulties in accessing available knowledge
• Difficulties in applying the knowledge developed in the company and/or with partners
• Dependence on key knowledge from suppliers
• Loss of relevant knowledge with the departure of people and/or the change of suppliers

To mitigate the knowledge risks linked to the outsourced value chain, the central company needs to (i) work on management at more strategic levels, expanding the technical and managerial capacity of the central company; and (ii) adopt not only the outsourced value chain approach, but also the Value and Knowledge Chain. This means that the central company can improve its efficiency and productivity with Knowledge Management integrated into its outsourced chain, whether to ensure the quality of its processes and products, promote a knowledge ecosystem, or implement network innovations. Beyond mitigating knowledge risks in the outsourced value chain, one of the great motivators for having allies in the chain is precisely the specialized knowledge of each actor. Companies organize themselves into chains according to their specialized knowledge and competencies, so that, together, they can generate value for customers. Knowledge is, therefore, one of the catalysts for the organization of the outsourced chain.

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