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Position · Diagnose

Value Chain analysis

Breaks the business into the activities that actually happen, then asks where cost sits and where value is created. Those two are rarely in the same place, and the gap is where strategy lives.

The printable canvas and the handoff into Claude Code are part of a paid plan. See what a plan includes. It needs the Claude desktop app on this machine, and your team and the prompt library already installed in that project — we cannot see your disk, so open it there.

Stage
01 Diagnose
Works at
All levels
Maturity
Scaling → Large organisation
Time
Half a day

What it is

Michael Porter's model for taking a business apart into the discrete activities it performs, so you can see where cost accumulates and where value is added. The insight it produces is almost always the same shape: you are spending most in a place customers do not value, and under-investing in the one or two links they actually choose you for.

Primary activities
The five that move the product to the customer: inbound logistics, operations, outbound logistics, marketing and sales, and service. These are where the product is physically created and delivered.
Support activities
Procurement, technology development, human resource management and firm infrastructure. They do not touch the product directly but determine how well the primary activities run.
Cost drivers
What makes each link expensive — scale, utilisation, location, complexity, linkage with other activities. Two businesses with the same chain can have very different cost structures.
Value drivers
What makes a link matter to the customer. Some links are pure cost to be minimised; some are the reason anyone buys from you.
Margin
What is left. In this model margin is not a link but the outcome of the whole chain being worth more to the customer than it cost you to run.
The mistake people makeDrawing the chain as the org chart rather than as the work is the standard failure. Activities cross departments, and the expensive parts are usually the handoffs between them — which no department owns and therefore nobody has costed.
What it’s forRevenue and profit are in different places and you need to know which links actually create value.
What it’s not forYou are a single-activity business — the chain is too short to be informative.

How you run it

  1. Draw the chain as it actually isFollow one order from first contact to cash collected. Draw what happens, not what the process document says happens.
  2. Split primary from supportPrimary activities touch the product on its way to the customer. Support activities make them possible. Mixing them hides where money goes.
  3. Put cost against each linkRough is fine. What matters is relative weight — which three links consume most of the cost base.
  4. Put customer value against each linkWhich links would a customer notice if you did them badly, and which would they never see? The mismatch is the finding.
  5. Decide what to do with each linkInvest, hold, fix, outsource or stop. A value chain with no decisions attached is a diagram.

The prompt

Two ways to run it

Run this tool in your own Claude

The short prompt starts your partner against the library on your disk. The long one carries everything with it and needs nothing installed.

🔒 Prompt locked

Everything above is free — what this tool is, what it is for, what it is not for, and how to run it as a workshop. Three tool prompts a month are free with an account; beyond three, and for the printable canvas, it is the paid part.

See plans — from £19 a month

Your playbook

It lands in the earliest stage this tool suits. Move it on the Playbook page.

You’ll need

  • A list of what the business actually does, end to end
  • Cost data at activity level, however rough
  • Some sense of what customers will pay more for

You’ll end up with

  • The chain drawn as it really operates, not as the org chart says
  • Cost and value marked on each link
  • The two links to invest in and the two to fix or outsource

Runs well with

AI risk classification and governanceAnalysis planBusiness Model CanvasComparable company benchmark