A chain, as the adage goes, is only as strong as its weakest link. Over the past few decades, virtually every link in the business process— from supply chain, to finance, operations, product development, and even human resources—has been reengineered and improved by application of sophisticated management strategies.
But there’s one major exception: the demand chain—that is, those business processes that encompass everything a company does that involves marketing and sales. Now it’s time to reinvent the demand chain as well, since doing so will fundamentally improve the way businesses create and grow their most important asset: revenue.
All other core business processes that underwent fundamental transformations have resulted in improved efficiency, quality, and contributions to profitability. In the 1980s, there was Six Sigma. In the 1990s, it was Supply Chain Management. In the early years of the 2000s, there was Agile Development. This book’s call to adopt Revenue Performance Management (RPM) will do for revenue what earlier process transformations have accomplished for other key business functions.
Professor Michael Porter of the Harvard Business School pioneered thinking around the corporate value chain approach, claiming that this method “disaggregates the firm into its strategically relevant activities in order to understand the costs and existing potential sources of differentiation.” Figure 11.1 illustrates Porter’s ...