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MOSL: VALUE MIGRATION 2.0- Digging deeper, exploring more themes; Pace of migration accelerating in BFSI and Jewelry

Value Migration 2.0: Digging deeper, exploring more themes; Pace of migration accelerating in BFSI and Jewelry

 

• In our Theme Report on Value Migration published in January 2017, we had dwelt upon the importance of staying with winning business models in ultra-disruptive times. India is indeed witnessing a phase of heightened disruption over the last three years, with transformational and game-changing reforms like GST, RERA, IBC (Insolvency and Bankruptcy resolutions), and Demonetization, driving underlying changes in the way businesses operate and create value for stakeholders.
• To recap, along with various nitty-gritties of Value Migration, we had highlighted 26 case studies in our report, which touched upon cases where (a) Value Migration is already prevalent and has left a trail of winners/losers, and (b) Value Migration can drive changes in the ensuing decade. We had also discussed the disruptions caused by unlisted players and consequent challenges they posed to the listed ones.
• In this sequel, we look at the progress/updates on some of the cases already highlighted and also dwell on two interesting new themes of Value Migration.

 Recap: What is Value Migration?

• Value Migration is defined by Adrian Slywotzky, author of the book “Value Migration”, as a flow of economic and shareholder value away from obsolete business models to new, more effective designs that are better able to satisfy customers’ most important priorities. The framework tries to identify industries where Value Migration is underway and can help pick potential winners early in the cycle.
• Value Migration happens in three stages: [A] Value Inflow: In this phase, a company or an industry captures value from other industries or companies due to superior value proposition. The market share and profit margins of the company or industry expand. [B] Stability: In this phase, competitive equilibrium is established. Growth rates moderate. [C] Value Outflow: Value starts to move away towards companies or industries meeting evolving customer needs. In this phase, market share declines, margins contract, and growth stops.