3. Construct a value chain

Construct a WealthWorks Value Chain

WealthWorks value chains are well-suited to economic and community development that reaches beyond the norms of “creating jobs” and “increasing income” to achieve broader and deeper wealth-building goals that strengthen and sustain a region’s economy for the longer haul.

WealthWorks value chains offer a practical way to build your stocks of local capital, increase local ownership and control of that capital, and improve livelihoods and upward mobility for people, places and firms within a region. They show how a network of different types of partner investments, coordinated around a true market opportunity, can produce wealth that “sticks” to the region. They move the system of doing economic and community development toward a “new normal”—one where the realization of shared and common interests among value chain partners catalyzes opportunity and creates the will to address challenges together and better utilize all the resources flowing through the value chain to build wealth in the region.

WealthWorks value chain defining characteristics

A WealthWorks value chain is a network of people, businesses, organizations and agencies addressing a market opportunity to meet demand for specific products or services—advancing self-interest while building rooted local and regional wealth.

Economic and community development goals tend to drive development practice. When goals are focused primarily on creating jobs and generating income, development activities are designed to produce those results, no matter who gets income, or what kind of jobs they are. In WealthWorks, development goals are expanded to include all three elements of wealth building within a region: that is, boosting stocks of eight types of capital (while harming none), increasing the local ownership and control of that capital within the region, and improving livelihoods, including moving people, places and firms on the economic margins towards the mainstream. Working on that range of goals calls for a tool that is flexible in both its design and application—one that can broaden and deepen wealth-building impacts within a region. That tool is the WealthWorks value chain.

Value chain coordinator

The coordinator serves as the backbone of a WealthWorks value chain, weaving together the efforts of everyone involved.

With multiple players and moving parts, it’s no surprise that WealthWorks value chains need to be guided by a thoughtful and committed coordinator. At the point a critical mass of businesses, organizations, agencies and investors want to act on a market opportunity and build a value chain, they typically agree they must have a coordinator who will serve as the backbone that holds and weaves their efforts together. Anyone might be a coordinator—an organization, a business, an agency or a team. But like any value chain partner, the coordinator, too, must have a vested interest in developing and maintaining the value chain.

Demand, transactional and support partners

There are three primary types of partners in a value chain—demand, transactional and support—and they each play different roles.

WealthWorks considers any person, business, agency or organization that is involved in a value chain a “partner.” Some value chain partners are very involved with the coordinator in thinking about, designing and building the value chain. Some are aware of the chain and supportive, but dip into the work of constructing the value chain only in relation to their specific contribution or connection to its effort. A few partners may be largely unaware they are even in the value chain, but because other partners and the coordinator are aware of those partners’ value, they maintain relationships with them.

Types of value chain partners. There are three primary types of partners in a value chain, and they each play different roles.

  • Demand partners are the buyers who have significant interest or commitment to buy your products or services. They are in your value chain by necessity and default—without them, you are producing on blind faith that someone will buy what you make or do.
  • Transactional partners are the businesses, organizations and people that play a direct role in sourcing, producing and distributing the actual product or service you are delivering to the demand partners.
  • Support partners are the people, businesses and organizations that directly assist transactional partners with fulfilling their roles. Their services can include financing, policy and regulation, certification, research and development, as well as technical assistance.
Wealth-building opportunities: Gaps, bottlenecks and underutilized resources

Wealth-building opportunities become evident as you map the value chain and identify its gaps, bottlenecks and underutilized resources.

A WealthWorks value chain is dynamic, not static. A large part of its value as a tool for designing and implementing economic and community development efforts lies in that fact. The WealthWorks value chain, when well coordinated, becomes a communication and planning vehicle that surfaces and highlights information that can lead to more wealth-building opportunities.

How does that happen? The coordinator and core partners in a WealthWorks value chain regularly, either through formal meetings or a series of smaller exchanges, discover things happening (or not happening) in the value chain that present a barrier to be tackled or offer an idea for an entrepreneurial venture.

Investment to support the value chain

In WealthWorks, investment includes any use or dedication of a capital for wealth-building results. Applying an underutilized resource to fill a gap in the value chain is a wealth-building investment.

Like any economic and community development approach, building a WealthWorks value chain is an undertaking. Identifying the coordinator, spotting the right market opportunities, assembling and connecting partners, finding leverage points and addressing gaps, bottlenecks and underutilized resources is real work. So, like any market-driven approach, it requires investment—not just financial, but investments of creative thinking, willingness to innovate, commitments to doing things differently to create different results—and time.

Think of a WealthWorks value chain as a venture undertaken by a group of investors. Each invests in the value chain to, over time, generate a good return. But WealthWorks investors don’t necessarily invest dollars, and not all value chain investors are looking for financial returns.