The Evolution of Value Chain and Porter’s 5 Forces

Millions of eager MBAs populate the executive suites and boardrooms of top companies around the globe, and the vast majority were indoctrinated in strategy classes with Michael Porter’s Five Forces and value chain analysis. These value chains have served corporations as they examine vertical integrations, mergers & acquisitions and the strategic fit of business lines since the Industrial Revolution.

Screen Shot 2018-04-11 at 8.59.39 AM.pngExample: Linear value-chain which offers one direction for business flow only.

This traditional model is no longer useful or practical and the technology revolution of the last 30 years is forcing companies to re-evaluate linear value chain analysis in favor of a “constellation” approach to building businesses.
Untitled123.pngExample: Constellation approach using TradeIt to showcase the potential of a living breathing value ecosystem that flows to all entities.

As we see in the TradeIt model, the relationship between buyers and suppliers now features a “big bang” view of the ecosystem—partners that support each other and need each other to grow, branching off in every direction.

So why is this beneficial?

The TradeIt model would not be possible without APIs. APIs allow companies to securely work with each other through technical channels in order to focus, build and scale without the same linear approach as historically conceived. But we’re getting ahead of ourselves. First, a refresher…

Five Forces

First described by Michael Porter in his classic 1979 Harvard Business Review article, Porter’s insights started a revolution in the strategy field. A Five Forces analysis can help companies assess industry attractiveness, how trends will affect industry competition, which industries a company should compete in—and how companies can position themselves for success.

Essentially Porter built a framework for understanding competitive forces in an industry and how those drive economic value among the industry players. Today we’re still trying to understand how to drive value, but what’s clear is that it’s no longer through a linear value chain. Instead, we drive value through a platform model where you have contributors owning different pieces, therefore making the sum of the parts greater.

Evolution of the Value Chain

“The value chain describes the full range of activities that firms and workers do to bring a product from its conception to its end use and beyond. This includes activities such as design, production, marketing, distribution and support to the final consumer.” Nowhere does it say the chain has to be linear.

Enter the API

APIs are revolutionizing traditional business alliances and partnerships through scalability, flexibility, and fluidity.1

When companies share APIs, the world expands. Uber relies on Braintree for payments, Google integrates Uber into its map feature, and the list of interdependent API-driven technology businesses becomes more and more apparent.

Similar to the relationships between Uber, Google and Braintree—which are all focused on delivering a service to an end user—in finance, Cross River Bank allows companies like Affirm, TransferWise, and others to be free to build client-facing tools and services without having to do the core banking functions that often slow large incumbents. The ‘big bang’ approach to an ecosystem allows innovative service providers to enter a space with one “killer app” or a new tactic to solve a pain point.

Power in Partnerships

Large incumbents, where all the technology and related services are all under one roof, may not be able to move as quickly due to silos, legacy systems and/or risk and compliance requirements. The keys to this new value chain approach and the ecosystem are the partnerships and the ability to work together in new and innovative ways to meet the end user’s needs.

The visual below shows how TradeIt acts as a hub between supply and demand (brokers vs publishers) and how other partners come into the equation with ancillary and related services.

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This type of model not only offers much more flexibility for other players, it also opens the door for additional revenue streams and increased profitability. By creating value at every touchpoint, from broker to publisher and supplier to distributor, the ecosystem will only continue to expand and grow…to the benefit of everyone.   


1Bala Iyer and Mohan Subramaniam, “Corporate Alliances Matter Less Thanks to APIs,” Harvard Business Review, June 8, 2015.

TradeIt’s Bot is Live on Facebook Messenger

We are excited to announce the launch of the TradeIt Bot, live on Facebook Messenger. The new bot allows investors to securely link to their brokerage accounts to view account balances, receive alerts, such as end of day market roundups on the performance of their positions. The bot also provides pricing data for the equities and crypto markets. Giving investors greater control and sense of security, TradeIt securely links investors to their accounts via brokers’ APIs; we do not screen scrape the data.

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“Our partners have reported increased engagement when leveraging TradeIt. When an end user simply sets up a watchlist, retention increases 5x over a 3 or 6-month timeframe.  With a portfolio linked via TradeIt’s technology, partners reported 10x and 12x increases in retention for 3 and 6-month timeframes, respectively,” Nathan Richardson, CEO, and co-founder, noted.  “We expect with the large volume of users on Facebook’s Messenger Bot and high retention numbers reported among our partners, TradeIt can support investors with real-time portfolio data and account balances.”  

In November 2017, Facebook reported continued growth and adoption for the Messenger app by hitting 103.5 million MAU in USA.  Global adoption was 1.3 billion MAU globally.  As we explored in our summer series on FANGs, Facebook laid out plans to embed business services into the Messenger platform, in line with WeChat’s strategy.  Ordering an uber, booking a reservation, shopping for new clothes, and with TradeIt’s Messenger Bot, now, monitoring your investment platform and track market prices for equities and crypto.  

With Messenger’s numbers increasing and Facebook’s stated strategy to follow cues from WeChat, looking to Tencent is likely a sign of what’s coming to the US markets.  Tencent, WeChat’s parent company, has received a license that allows it to sell mutual funds on WeChat and give the popular messaging app’s 980 million users.  Coupling the mutual fund license with the licenses to operate mobile payments, insurance and micro-financing on the WeChat messenger platform, the market is seeing… and validating the need… new avenues for individuals to manage their wealth and pursue the business of their lives.  

The TradeIt Bot for Facebook Messenger can be integrated for a single broker on their Facebook page, giving our brokerage partners an easy way to enter the Messenger space and provide access to their investors where their investors are active and engaged.  Also if you head over to the TradeIt homepage you can see the bot experience embedded on the page.  Over time, we expect the bot to support additional parts of the customer journey, specifically account opening.  For more information, please contact us at support@trade.it or check out the bot here.

TradeIt’s Developer Portal is Live, Supporting Ecosystem Expansion

In TradeIt’s ongoing efforts to support FinTechs, financial institutions and app developers, we are excited to launch our Developer Portal, available at developers.trade.it. The new site is designed for our partners looking to access our SDK or API and to begin integrating our platform into their apps for end users.  

Once registered for the site, a developer will be issued a key to our staging environment. For developers who already have a key to the TradeIt API, they can link their key to an account and leverage the portal for information. The site includes a hub for documentation and integration guides, including dummy accounts for deeper testing of one’s integration.  Users will be able to request production access as they prepare for deployment and reference broker details.  

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Future upgrades and additional functionality to the Developer Portal will include broker profiles, deployment checklist to help developer prep for production release, analytics, community threads, and support.  We believe the new developer portal is one more tool to help expand the ecosystem and help support our partners.

To sign up for the developer portal, click here.  For additional questions, comments or feature requests, please contact us at support@trade.it.

Product Announcement: New SDK Screens for Transactions

Expanding investors’ visibility to their brokerage accounts

We’re excited to announce that we’ve launched new transactions screens to our SDK to support our core products, PortfolioView and TradingTicket.  These new screens provide investors with great visibility into their accounts.   

Users will now be able to view their transactions… trades, deposits, dividends, interest, etc.  The new screens for transactions will be accessible via PortfolioView, where the end user can select from the activity menu in the upper right corner.  These new screens can be stand-alone screens as well if you have built your own portfolio tools, similar to how partners can integrate the order history screens.

We’re thrilled to extend this new feature and hope your app users will benefit from it!

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For more information about the new screens, check out the documentation here.

Email support@trade.it for more details or with any questions.  

Product Announcement: New SDK Screens for Orders

Greater visibility for investors looking to manage their brokerage accounts

We’re excited to announce that we’ve expanded our core products, PortfolioView and TradingTicket, to now include order details as part of the SDK screens.  

End users will now have great visibility into the details of their brokerage accounts and their trades. The new screens provide an easy view of all orders an investor has active – open and pending orders, partially filled orders and orders filled that day. A simple swipe down will refresh the screen and with an easy swipe to the left, users can cancel an open order. The new screens can be accessed from the PortfolioView or TradingTicket.

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For more information about the new screens, check out the documentation here.

Email support@trade.it for more details or with any questions.