---
id: "prereq-value-chain-dynamics"
type: "prereq"
source_timestamps: ["§ Anticipate the Impact on Your Industry"]
tags: ["economics", "strategy"]
related: ["concept-paradox-of-access", "claim-disintermediation-risk"]
reason: "Crucial for understanding why mere adoption of Gen AI leads to margin erosion rather than sustained profitability."
source_url: "https://hbr.org/2025/11/the-gen-ai-playbook-for-organizations"
source_title: "The Gen AI Playbook for Organizations"
sources: ["agentic"]
sourceVaultSlug: "hbr-seg-agentic"
originDay: 6
articleStem: "hbr-cl-87-genai-playbook-orgs"
sourceUrl: "https://hbr.org/2025/11/the-gen-ai-playbook-for-organizations"
sourceTitle: "The Gen AI Playbook for Organizations"
---
# Value Chain Dynamics

**Prerequisite knowledge.** The article assumes the reader understands the concept of a **value chain**: how bargaining power shifts among suppliers, incumbent firms, and buyers, and how **disintermediation** occurs when clients bypass incumbents to perform services in-house.

**Why it's required.** It is crucial for understanding why mere adoption of gen AI leads to *margin erosion* rather than sustained profitability — the mechanism behind the [[concept-paradox-of-access|Paradox of Access]] — and why [[claim-disintermediation-risk|customers and suppliers can turn gen AI against incumbents]]. A reader without this grounding will mistake efficiency gains for profit gains.