-> *I got this from Scott Galloway on the [[Pivot Podcast]] as well as from the Prof G Strategy Sprint* > "Vertical integration is a company's ability to control the end-to-end customer experience by owning as much of the value chain as possible." This includes designing, manufacturing, distributing and the usage life-cycle of a product. This desire has been around since modern companies, for example Carnegie in the late 1800's extending from steel handling into raw materials into developing their own processes, owning all refinement and gaining control over their distribution network, up to owning railroads. Raw materials -> Design -> Manufacturing -> Distribution -> Consumer life cycle This might be a producing brand that for example extends into owning their own channels (for example Apple opening their own flagship stores) or channels extending into products (Amazon producing their own house brands). This is similar to [[Recurring Revenue Bundle#Rundles vs pure players]], where bundling services together leads to a stronger overall offering that will outperform incumbents even if they have the strictly better product. In this case because they control the channels below (= cheaper supply chain & procurement) or above (= better distribution) Example: Apple Music eating into Spotify, by virtue of being bundled with an iPhone / Apple services, even though it's the inferior product. ## Small organizations going vertical Usually going vertical requires a lot of investment: Opening your own stores is not cheap. That said, there are opportunities to scale this approach, for example experimenting with direct-to-consumer ecommerce (instead of all-out flagship stores) or a limited run of in-house label (if you are a retailer). ## Internet of Things extending the vertical ladder Traditionally the "value ladder" would end at the customer as there was no way to know what the customer would do with the product. However with [[Recurring Revenue Bundle]] there is a constant relationship between customer and brand and with the [[Internet of Things]] and the fact that [[Everything that can be digital will be]], brands can now actively look into the usage and life cycle of a product post purchase. Looking at industrial applications, companies like thyssenkrupp would sell elevators, but then also elaborated service contracts based on their ability to get the service and operations data from the elevators directly into their cloud and thus being able to for example run predictive maintenance models on it.