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The Value of Networks Summit Value networks (value webs), are sets of social and technical resources that work together via relationships to create value in the form of products, services or social good. Included in a company’s internal value networks are research, development, design, production, marketing, sales, and distribution - working interdependently to add to the overall worth of products and services. Companies also have external facing value networks where value is created from the relationships and interactions between the organization, its customers or recipients, intermediaries, stakeholders, complementors and suppliers. Value network principles apply equally well to public agencies, civil society organizations and other purposeful networks focused on creating economic or social good. Key Terms and Concepts All exchanges of goods, services or revenue, including all transactions involving contracts, invoices, return receipt of orders, request for proposals, confirmations and payment are considered to be tangible value. Products or services that generate revenue or are expected as part of a service are also included in the tangible value flow of goods, services, and revenue. In government agencies these would be mandated activities. In civil society organizations these would be formal commitments to provide resources or services. Intangible Value Two primary subcategories are included in intangible value: knowledge and benefits. Intangible knowledge exchanges include strategic information, planning knowledge, process knowledge, technical know-how, collaborative design and policy development; which support the product and service tangible value chain. Intangible benefits are also considered favors that can be offered from one person to another. Examples include offering political or emotional support to someone. Another example of intangible value is when a research organization asks someone to volunteer their time and expertise to a project in exchange for the intangible benefit of prestige by affiliation. A Non-Linear Approach The value networks model challenges the traditional notion of a value chain. Historically we have been in an industrial age, focused on a linear value model, and have recently begun to switch to a new business style in which there are a web of different resources that work together to create value. Often value networks are considered to consist of groups of companies working together to produce and transport a product to the customer. Relationships among customers of a single company are examples of how value networks can be found in any organization. Companies can link their customers together by direct methods like the telephone or indirect methods like combining customer’s resources together. The purpose of value networks is to create the most benefit for the people involved in the network (5). The intangible value of knowledge within these networks is just as important as a monetary value. In order to succeed knowledge must be shared to create the best situations or opportunities. Value networks are how ideas flow into the market and to the people that need to hear them. Applications Value networks are instrumental in advancing business and institutional practices. A value network analysis can be useful in a wide variety of business situations. Some typical ones are listed below. Relationship Management Relationship management typically just focuses on managing information about customers, suppliers, and business partners. A value network approach considers relationships as two-way value-creating interactions, which focus on realizing value as well as providing value. Market Space Strategies and Investments Identifying lucrative and powerful investment opportunities requires the ability to quickly assess a complex environment and accurately map the current and emerging market space. A value network analysis helps identify, analyze, evaluate, prioritize, and manage investments in market spaces - ranging from providing seed capital through joint venture financing and support of management buy-ins or buy-outs. it views a firm as a series, chain, or network of basic activities that add value to its products and services, and thus add a margin of value both to the firm and its customers. In the value chain conceptual framework, some business activities are primary processes; others are support processes Business Web and Ecosystem Development Resource deployment, delivery, market innovation, knowledge sharing, and time-to-market advantage are dependent on the quality, coherence, and vitality of the relevant value networks and business webs and ecosystems. Fast-Track Complex Process Redesign Product and service offerings are constantly changing - and so are the processes to innovate, design, manufacture, and deliver them. Multiple, inter-dependent, and concurrent processes are too complex for traditional process mapping, but can be analyzed very quickly with the value network method. Reconfiguring the Organization Change is all there is. Mergers, acquisitions, downsizing, expansion to new markets, new product groups, new partners, new roles and functions - anytime relationships change, value interactions and flows change too. Supporting knowledge networks and communities of practice Understanding the transactional dynamics is vital for purposeful networks of all kinds, including networks and communities focused on creating knowledge value. A value network analysis helps communities of practice negotiate for resources and demonstrate their value to different groups within the organization. Develop Scorecards, Conduct ROI and Cost/Benefit Analyses, and Drive Decision Making Because the value network approach addresses both financial and non-financial assets and exchanges, it expands metrics and indexes beyond the lagging indicators of financial return and operational performance - to also include leading indicators for strategic capability and system optimization.
Value Network Analysis Value network analysis is an essential and critical knowledge leadership
priority. All contemporary process analysis disciplines are
heavily transactional in focus. They fail in complex, boundary-spanning
knowledge-based environments. Social network analysis (SNA) offers a good
description of relationships and flows, but does not show the business model.
Only value network analysis bridges these disciplines offering a complete,
systems-level view of your knowledge-based business ecologies.
Value Network Analysis Value network analysis is a natural and common-sense way to
elaborate and improve business productivity, expand innovation and retire/reduce
costly, inefficient processes. It is a boundary-spanning, holistic method. Value
network analysis elaborates the intangibles that account for 90% or more of
revenue and earnings in your knowledge-based businesses. Value Network Tools and Methods Tangibles are goods, services and revenues. Intangibles are relationships, brand, experiences, social networks, knowledge markets and other key enterprise assets. Intangibles create most of the wealth in today's knowledge economy. Intangibles are central to innovation, cost savings and productivity growth. Yet, organizations don't know how to elaborate or measure intangibles. Sometimes, they try to apply 20th Century transactional or manufacturing methods like 6-Sigma or TQM. This efforts always fail. Organizations now have new, superior methods for understanding, visualizing and leading their intangibles. Collectively, these methods are known as value networks (VN) and value networks analysis (VNA). Equipped with these techniques, organizations can articulate, optimize and master intangibles. The outcomes are improved resource utilization, productivity, innovation and sharply improved performance overall. The leading toolkit for intangibles is GenIsis. It is part of the ValueNet Works offerings. The illustration below outlines some of these integrated, easy-to-use offerings.
Genesis Application Portfolio
Related Concepts Complex adaptive systems, are a special case of complex systems. They are complex in that they are diverse and made up of multiple interconnected elements and adaptive in that they have the capacity to change and learn from experience. The term complex adaptive systems was coined at the interdisciplinary Santa Fe Institute (SFI), by John H. Holland, Murray Gell-Mann and others. John H. Holland is one of the inventors of evolutionary computation and genetic algorithms. Nobel Prize laureate Murray Gell-Mann discovered quarks. The term complex adaptive systems (or complexity science) is often used to describe the loosely organized academic field that has grown up around the study of such systems. Complexity science is not a single theory— it encompasses more than one theoretical framework and is highly interdisciplinary, seeking the answers to some fundamental questions about living, adaptable, changeable systems. Examples of complex adaptive systems include the stock market, social insect and ant colonies, the biosphere and the ecosystem, the brain and the immune system, the cell and the developing embryo, manufacturing businesses and any human social group-based endeavor in a cultural and social system such as political parties or communities. There are close relationships between the field of CAS and artificial life. In both areas the principles emergence and self-organization are very important. (Wikipedia) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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