1470ComputerWorld :: Value Networks /\ Clusters :: Collective Intelligence
- Feb 13, 2007
Thought this may interest you. Carol Rozwell is a value network exponent and active in the value network community and clusters.
A very cost-efficient way to introduce and immerse yourself in value networks and social network analysis is to join the SoCal Cluster 22 Feb at LAX. See:
In the ascension of value networks this event marks a turning point and highlights deeply practical nature and proven advantages of value networks and value network analysis. You will interact with value network enterprise customers like Cisco Systems. Hear from Verna Allee how major institutions and firms like Boeing and the European Commission are adopting value networks broadly. You will also see a preview of GenIsis: The Value Network Browser. Learn how complex environments like NASA use social network analysis to discover and optimize organizational knowledge pathways.
Traditional networks are integral to management
Value networking is a method for examining the relationships among a group of related organizations or individuals to understand and categorize the value each gains from the relationship, according to Gartner vice president and distinguished analyst Carol Rozwell.
By Bert Latamore
Computerworld (US online)
Updated: Feb 13, 2007 12:14 AM
Value networking, says Gartner vice president and distinguished analyst Carol Rozwell, is a method for examining the relationships among a group of related organizations or individuals to understand and categorize the value each gains from the relationship.
While this is not an exact measurement system, it has implications that range from the business management level (Does the enterprise have the right business partners to succeed, and if not what is missing?) down through the project level (What partnerships with which entities or individuals will best ensure the project's success?) to network infrastructure design, since the network provides the infrastructure that makes those relationships possible.
"I first encountered the value relationship concepts in 1998-'99, when e-commerce was the rage," Rozwell says. "At that time, many brick-and-mortar entities were concerned that new Internet-based competitors would disrupt their businesses. Value network mapping was an attempt to identify all their complex sets of relationships and identify the economic value drivers of the network.
Concept is catching on
"As the awareness of the importance of partnerships has increased, the value network concept has seen a gradual uptake," she says. "It is being used by companies that are receptive to techniques that seem a little squishy at first."
She has charted the life sciences value network, mapping pharmaceutical and biotech companies to other entities such as contract manufacturers and hospitals. In the process, she coded each organization according to its main business strength known as its value discipline:
– Operational excellence,
– Customer intimacy,
– Product leadership, or
– Brand mastery (a category added to the list by Gartner.)
"For instance, if you are a traditional pharmaceutical manufacturer, your major corporate focus most likely will be product leadership," she says. "So in your value network, you want partners with complementary value disciplines such as customer intimacy and branding." These might include Internet services such as WebMD or blogs as well as contract sales and marketing organizations. So at a corporate management level, value networking helps companies plan better business strategy and select the best partners to maximize success.
The value network map can be used to examine existing relationships to see whether the enterprise is allied to business partners that have complementary rather than competitive strengths and to identify potential new partners with complementary strengths. "So instead of starting with a blank sheet of paper, you have a methodology for understanding the tangible and intangible assets that flow from organization to organization."
By putting the customer, rather than the modeler's enterprise, at the center of the network, management can examine the value of each relationship and entity in the network to the customer. This can lead to valuable insights into customer needs and reactions that can result in improved business strategies. Most companies have a problem seeing beyond their own products and marketing. This exercise can help management understand what the customer wants and how the customer sees the enterprise and its products. For instance, it can help a pharmaceutical company see how it contributes to the care patients receive and how it can improve that care. It can help management identify gaps and redundancies and develop an approach that helps rather than confusing the customer.
On the project level, an academic research organization may discover a new molecule and may partner with a pharmaceutical company to bring a new product to market. The pharmaceutical will further research the compound and take it through the clinical study process, which demands excellence in complex operations.
Once the FDA approves the drug, the pharmaceutical company may partner with a contract manufacturer to make it in large quantities and with a sales and marketing specialist to furnish doctors with the information they need to prescribe it to patients. The pharmaceutical company may also want help in establishing a strong brand presence for the new drug against existing competition. The value network analysis helps the pharmaceutical company understand which potential partners have the right qualities to provide the best chance of success at each stage in the product development life-cycle.
One approach to measuring the value of each relationship in a network is to quantify the number and kinds of interactions among the members of the network. This can be refined by identifying the characteristics and value of each interaction. This has implications at multiple levels of the organization, including network design, security and access. Obviously the network needs to be designed to support expected data flows, and routine interactions need to be automated so that business partners have access to the internal staff members and data they need while restricting their access to only that data.
When deciding where to support the interactions with technology, the network designers might want to give higher priority to interactions that have a higher value and occur frequently. And, Rozwell says, not all interactions should be automated with technology. "It may make more sense to handle occasional or low frequency interactions manually, as one-offs," she says.
This does not mean these occasional interactions are low value. For instance, the CFO of an important client may only need to exchange data with the enterprise CFO a few times a year, but those exchanges may be critical to the business relationship. The value network can help network staff identify and prepare for potential important -- but low frequency -- interactions so that they do not create ultimately embarrassing emergencies when they occur.
In contrast to the old concept of the supply chain, which Rozwell dislikes because of its implied linear rigidity, the value network shows a more complicated set of two-way relationships. "Life and business don't work as a series of sequential handoffs from A to B to C," she says. Rather, multiple participants interact simultaneously in complex ways. "Back in 2003 I was working with a bio-pharma. I put up the value network picture and they gasped at the complexity --- nearly 20 different entities. They had never really examined their company' relationships with all the other players, so they found the value network map to be very enlightening."
Mapping these relationships among multiple individuals or entities as value networks provides a much more realistic view for understanding complex interrelationships that can lead to insights that can change the business and improve its chance to prosper in a complicated, fast-evolving environment.
For more information on value networks, Rozwell suggests the entry for "value network" in Wikipedia and the writings of Verna Allee on the subject. And, of course, Rozwell can be reached through Gartner.
Bert Latamore is a journalist with 10 years’ experience in daily newspapers and 25 in the computer industry. He has written for several computer industry and consumer publications. He lives in Linden, Va., with his wife, two parrots and a cat.