A Value network is a complex set of social and technical resources. Value Networks work together via relationships to create social goods (public goods) or economic value. This value takes the form of knowledge and other intangibles and/or financial value. Value networks exhibit interdependence. They account for the overall worth of products and services. Companies have both internal and external value networks. External facing networks include customers or recipients, intermediaries, stakeholders, complementors, open innovation networks and suppliers. Internal value networks focus on key activities, processes and relationships that cut across internal boundaries, such as order fulfillment, innovation, lead processing, or customer support. Value is created through exchange and the relationships between roles. Value networks operate in public agencies, civil society, in the enterprise, institutional settings, and all forms of organization. Value networks advance innovation, wealth, social good and environmental well-being.
Christensen defines value network as:
The collection of upstream suppliers, downstream channels to market, and ancillary providers that support a common business model within an industry. When would-be disruptors enter into existing value networks, they must adapt their business models to conform to the value network and therefore fail that disruption because they become co-opted. (From page 296).
In Fjeldstad and Stabell presents a framework for "value configurations" in which a "Value network" is one of two alternatives to Michael Porter's Value Chains (the other being the Value shop configuration).
F&S's value networks consists of these components:
An obvious example of a value network is the network formed by phone users. The phone company provides a service, users enter a contract with the phone company and immediately has access to all the value network of other customers of the phone company.
Another less obvious example is a car insurance company: The company provides car insurance. The customers gains access to the roads and can do their thing and interact in various ways while being exposed to limited risk. The insurance policies represent the contracts, the internal processes of the insurance company the service provisioning.
Unfortunately F&S and Christensen's concepts both address the same issue; the conceptual understanding of how a company understands itself and its value creation process, but they are not identical. Christensen's value networks address the relation between the a company and its suppliers and the requirements posed by the customers, and how these interact when defining what represents value in the product that is produced.
Fjeldstad & Stabell's value networks is a configuration which emphasize that the value being created is between customers when they interact facilitated by the value networks. This represents a very different perspective from Christensen's but confusingly also one that is applicable in many of the same situations as Christensen's.
In Normann and Ramirez argued as early as 1993 that in today’s environment, strategy is no longer a matter of positioning a fixed set of activities along a value chain. According to them the focus today should be on the value creating system itself. Where all stakeholders co-produce value. Successful companies conceive of strategy as systematic social innovation. With this article they laid a foundation for the Value Network to emerge as a mental model.
In Verna Allee defines value networks as any web of relationships that generates both tangible and intangible value through complex dynamic exchanges between two or more individuals, groups or organizations. Any organization or group of organizations engaged in both tangible and intangible exchanges can be viewed as a value network, whether private industry, government or public sector.
Allee developed Value network analysis, a whole systems mapping and analysis approach to understanding tangible and intangible value creation among participants in an enterprise system. She believes value network analysis provides a standard way to define, map and analyse the participants, transactions and tangible and intangible deliverables that together form a value network. With expert work shop facilitation, Allee says, value network analysis can lead to profound shifts in perception of problem situations and mobilise collective action to implement change
All biological organisms, including humans, function in a self-organizing mode internally and externally. That is, the elements in our bodies—down to individual cells and DNA molecules—work together in order to sustain us. However, there is no central “boss” to control this dynamic activity. Our relationships with other individuals also progress through the same circular free flowing process as we search for outcomes that are best for our well-being. Under the right conditions these social exchanges can be extraordinarily altruistic. Conversely, they can also be quite self-centered and even violent. It all depends on the context of the immediate environment and the people involved. Reference--Ehin, Charles. Hidden Assets: Harnessing the Power of Informal Networks. New York: Springer, 2005.
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 .
Prescription Solutions' Pharmacy "Value Network" Provides Choice for Clients and Consumers While Keeping Rising Costs in Check.
Apr 27, 2011; Prescription Solutions, a leading pharmacy benefits management (PBM) organization and an Optum company, announced its new...
Prescription Solutions' Pharmacy 'Value Network' Introduces Choice for Clients and Consumers While Keeping Rising Costs in Check
Apr 20, 2011; Wireless News 04-20-2011 Prescription Solutions' Pharmacy 'Value Network' Introduces Choice for Clients and Consumers While...
Prescription Solutions' Pharmacy 'Value Network' Offers Choice for Clients and Consumers While Keeping Rising Costs in Check.
Apr 19, 2011; Prescription Solutions, a pharmacy benefits management (PBM) organization and an Optum company, has announced its new pharmacy...