One of the most powerful benefits of value network modeling is the ability to monitor, predict and influence performance. Metrics are made simple with the Comprehensive Reports function in the ValueNetwork.com application. In addition to Animations and Detailed Visuals, indicator reports are generated for the Standard Value Network (Role view) and the Collaborative Value Network (Participant view). The text and charts below are drawn from a Standard Value Network (Role-based) Report, using the example of scheduling procedures in a health care organization. For other blogs in this series see the links at the end or simply search "Indicators and Metrics."  

Agility

Average Degrees of Separation for all Transactions : 1.46

Average Degrees of Separation for all Intangible Transactions : 1.18

Average Degrees of Separation for all Tangible Transactions : 1.54

Stability

Weak Tie Stability: (intangible/tangible)    0.6953.57 % of all possible ties are present.

Density All transactions:

Density Intangible transactions:

The density of the network often provides insights into the speed at which information diffuses among the Roles. High density in the network can also show that there is a high level of social capital as people are well connected. Low density could indicate social constraint. The constraint might mean there is a low level of trust, a low need for regular interaction, or other factors that create “distance” between the Roles. Geography is sometimes a significant factor in the density of the network.

Other topics in this series:

One of the most powerful benefits of value network modeling is the ability to monitor, predict and influence performance. Metrics are made simple with the Comprehensive Reports function in the ValueNetwork.com application. In addition to Animations and Detailed Visuals, indicator reports are generated for the Standard Value Network (Role view) and the Collaborative Value Network (Participant view). The text and charts below are drawn from a Standard Value Network (Role-based) Report, using the example of scheduling procedures in a health care organization. For other blogs in this series see the links at the end or simply search "Indicators and Metrics."

Structure and Value

One of the most powerful benefits of value network modeling is the ability to monitor, predict and influence performance. Metrics are made simple with the Comprehensive Reports function in the ValueNetwork.com application. In addition to Animations and Detailed Visuals, indicator reports are generated for the Standard Value Network (Role view) and the Collaborative Value Network (Participant view). The text and charts below are drawn from a Standard Value Network (Role-based) Report, using the example of scheduling procedures in a health care organization. For other blogs in this series see the links at the end or simply search "Indicators and Metrics."

Value Creation 

 Average Number of Deliverables per role: 5.63

Some excellent reflections on value and social networks by Kevin Wheeler, an expert in staffing and Presdident and Founder of  Global Learning Resources, and The Future of Talent Institute

Is your social network valuable simply because of the number of people you have in it? I don’t think so. I have over 10 million first, second and third degree connections in LinkedIn and I get almost no value from that network, per se. I get little value because many of my contacts are active recruiters. As I am neither an active recruiter or a candidate, not much interaction happens. And this illustrates one of the several criteria needed to make a network really valuable.

Valuable, robust networks need to meet at least four criteria: (1) they need to be made up of people with similar interests and motivations who are seeking the same thing, (2) they need an instigator, a moderator, perhaps even a rebel, who rouses passions and gets people engaged, (3) they need a large enough number of people so that someone is always “there” to respond, comment and keep the ball rolling, and (4) they need to save time and energy in some way.

Networks are collections – collections made of people rather than books or stamps. Successful collectors in any area do not just collect at random. The good ones have a system, a focus and a rationale behind their collecting. For example, stamp collectors are usually focused on a specific country or on theme.  The same is true for coin collectors.  Baseball card collectors concentrate on a team or league or person.  Focus is necessary and is the first rule for successful use of networks because it is so difficult to sift through thousands of anything to find the one(s) that meet your criteria.  It is much better to have hurdles to entry that ensure the integrity of those who are admitted.  A recruiter, for example,  needs to know exactly what type of people they are looking for and then spend the time to attract only those type before admitting them to their community of similar people.

The second rule of getting value out of your network is to create a forum where good discussion can take place and where people get engaged in issues that shed light on their interests and skills.  Most communication on networks is small talk, meaningless chatter, and disengaging tirades. It is very easy to think that people who always contribute to a discussion are the best, but I believe that volume and frequency of communicationare not indicators of quality. The networks where people engage in discussions about relevant issues and have arguments that are based on facts and evidence are powerful, but hard to find. It often requires someone to throw out the contentious statement or ask the tough question to get people interested enough to respond.

The number of people in your network is important only because not all network members can be equally engaged all the time, and the larger the network the better the chances are that someone will be available and ready to engage in discussion and debate. Global reach and broader critera for membership can help expand the numbers, but it is always a tradeoff between volume and quality.

And all the other criteria are baseless if the network does not provide answers, fulfill some need, or entertain. If it fails to do these things then membership will fall off and the network will become less valuable. If you watch networks for a while, you begin to see how many disappear after a few months. Only a handful remain for more than a year or two.

Good networks need to meet all the criteria above and require sustained effort and focus to be successful.

Here are some books by both noted and new authors addressing value creating networks. The list is alphabetical order by author as they are all on target and worthwhile. Clicking on the title will take you to http://www.amazon.com/ where you will find more detail.

The Future of Knowledge: Increasing Prosperity through Value Networks, Verna Allee, Butterworth Heinemann, 2002.

Net Work: A Practical Guide to Creating and Sustaining Networks at Work and In the World, Patti Anklam, Butterworth Heinemann, 2007.

Excellent article on the Real Value of Intangibles by Denise Caruso. The major financial meltdown in recent months makes these remarks more relevant than ever. Here is an excerpt:

There is no accepted standard for appraising the worth of nonphysical assets like brands, human capital, and managerial expertise. Yet these are the essence of 21st-century business.

Although cost may help determine the value of physical assets, the same cannot be said for intangibles. These assets — intellectual property, software investments, staff and managerial expertise, market research, advertising, business processes, organizational structures and the like — are the real stuff of which 21st-century companies are made. Today, $100,000 can buy a patent that turns out to be worthless or an employee whose great idea tacks a million dollars onto the bottom line. As a result, traditional accounting practices that can record only what things cost, or their resale value, are hopelessly inadequate in representing intangible assets.In fact, based on the difference between reported book and stock values, intangible assets now make up between 60 and 80 percent of global corporate worth. The monetary value represented by those percentages is staggering. Leonard Nakamura of the Philadelphia Federal Reserve Bank declared in 2001 that the value of gross investments in such intangibles as alliances and networks, human capital, and leadership was greater than $1 trillion annually for the United States alone. Reports from both the Federal Reserve and the National Bureau of Economic Research (NBER) calculated that as much as $800 billion of intangible investment was excluded from published data on U.S. gross domestic product in 2003. The exclusion translated to more than $3 trillion of intangible corporate value. When the authors of the NBER working paper — Carol Corrado, CharlesHulten, and Daniel Sichel — added intangible assets to the sources-of-growth framework used by the Bureau of Labor Statistics, they saw “a significant difference in the observed patterns of U.S. economic growth” that drive investment, corporate strategy, and government market interventions.

What a remarkable statement! Even more remarkable is that the statement did not set off a firestorm in the financial press or trigger an immediate demand for reform from the business community. If the absence of effective accounting for intangibles is significantly skewing official statistics, that means the daily decisions being made by investors, managers, and regulators are actually based on financial data that has only a marginal connection with economic reality — and does not even acknowledge the existence of the most important drivers of value in the global economy. No wonder all the buzz these days is about the “irrationality” of markets. Fed a constant stream of misinformation, how rationally could they behave?

One of the most powerful benefits of value network modeling is the ability to monitor, predict and influence performance. Metrics are made simple with the Comprehensive Reports function in the ValueNetwork.com application. In addition to Animations and Detailed Visuals, indicator reports are generated for the Standard Value Network (Role view) and the Collaborative Value Network (Participant view). The text and charts below are drawn from a Standard Value Network (Role-based) Report, using the example of scheduling procedures in a health care organization. For other blogs in this series see the links at the end or simply search "Indicators and Metrics."

Risk

One kind of risk to the value network shows up in Role dependency. The risk is that the Role could be a bottleneck. If the Role is not adequately resourced then value flow pathways can be negatively impacted with time delays. If a Role cannot keep the value flows  moving then it affects the speed of value creation and conversion in the network. A good cross check for whether the Role is a bottleneck is to look at the speed indicators to see if a potential bottleneck Role slows down the value flows.

The second risk factor is that if there is too much Structural Dependency on a Role then it can affect the entire network if something goes wrong. Structural Dependency is based on centrality, one of the most common structural indicators in network analysis. Centrality is about which Roles or Participants have the most ties or connections. In classic network analysis, high centrality is generally viewed positively as an indicator of prominence or high prestige. However, in value network analysis, extremely high centrality for any one Role or Participant may actually be a risk factor for the network!

Structural Dependency correlates to variance between the connections of all the Roles. We can assume that the higher the variance the more we are likely to find some Roles with many connections and others that have almost none. This means that power in the network is not well distributed. The wider the variance between numbers of connections between Roles, the higher is the risk to the network. The network might be unduly influenced or controlled by one or two Roles. In such cases the network might break down or disintegrate if those Roles for some reason disappear or are unable to perform.

Structural Dependency                              All                    Intangible                     Tangible

a) Highest Number of connections per Role
for Transactions                                                          7                              6                                             7

b) Lowest Number of connections per Role 
for Transactions                                                           2                              1                                              1

c) Variance Transactions                                           2.69                           2.30                                          3.19

d) Average number of connections per Role 
for Transactions                                                       3.75                           2.25                                          3.25

Other toipcs in this series:

One of the most powerful benefits of value network modeling is the ability to monitor, predict and influence performance. Metrics are made simple with the Comprehensive Reports function in the ValueNetwork.com application. In addition to Animations and Detailed Visuals, indicator reports are generated for the Standard Value Network (Role view) and the Collaborative Value Network (Participant view). The text and charts below are drawn from a Standard Value Network (Role-based) Report, using the example of scheduling procedures in a health care organization. For other blogs in this series see the links at the end or simply search "Indicators and Metrics."

Resilience

Resilience in a value network is critical for the network to respond to changing conditions. Resilience requires the right balance of formal structure to informal knowledge sharing. Therefore, the Ratio of Tangible/Intangible Transactions is helpful as an indicator of the Resilience of the network. The first two charts below are basic indicators for the number and percentage of Tangible and Intangible Transactions. The text below that shows the Ratio of Tangible/Intangible Transactions.

More intangible than tangible:

More tangible than intangible:

Senior Value Network Analyst, Judith McCrory

Supportability is the capability of being supported; endurable; maintainable.” For value networks, supportability refers to the ability to guide and facilitate a network to create a maximum of value with the resources available. Just as in any management situation, this is influenced by different factors such as 1) Resources and Capabilities; 2) Goals and Values; 3) Organizational structure and systems. Below is a simple framework for Value Network Supportability Factors and relevant assessment questions:

Value Network Supportability Factors

1. Resources and Capabilities
Key Questions: “Who and what is included in the network? “Are all roles and interactions systematically supported?”

Who and what is included in the network determines the area of support and therefore also the level of support. Networks are supported differently, depending whether it consists of only a few roles comprising of one or two players, business units comprising 10 or more participants, or organizations representing 100 or 1000 participants.

At one end of the scale, we have high level networks such as industry ecosystems, where we are looking at overall systemic features, in a more abstract way. We are more concerned with the system as a whole than its individual components. The support or influence of a high level network is exerted by role modeling, network communications on win:win scenarios and agreements on standards, rules and regulations.
A much more focused support is possible when Individual components are scrutinized at a low level descriptions of a value network. Due to the fact that we are looking at detail rather than overview, it is possible to support the network at operational level.

2. Goals and Values
Key Question: “Do we all follow the same values and objectives?”

Is there a collective understanding of purpose? Small self-contained networks such as a business unit with a collective understanding of its purpose can be easily supported by its manager. Even in larger networks the more convergent the network understanding of its purpose, the more focused it can be supported by a facilitator to achieve its goals. At diffuse networks, each actor could have a different understanding of their purpose, specifically their goals and objectives. This means that supportability is more limited as it can be difficult to obtain agreements and decisions.

3. Organizational structure and systems
Key Question “Are there practices and tools in place to support and influence the network?”

Self contained networks within a supportable border lend themselves to formal structures of support which include e.g. strategy plans, performance measures, and performance appraisals. Short-term methods of facilitation are meetings and formal or informal communication. These measures are possible in a highly defined context with strong cultural norms. The use of methods has an influence on the context and culture of the network itself.

In larger and more diffuse networks the behavior of a network can only be influenced by recommendations and cooperation - usually for long-term win:win situations - through communication and collaboration platforms. Additionally, role model behavior which sets new industry standards can influence the network behavior.

The Maturity and Supportability Questionnaire

A previous blog addressed value network maturity. The Maturity Model can easily be combined with the Supportability Model, making it possible to plot a landscape along these two dimensions. These dimensions can be assessed by thinking through the Value network supportability questionnaire as below.

Likert scale answers can help to find less developed areas of maturity or supportability of the value network. We have used the following continuum to allocate points: 10) true for all Roles, 7) for most roles, 5) for half of the roles, 3) for some roles, 0) for no roles, N/A) not applicable. A higher score means the network is more supportable and therefore provides a key performance indicator as to the stability and predictability of the network.

It is important to note though that not all networks can and should move into high supportability/high maturity. Optimization is reaching the "sweet spot" in the matrix where the appropriate balance of structure and emergence allows a particular value network to operate at its best.

Maturity statements

-The VNs processes are clearly defined or documented
-The VNs roles/participants are clearly defined and transparent to everybody
-The VNs activities are proactively planned and monitored
-The relationships between the roles are clearly defined.
-Transactions are transparent
-The value flows are repeatable
-The quality of deliverables is consistent
-Roles are executed regularly
-Roles have formal agreements between each other.
-There is no measurable loss of quality or deviation from all specifications of flow paths
-All parts of the VN are affected by major improvement measures (process changes, resource changes, training, merger, alliances, outsourcing)

Supportability statements

-The roles of the VN are supported by the same manager/board/institution.
-The roles of the VN are guided by the same strategy plan.
-The roles of the VN are guided by the same network performance measures.
-The roles of the VN are subject to performance appraisals with the same set of values.
-The roles of the VN have the same objective/goal.
-The roles of the VN have the same understanding of the network’s purpose.
-The roles of the VN are organized in a communication platform where they discuss collaboration within the network.
-All roles widely share business-specific knowledge.
-All roles belonging to the value network have been included.
-All resources are shared or negotiated without competition.
-All roles play an equally important role in this network.

Plotting any given network against the model can identify the gap between the "as is" condition of the value network compared to where it needs to be for optimization. Then people can plan for interventions by addressing:

1)    Where are we?

2)    Where do we want to be?

3)    How do we get from here to there?

We previously reported on the Journalism That Matters project to generate "current state" and "emerging" value networks in the journalism ecosystem. Peggy Holman reports that a talented group of value network modelers has updated the maps. Here is the emerging ecosystem:

The Map Makers: 

• Kara Andrade, Maynard Institute
• Sherrin Bennett, Interactive Learning Systems
• Dave Cohn, spot.us
• Kaliya Hamlin, Identity Woman
• Peggy Holman, Journalism that Matters
• Ytaelena Lopez, Maynard Institute
• Chris O'Brien, San Jose Mercury News
• Chris Peck, Memphis Commercial Appeal
• Martin Reynolds, Oakland Tribune
• Stephen Silha, Journalism that Matters

For more on the Journalism the Matters effort and their upcoming gathering in January 2010 check the blog link below.

Effective Value Networks are grounded in a deep appreciation of the social aspects of wealth creation, intangibles and intangible asset management. Here a top global expert in intangibles examines the steep decline in trust and reputational indicators, the very real financial impact of that and some possible ways to turn the tide with greater transparency and stakeholder dialogue, including social media. Part 1 describes the decline in reputational factors. Part 2 provides suggestions for ways to move forward.

From Pitchforks to Profits: Overcoming Public Attitudes about
Business in the Post Financial Crisis Era

Jonathan Low 

Corporate reputations that have been damaged will only be restored by a more assertive approach to how companies define and deliver on their promises, with trust as the foundation on which they are based.

Respondents to reputational surveys reflect a loss of confidence in institutions, in experts and in the blind acceptance of expertise. From the loss of belief in CEOs and advertising to the recognition that customers’ or investors’ perceptions have an impact on business survival and job security, it is apparent that businesses must commit to regaining stakeholders’ trust if they are to recover. The helplessness felt by stakeholders in the face of the financial collapse has created a perception that business has treated its stakeholders unfairly and that there is a need for those outside the corporate boundary to regain some greater measure of control in whatever transaction they may be contemplating; a mortgage, a new car, a knee replacement or a bag of groceries.

The distrust in executives or experts of any kind who are promoting products or services, coupled with shaken faith in financial statements generally and projections in particular has led to a ‘down-sizing’ of the circle from which individuals are willing to trust advice. There is a greater reliance on family, close friends – and oneself. This is beneficial in some respects as it promotes greater awareness and attention to detail (‘an educated consumer is our best customer,’ as one ad used to say), ultimately strengthening each link of the business value chain, but it also weakens a company’s ability to frame the purchase decision.

Transparency and dialogue; new imperatives for corporate disclosure

The loss of trust and increase in reputational risk for corporations contributes to a trend that began during the dotcom boom and accelerated after its collapse. There is demand for greater transparency about many aspects of corporate decision-making, including strategy development, executive compensation and investment in new technologies. Complementing that trend is the increasing assertiveness of NGOs, investment professionals and others outside the corporate boundary who are demanding both greater ‘permeability’ and more of a dialogue-driven rather than management-driven discussion of corporate issues.

New technologies and the pervasive nature of their use  - from cell phones to PDAs to the variety of social media discussed below -  have also reinforced the trend towards more rather than less disclosure. With internet access approaching population saturation rates, habits and expectations have changed. This makes it harder for companies to avoid unpleasant or inconvenient issues – and made it harder to correct misperceptions.

The chart below illustrates salient aspects of this development.

Trends in Disclosure

Common Practice Emerging Trend

                                                          Communications

       One Way Communication                                         Multi-Stakeholder Dialogue
       Single Company Progress Report                                Industry Benchmarking
       Public Relations                                                      Corporate Governance
       Voluntary Reporting                                                 Mandatory Reporting

Standards

       Verification as an Option                                           Third Party Assurance
       Inputs and Outputs                                                    Models and Strategy
       Ad Hoc Standards                                                      Global Standards
       Corporate Boundary Definition                                     Dialogue-Set Definition

The comparison between the two columns highlights the contrast between the traditional ‘out-bound’ form of communication and the emerging demand for stakeholder input regarding what information is deemed sufficient by those outside the corporation. Similarly, the historic approach to standards, in which corporations decided to which standards they would adhere based on their own perception of what was in their best interest is giving way to a new model through which customers, investors and others are asserting their interest in comparable metrics on a grander, often global scale.

Many corporations will view these trends as an intrusion on their free market decision-making rights or a diminution of their prerogatives. A more enlightened view might be that corporations now have the opportunity to engage with stakeholders on a broader set of principles. Recent experience suggests that returns to transparency outweigh returns to secrecy. Better information leads to more informed decision-making, more committed customers and investors, more satisfied employees and more reliable business partners. As we have seen, the near-death experience of the financial collapse and its aftermath has left many stakeholders’ embittered and mistrustful. The opportunity to re-engage through fuller disclosure may well contribute significantly to future growth.

Social media and reputation; a new relationship

For corporate communications specialists and reputation-minders in the post financial crisis universe, distrust and dialogue converge most forcefully on the internet and specifically in the realm of social media. Social media comprise a loosely defined collection of blogs of all sizes and interests, and cyber-space gathering spots such as Facebook, MySpace, Twitter, Alibaba, Craigslist, Orkut; the list is endless – and growing. Traditional media like newspapers, radio and television have seen their revenues plunge as advertisers follow their customers to the web.  As information consumers have moved to the web to gather news, opinion and data – increasingly through their cell phones or PDAs -  the influence of traditional media has declined while that of the bloggers and other social media commentators appears to have increased.

The numbers around social media impact are compelling. Internet penetration has reached approximately 75% in the US, somewhat less in Europe and far less in Asia. However, 48% of the total population in the US, 36% of the population in Europe and 11% of the population in Asia access social media (corresponding totals for internet and social media access in South America are considerably lower).

Even more impressively, recent research from Burson Marstellar reports that in the US alone, there are now 20 million bloggers, some 2 million of whom are paid something for their efforts and almost 500 thousand of whom blog full time for a living. To put that in perspective, more people in the US make their living as bloggers than as computer programmers or firemen.

This means that a growing though not yet dominant element of the population is forming its views based on sources which are not traditionally filtered or necessarily expert. In addition, the demographics on social media participation are shifting: in the US, 52% are women and 45% men. Women over age 40 are the fastest growing segment.

This wave of information, data and opinion –with its correspondingly receptive audience, both feeds and benefits from the trends towards multi-stakeholder dialogue in corporate communications, particularly as individuals seek to inform themselves and make up their own minds in the post crisis era.  It behooves corporate communicators to develop a better understanding of how social media participants choose and sustain affiliations, form opinions and make their social or economic decisions through these channels.

Recent research by Predictiv LLC provides insights into how this can be done – and what the implications may be. Predictiv measured the impact of social media on a client’s stock price performance.  The client company revised its projected 2008 earnings downward, which led to negative media coverage, further impacting the stock price. This downward movement occurred despite concurrent increases in the Dow Jones Industrial Average (DJIA) and the US Consumer Price Index. This confirmed the impact that a single negative event could have on business results.

Analysis of blog coverage correlated on a daily basis with the company’s stock price performance, the DJIA performance and traditional media coverage showed that blogs correlated .63 with the DJIA but only .35 with the company’s stock price. Blog coverage contributed measurably to both the daily price - $2.77 on average - and quarterly stock price performance - $471 million. In this case, however, the analysis suggests that traditional media coverage drives blog messaging, not vice versa, and that mainstream coverage has a greater impact on market value than do blogs.

It would be imprudent to draw broad conclusions from one example, but this does substantiate two contentions; that blogs have a measurable, quantifiable impact on financial performance and that as of this writing, communicators in the post-financial crisis environment must pay attention to traditional and not just social media influences.

Implications and conclusions

Distrust and disillusionment in the wake of the financial crisis is pervasive among business stakeholders, including customers, investors, employees, opinion leaders and alliance partners. Companies that neglect to address this head-on, will face reduced acceptance in the marketplace and a longer recovery.

To regain trust, businesses must be more transparent and willing to engage rather than simply transmit their own point of view. The fundamentals of business reputation will continue to evolve, but more emphasis than ever before must be placed on the desires – both actual and perceived – of those outside the corporate boundary. Social media may be one avenue for rebuilding trust, but traditional media influence is still powerful and must not be ignored. The onus is on business to demonstrate that they are working to earn the confidence of those whose interests they claim to serve.

Reprinted with permission of Jonathan Low

Effective Value Networks are grounded in a deep appreciation of the social aspects of wealth creation, intangibles and intangible asset management. Here a top global expert in intangibles examines the steep decline in trust and reputational indicators, the very real financial impact of that and some possible ways to turn the tide with greater transparency and stakeholder dialogue, including social media. Part 1 describes the decline in reputational factors. Part 2 provides suggestions for ways to move forward.

From Pitchforks to Profits: Overcoming Public Attitudes about
Business in the Post Financial Crisis Era

   Jonathan Low    

“My Administration is the only thing between you and the pitchforks.” U.S. President Barack Obama felt compelled to speak these words to the leading U.S. bank CEOs at a White House gathering to which they had been summoned on April 9, 2009.  Driven by public anger at the financial crisis, the President employed a metaphor invoking 19^th Century images of ‘peasants with pitchforks’ and scythes rising up to demand better treatment from their overlords. That such revolutions regularly occurred from 1776 until 1917 in Europe, North America and South America added a modicum of historical weight to the implied threat.

Based on recent polling data, it is would seem that his uncharacteristic use of alarmist imagery was not misplaced. According to the 2009 Edelman Trust Barometer, 49% - or fewer than half of the people surveyed in an annual assessment of US attitudes - support an independently functioning free market. This would not be considered a particularly remarkable finding in much of Europe, Asia or South America, where social democratic agendas have held sway for much of the post-World War II era, but in the strongest bastion of free market policy, it is a revolutionary turn of events. Revolutionary because US citizens have in the post-war era displayed an unwavering faith in their own ability to get ahead – even ‘to get rich’ without demanding help from the government. Demonization of the wealthy has not usually been a successful political tactic in the US for the same reason; until recently, many people hoped – and even assumed – that they would be wealthy some day.

If companies do not address the negative perceptions about them now, lingering mistrust will cloud their interactions with customers, investors, the press and voters for the foreseeable future. Reputations take years to build, but a moment to destroy.

Global loss of trust in business

Survey results suggest widespread disillusionment with businesses and business leaders. Evidence of this is can be found in sample data points such as those that follow from respected global market research firms. These attitudes are especially noteworthy given the businesses investment in brand-building and consumer loyalty programs over the preceding decade, is roughly estimated to be in the trillion dollar range.

· Trust in business across twenty countries is down 62% from 2008, according to Fortune magazine;

·  In 13 of 15 industries analyzed, trust has been lost according to the Better Business Bureau;

·  According to the Edelman Trust Barometer, only 17% of those surveyed trust CEOs, while a slightly better 29% trust information provided by CEOs;

·  A miniscule 13% of those surveyed in the same Edelman study trust in advertising;

·  88% of those surveyed in a Harris Interactive poll state that corporate reputation is “Not Good” or “Terrible.”

Reclaiming that trust will not be easy and the lost faith has already produced a financial impact. AIG, the global insurance giant in attempting to sell its highly profitable aircraft leasing business to raise cash to pay down debt received bids of less than $5 billion for a unit with a book value of $7.5 billion, reflecting the company’s uncertain outlook. Trustees for the Madoff Company, trying to sell its trading unit, had received estimates from valuation experts that it would fetch bids of $200 – 400 million based on trading volume. Instead, the best bid they received was for $15 million, a figure they said was “depressed by the stain his (Madoff’s) fraud had left on its reputation.”

Trust and reputation are intangibles; frequently taken for granted and not accounted for on traditional balance sheets or income statements. And yet, research suggests that as much as 50 percent of a company’s market value may be attributed to them.

This change in attitudes about trust and reputation has affected business-to-business relationships and has also influenced the factors determining corporate reputation. In Barron’s magazine’s annual ‘Most Respected Companies’ survey of institutional investors, the attributes that contribute to a company’s reputation have changed since the financial crisis.

Barron’s Most Respected Companies: Most Important Attributes That Contribute To Company Reputation (% who chose each factor as most important)

                                                 2007                    2009

Strong Management                      32%                         27%
Sound Business Strategy                 25                           27
Ethical Business Practices               21                           20
A Competitive Edge                        9                           10
Consistent Revenue/Profit Growth    6                             0

The numbers reflect the credibility business has lost with institutional investors (who typically own 70 percent of the outstanding shares of any public company) since the beginning of the financial crisis. Each factor suggests a loss of confidence in executives and the financial statements they have produced: the Strong Management decline raises doubts about management’s perceived worth to investors and their credibility after such a colossal collapse in values. It also raises further doubts about the “Iconic CEO” model personified by Jack Welch of GE and popular for much of the last two decades but increasingly of dubious value.

Conversely, the increase in Sound Business Strategy as a reputation driver alludes to the growing conviction that organizational effectiveness and strategy execution are the most important keys to sustainable business success. In a recessionary environment, talent is abundant, strategic vision is rare.

Ethical Business Practices is statistically unchanged as a factor, but realized a one point decline. One might well wonder why more investors did not consider ethics more important given the ethical breaches uncovered in the various examinations of the causes of the financial meltdown. There are two possible explanations: one, that due to pervasive structural compensation and competitive issues, particularly in financial services, ethical practices pale by comparison and, two, a more optimistic view that most people are ethical but the ‘perfect storm’ of behavioral and regulatory problems occurring at one time had more to do with the crisis than did personal values.

A Competitive Edge increased one point in real terms, again, statistically insignificant, but suggesting that organic (eg, factors unique to the company in question) or growth prospects related to strategy are now viewed by investors as more convincing than theoretical themes like synergy or other alleged potential future benefits.

Three graduate students of Lund University in Sweden use value networks and intellectual capital, along with other lenses to understand collaboration at the regional level. Their advisor on the project is Leif Edvinsson. Here are some key excerpts relevant to value networks and a link to the full study below.

The southwest of Sweden and the east side of Denmark forms the Oresund region. This region is well known for its highly developed infrastructure, well educated population and its enterprises within biotech, IT, logistics and design. The region has high potential for collaborative innovations.

All involved organizations in the Oresund region together create a large value network. All organizations play an important role in this network. These roles together with supporting networks have to be identified. What actor who plays what role must be identified and developed in order to make the transitions in the innovation processes smooth.

We have found that: “cultural”, “trust” and “different objectives” are the most common constraints of collaborative innovations. A reason for this could be that many organizations have not identified their roles in the Value Network System – the Oresund region. The anticipatory reason behind these obstacles in the Oresund region can be the lack of meeting places for the different actors in the region. From a corporate perspective, “management issues” as well as the “budget & financial problems” concerning innovation and collaboration can be solved on an operational level in each and every company individually.

However, the other critical factors, such as “different objectives”, “culture barriers” and “trust”, are factors which both the private sector and the public sector experience and therefore have to be solved together. Several of these problems are linked together making them more complex.

The five identified main problems which corporations experience have a negative impact on collaboration in the region. These can be classified into two types of problems: Process‐ and Structural problems.

The process problems are:

• Management

• Financial tools & Budget

• Trust

• Different Objectives

Whereas, the structural problems consist of: diverse corporate cultures within the different kinds of organizations in the region and the two country’s different cultures. The problems, which cannot be solved individually by the organizations, have their origin in two types of weaknesses in the Oresund region. We would argue that the first weakness is that it has been too much focus on organizations in particular which has triggered cooperation rather than collaboration. The second weakness is the weak supply of meeting places.

By solving the second problem i.e. creating more meeting‐places, the predominant focus on organizations can be changed as well. If people from various organizations meet 68 and get to know each other, the focus will change from “organization” to “people”. When the focus changes from organizations to people, trust can be built, cultural barriers transcended and most important the identification of key‐roles and supportive networks can be accomplished. These issues are crucial in order to smooth the transitions in innovation processes. “Collaboration does not happen by itself”, as Verna Allee expressed in our interview. The meeting‐places are therefore vital in order for not only co‐operation to occur but also genuine collaborations.

To finally conclude the thesis, the focus in the Oresund region has to be on the roles and not only the organizations to trigger collaboration and create easier transitions in the innovation processes.

A rethinking is necessary to shift the meaning of mobility. The traditional static view focuses on the mobility of individuals.  What is needed is a dynamic vision of what mobility looks like from a focus on individuals playing different roles within collaborating groups, the actual work being done and a variety of workspaces that support that concept.

Traditionally, there has been company money and energy allocated to create a one size fits all mobile worker program that rarely fits anyone well.  The traditional approach focuses on people who are most able to perform independently - single task or repetitive work -currently done alone without any or much collaboration.  This is backwards. It is more important to identify people who need to collaborate in a variety of settings and support their needed mobility.

The reality is that people do not only come to their place of work to interact with the people they work with. Social interaction happens in a variety of places, settings, and virtually; associate interaction now goes beyond traditional boundaries, and continually changes with new projects, challenges, innovations and engagements. 

The network – the internet and the web of people  – is becoming the workplace.  People are increasingly empowered for seamless dynamic and creative collaboration across teams, organizations and communities through personalized and mobile collaborative working environments, enabling work from anywhere and at any time.

Value networks and Value Network Analysis (VNA) focuses the right kind of attention to the human focused networks which give life to the organization.  With value network perspective, the work is able to be mapped out as sets of work roles and value creating interactions.  This approach is designed to surface the critical working relationships, environmental conditions, infrastructure and motivators that support today’s mobile workers.  Value Network Analysis assumes a strategic view of mobile workers as a cornerstone for the more agile, globally networked organizations that are becoming the norm in every industry. It provides a much more powerful way to how mobility supports collaboration.

Companies often achieve great success with a value network business model, or internal collaborative value networks, only to have that advantage erode over time. Why is that? In our experience, an organization that has not truly mastered Value Network Analysis (VNA) as a basic competency finds it increasingly difficult to hold the line against the more familiar and traditional bureaucratic models of organization. As a network grows in complexity people try to “control” the value network by imposing bureaucratic order. They either try to reconfigure the network as an organization chart or drive it into tightly controlled process models. Either way they will sub-optimize the very network qualities they need the most.

Levels of maturity are standard levels of competency that have been the foundation for many different kinds of maturity models. One of the best known frameworks is the Capability Maturity Model (CMM). The maturity model framework can be adapted to value networks as well. Such a model can help address questions of value network competency and aid in developing value network strategies.

The following Value Network Maturity Model was developed by Verna Allee and Oliver Schwabe and has been validated through both research and practice. Through observation, surveys, or collaborative processes any given value network can be defined, mapped, and assessed according to the levels of maturity. Once you have determined the level of maturity, then you can identify those characteristics that need improvement. Value Network Analysis provides a way for participants in a value network to evaluate, monitor, and improve network performance over time. You can find more on this and other topics in the Help Library of the ValueNetworks.com application.

Level 1. Initial Stage

It is characteristic of value networks at this stage that they are mostly undocumented and in a state of dynamic change. They tend to be driven in an ad hoc, uncontrolled, and reactive manner by dominant participants or events. This provides an unstable environment for the value network. Informal relationships (Intangibles) dominate. Transparency tends to be low.

Level 2. Repeatable Stage

At this level of maturity some sequences or value flows are repeatable, possibly with consistent results. The flows may not repeat for all situations or scenarios. Clear Roles can be identified in the network. Although consistency and quality may be uneven, Roles are executed with regularity. Organizations may use basic management tools and practices to help execute roles or consistently complete particular sequences. Formal agreements are limited and apply only to the execution of specific transactions or isolated sequences.

Level 3. Defined Stage

It is characteristic of value networks at this level that there are sets of defined and documented standard sequences and specific transactions between Roles. These are installed with simple controls for improvement over time. Most Roles have established expectations, informal agreements, and more rarely, contractual agreements with each other to establish consistency of performance. Such controls may apply to Role execution, or consistency of value flow sequences. Standards and guidelines are generally applied, with some tailoring if necessary.

Level 4. Managed Stage

At this stage value network metrics are used effectively to control different flows and sequence variations. Managers and Role leaders can identify ways to adjust and adapt the flows to particular projects without measurable losses of quality or deviations from specifications. Participants in the value network engage in a network narrative with negotiation of Roles, Deliverables, value flows, and sequences. Service-level agreements between Roles are common. Some value flow agreements may involve multiple Roles.

Level 5. Optimizing Stage

It is characteristic of value networks at this level that there is a general focus on continually improving value network performance through both incremental and innovative changes and improvements. Appropriate technologies are deployed to execute all Roles effectively and complete transactions at the lowest possible cost with optimal speed. Roles, flows, and key sequences are continually monitored and measured for performance. The network narrative has expanded to where key Roles, often through explicit agreements, cooperate to define and monitor overall network performance.