The basic challenge of the network orientation is the same challenge we have been dealing with in organizations for two decades with the focus on business processes: the world of human interactions and the world of business transactions are treated as two completely different worlds. Human interactions are dealt with in organizational charts, team charters, performance reviews, organizational culture, change management, and training. Business transactions are managed in the world of process maps, workflow systems, applications, and technology. Implementing value networks overcomes this “split” by bringing together both human interactions and business transactions in a human-centric, role-based model of business activity.

Supporting network patterns of organization requires addressing several key issues:

Supporting “roles”

Most staffing and resource efforts focus on filling seats or “jobs” on the formal organization chart. Common HR practice is not to seek people who can fill multiple roles, but to create a job description of specific credentials and skills and then seek candidates who have done exactly that same work for many years. Reorienting toward networks means supporting people in wearing different “hats” and filling roles in multiple value creating networks. Their formal position then becomes just a “home base” while they are more flexibly deployed where needed in different roles. The role doesn’t care who plays it. In companies where value networks have been implemented a daily duty roster first lists the role, then the individual who is assigned to the role and then what organization or “box” they come from.

Supporting variation to drive innovation

Human interactions account for 70% of business value and activity and also intelligently bring innovation to every aspect of the business. But innovation requires variation. After all, the whole goal of business process engineering is to drive out variation. Yet in complex work environments variation is not only a given – it is desirable and necessary for rapid response and continuous innovation.

Rethinking how “value creation” happens

If value is being created anywhere it must be created everywhere. Traditional views of value hold that value is only monetary value. It only happens at the “end point” of a business process where product or service is delivered to the customer. Value network modeling reveals the “hidden value” that is being created between roles carrying out a business activity. It drives consideration of value as something everyone is negotiating and creating in every work activity. Further it expands the concept of value to include non-financial value, especially consideration of how we are building strategic capability for the future.

Expanding to more systemic performance indicators

Performance indicators and KPIs rarely address systemic indicators that indicate the vitality of the organization. Network analysis opens up an entire new world of whole-system types of indicators that can provide powerful insights into the health and vitality of an enterprise. For example, Value Network Analysis includes indicators for resilience, value creation, perceived value (brand), asset impact, reciprocity, structural dependency and risk, agility, and stability.

Managing intangibles

While any executive will agree with how important intangibles are for success, very few companies put any serious effort into understanding or managing intangibles. As VNA spreads as a management practice, intangibles management moves from an esoteric corner of the executive suite right down to the shop floor. With value network maturity people negotiate both their formal and intangible deliverables and also learn to develop indicators for both financial and non-financial impact.

Compliance, standards, and business reporting

The XBRL movement (Enhanced Business Reporting Language) is supporting adoption of Value Network Analysis taxonomies in market space and organizational reporting. The SEC is throwing its full weight behind adoption of XBRL as a way to bring auditable reporting into the Management Discussion and Analysis (MD&A) portions of the SEC 10K Filings (Eccles et al., 2007). In addition value networks are endorsed as critical in strategy blueprinting by the newest editions of industry process standard ITIL (Information Technology Infrastructure Library) and are integrated into eTOM (the enhanced Telecom Operations Map).

Supporting the learning curve

Finally but certainly not least is the challenge of learning the language of networks. Back when companies were moving into process tools and learning to work as teams there was a huge amount of training support. Today, we tend to throw people into new technologies or toss a few buzz words at them like “collaboration” or “networks” and expect them to suddenly begin behaving differently. The shift into the process orientation and team structures required significant investments in training and education. However, comparable support appears to be seriously lacking as we move into the world of networked organizations. There are new skills sets, mindsets, toolsets, and behaviors that must be mastered. Otherwise “networks” comes out our lips but “processes” and “org charts” run our lives.