Value Network Analysis | ValueNetworks.com

Glossary of Terms Update October 2009

Sun, 04 Oct 2009 15:57:06 -0400

Value Networks and VNA Language and Definitions

The Glossary of Terms commonly used in Value Network Analysis (VNA) was updated earlier this year along with the Help Library in the ValueNetworks.com™ application. This comprehensive document is also publicly available in the How-To Guides section of the Open Value Networks resource website, www.openvaluenetworks.com/.

We have now updated it again, to include brief descriptions of some specific Performance Indicators. These indicators were recently explained in a series of our blogs.

The complete Glossary (PDF) is here, and below are some excerpts. The Help Library has many articles and other resources expanding on this material. Some terms here, such as Impact Analysis, are also available as complete articles at www.openvaluenetworks.com/.

Image is by Eileen Clegg, www.visualinsight.net/.

GLOSSARY EXCERPTS

Agility

One indicator of network agility is how quickly information can move around the network and spread out across the network to reach all members. A network’s agility is important to be able to make sense of and adapt to internal and external changes. It is also an indicator of how easy it is for any individual to reach the person who might be able to solve a specific problem. A high average distance between Roles can be an indication that there are not enough hubs or connectors in the network. Agility is one of the indicators reported by the ValueNetworks.com™ application.

Asset Impact

Asset impact considers which assets are most affected by the network behavior as a whole and by the actions of specific roles. Impact can be determined to the sender role, to the receiver role, or to the network itself. Typically people assess impact to the receiver. However, it is quite useful as a way to assess the impact of a transaction to the network as a whole. Asset Impact is one of the indicators reported by the ValueNetworks.com™ application.

Centrality

Centrality is a classic network indicator that shows which roles have the most ties. Roles with more ties are said to be more “central” to the network and may have advantaged positions, alternative pathways to satisfy their needs, less dependency on other individuals, and access to more of the resources of the network as a whole. Just because a role has a strong position structurally does not mean it is providing the most value to the network. That determination can be made, however by examining incoming and outgoing ties separately, using Centrality indicators. Centrality is one of the indicators reported by the ValueNetworks.com™ application.

Channel Management

See Mechanism or Channel Analysis.

Deliverable in a Value Network

A deliverable is the specific “thing” or value that is conveyed from one role or participant to another role or participant. It can be a tangible product or service, such as a pair of jeans or a manicure. It can also be an intangible product (e.g., information or knowledge about something) or an intangible benefit (e.g., political support) that one person can bestow upon or give to another.

Density

See Stability.

Exchange in a Value Network

Exchange refers to two or more transactions between two roles or participants, and it evokes a quality of reciprocity (e.g., an exchange of money for service).

Exchange Analysis in ValueNet Works™ Analysis

Exchange Analysis, a core analysis in the methodology, is an assessment of overall patterns and network dynamics of value exchange that determines if the value system is healthy, sustainable, and expanding.

Flows (of value)

Two or more transactions that occur as a logical sequence are considered a flow. Examples of flows are business processes, communication flows, and chains of causality in which one event triggers another.

Impact Analysis in ValueNet Works™ Analysis

Impact Analysis, a core analysis in the methodology, is an assessment of the tangible/intangible costs (or risks) and tangible/intangible gains or value realization derived from an input that:

- Generates a response or activity

- Increases or decreases tangible assets (cost/benefit)

- Increases or decreases intangible assets (cost/benefit)

- Provides other positive or negative benefits

Intangible Assets

Intangible assets are resources under the control of an enterprise that are typically non-physical and not of a monetary nature, and that are critical for the success of the business. These resources include things such as brand image, customer and employee loyalty, quality of business relationships, social standing, competence of the workforce, improvements in internal structures and processes, and social citizenship. When these resources accumulate and are “held” by an entity, they are considered assets. Intangible assets may be converted to other types of value (e.g., products or services).

Intangible Value in a Value Network

Intangible value is generated by informal, non-contractual activities that help build business relationships and contribute to operational effectiveness.

- Intangible knowledge exchanges include such things as strategic information, planning knowledge, process knowledge, technical know-how, collaborative design, and policy development. These exchanges flow around and support the core product and service value chain.

- Intangible benefits are advantages or favors that can be offered by one person to another. Examples include offering to provide political support or a research organization asking someone to volunteer time and expertise to a project in exchange for prestige by affiliation. These intangible products or deliverables can be exchanged when people “trade favors” to build relationships.

Key Performance Indicators (KPI)

See Performance Indicators or Measures.

Mechanism or Channel Analysis

This is an analysis that determines the most appropriate technology and infrastructure support for each transaction or group of transactions in a value network. Channel Management is one of the indicators reported by the ValueNetworks.com™ application.

Organizational Network Analysis (ONA)

ONA involves the application of Social Network Analysis (SNA) as a diagnostic for business and organizational challenges.

Participants in a Value Network

Participants are individual people, institutions, or groups that execute the Roles in a value network. They can be individuals, groups or subgroups, organizations, collectives or aggregates, communities, or nation-states.

Perceived Value

A key focus in VNA, perceived value is how valuable you as well as other roles and participants perceive your deliverable to be.

Perceived Value Analysis

Perceived Value Analysis is a way to assess the level of value roles or participants feel they receive from individual deliverables that come from other roles and participants, and from the network as a whole. Perceived Value usually is assessed as part of the Impact Analysis. The analysis is also done to assess what other roles or participants feel about the level of value of their deliverables. Perceived Value is one of the indicators reported by the ValueNetworks.com™ application.

Performance Indicators or Measures

Performance indicators are either qualitative or quantitative metrics for assessing the quality or efficiency of execution of an activity, or for demonstrating progress toward a goal or desired outcome. The terms performance indicators and performance measures are often used interchangeably. Indicators is a somewhat broader term that can include second-order indicators that point to possible progress, even if that progress cannot be measured directly. More recently, the term key performance indicator (KPI), which refers to any aspect of human and business performance, has become part of the business language.

Reciprocity

Reciprocity is the extent to which value contributions (ties) are reciprocated between roles and in the network as a whole. Assessing reciprocity surfaces imbalances of tangible/intangible inputs and outputs, overburdened roles, work-arounds that might indicate something is not working in the formal processes or a role is not functioning as effectively as it could, disconnects of missing or dead links, and structural interdependencies. Reciprocity is one of the indicators reported by the ValueNetworks.com™ application.

Resilience

Resilience is critical for a network to respond to changing conditions and requires the right balance of formal structure to informal knowledge sharing. The ratio of tangible/intangible transactions is helpful as an indicator of Resilience. If the percentage of intangible transactions is higher than tangible transactions it usually indicates a high level of flexibility, collaboration, and trust. If the ratio is too heavy on the intangibles side, however, it might show that there are work-arounds or it could show that the network is largely social in nature. A high percentage of tangible exchanges shows that there is a lot of formal structure to the interactions. This might demonstrate a high level of transparency if processes are visible on shared systems, or on the other hand few informal interactions could indicate a low level of trust, information sharing, and/or flexibility. Resilience is one of the indicators reported by the ValueNetworks.com™ application.

Risk

One kind of risk to the value network shows up in Role Dependency. Speed of transactions provides a cross check for where a role might be a bottleneck in value flows. Another useful indicator is the distribution of inputs and outputs across roles in the network. 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. The wider the variance between numbers of connections between roles, the higher is the risk to the network. These indicators are reported by the ValueNetworks.com™ application.

Roles in a Value Network

Roles are the contributing roles in a value network. They are populated by Participants (specific people or entities) who generate transactions, send messages and other deliverables, engage in interactions, conduct processes, create value, and make decisions. They can be filled by individuals, groups or subgroups, organizations, collectives or aggregates, communities, or nation-states.

Social Network Analysis (SNA)

SNA is a social science discipline that focuses on relationships between social entities (e.g., members of a group), corporations, or among nations. It explores both directional and bi-directional exchanges, including sharing of information or types of business relationships.

Stability

Stability is revealed by measures of network Density. Density is calculated as the number of actual connections between roles divided by the number of potential connections between roles. The higher this percentage, the higher the density. The most significant Density indicator is Weak Tie Stability, which shows the extent to which the loss of connections in the network will impact performance of the network as a whole. Weak Tie Stability is the ratio between intangible and tangible transaction Density. Stability is one of the indicators reported by the ValueNetworks.com™ application.

Tangible Assets

Tangible assets show up on the financial balance sheet, for example as cash reserves, physical property, machinery, and accounts receivable.

Tangible Value in a Value Network

Tangible value is generated through contractual or mandated activities that contribute directly to economic gain. Tangible value transactions involve all paid or funded exchanges of goods, services, or revenue, including all transactions involving contracts and invoices, return receipt of orders, request for proposals, confirmations, and payment. Knowledge products and services that generate revenue (including products that are expected as part of service, such as reports or package inserts) are part of the tangible value flow of goods, services, and revenue.

Transaction in ValueNet Works™ Analysis

A transaction is an activity generated by a person that involves imparting a tangible or intangible product, service, or benefit, or other deliverable to another role or participant.

Value Conversion

A key focus in VNA, value conversion is the act of altering or transforming one type of value into another. An example is transforming an intangible input or asset (e.g., industry insights and experience) into a tangible output (e.g., subscription newsletter).

Value Creation Analysis in ValueNet Works™ Analysis

Value Creation Analysis, a core analysis in the methodology, is an assessment of the tangible and intangible costs and gains for each value output a role or participant contributes to the systems through:

- Adding new tangible or intangible value

- Extending value to other roles or participants in the value network

- Converting one type of value to another

Value Network

A value network is any web of roles and relationships that generates tangible and intangible value through complex dynamic exchanges between two or more individuals, groups, or organizations. Any organization, group of organizations, or purposeful network in which people are engaged creating social or economic good, can be visualized and analyzed as a value network, whether it is in private industry, government, or the public sector.

Value Network Analysis (VNA)

VNA is a whole-system mapping and network analysis approach to understanding tangible and intangible value creation among roles and participants in any purposeful activity, whether small work groups, organizations, business webs, or civil society networks.

Value Realization

Value realization is the act of turning a value input, either tangible or intangible, into real gains, benefits, or assets – all of which contribute to the success of an individual, group, or organization.

Also of interest:

Glossary - complete (PDF)

Reciprocity in a Value Network

Sun, 16 Aug 2009 11:39:36 -0400

Indicators and Metrics to Monitor and Predict Performance

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 example and some text 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."

Reciprocity

Reciprocity is one of the key questions addressed in an Exchange Analysis, which is an assessment of value dynamics throughout the whole network. An Exchange Analysis focuses on finding overall patterns in the network, and surfaces key issues – such as health, robustness, and resilience. The questions it addresses are grounded in systems thinking, classic network analysis, intangible asset management and living systems theory.

What to look for

Imbalances: Is there an appropriate balance of Tangible/Intangible inputs and outputs for different Roles and in the network as a whole?

Overburdened Roles and Participants: Are there particular Roles or Participants that are unduly carrying the burden of network interactions where disruption could put the network at risk?

Work arounds: Are there patterns of intangibles that might indicate something is not working in the formal processes or a Role is not functioning as effectively as it could?

Value Reciprocity: Are there reciprocal value relationships between Roles?

Disconnects: Are there missing or dead links? Where does a value flow get stuck or break down? Where does a Role fail to transform inputs to appropriate outputs?

Interdependencies: What are the structural interdependencies?

Useful Questions

1. How does value gained by one Role extend to or “flow” to other Roles or strategic partners within the organization?

Do the flows show that value gained by one Role actually accrues value for the company as a whole?

If a group of Roles belongs to the same organizational entity, then value that is gained by one Role from an external stakeholder should accrue both directly to that Role and either directly or indirectly to other Roles in that organization. When value gained by one Role is not accrued efficiently to its internal and external organizational partners, then value gain is diminished.

2. What does the pattern of interaction suggest about the level of trust in the network?

a. What norms of behavior are revealed in these exchange patterns?

b. What does the intangible activity indicate about transparency and trust?

The ratio of tangible to intangible transactions, or the depth and quality of knowledge flows, can be an indicator of trust.

3. Is one type of value exchange more dominant than another?

a. Do Tangible exchanges significantly outnumber Intangibles? (Or the other way around?)

b. If so, why do you think that is?

c. What would the implications be if it were different?

The dominance of a particular type of exchange may be an indicator of assumptions about value that drive system behaviors. Value exchange patterns also may point to places there might be structural or behavioral constraints on maximizing value. A high number of Intangible exchanges is not always a positive sign. It could indicate that people are interacting informally to try to manage infrastructure problems or unhelpful behaviors. Some Intangible interactions are actually “work-arounds” where something is broken or a Role is not being well executed.

4. Are there places where people need to be engaged in exchanges but are not?

Every interaction is an opportunity to create value or build relationship.

5. How deeply enmeshed and interdependent are the Roles?

The number, type, and frequency of interactions are indicators of the degree of structural coupling between a pair of Roles and may indicate the quality of a relationship.

6. Is every participant both contributing and receiving value from the network as a whole?

a. Which Roles are value “sinks” that absorb value but contribute little?

b. Which Roles contribute more value than they receive? Is that a risk?

If people feel they are not gaining positive value from the network they are more likely to withdraw.

7. Does it appear that some Roles are gaining value at the expense of another? If so, what are the implications?

If Participants in the network feel a particular Role or Participant is behaving unfairly, they are more likely to reconfigure Roles and interactions in ways that diminish that Participant’s place in the network – or alter the value interactions.

8. What do the patterns of reciprocity tell you about this network?

A consistent pattern of reciprocity in exchanges between Roles is an indicator of healthy value flows and whole-system optimization.

9. Are there bottlenecks, constraints, or instability in the flow of value?

Network patterns can be affected by control mechanisms and decision making. When one Role unduly constrains or controls Transactions it is an indicator of structural or behavioral constraints impeding value flow. Missing links, dead links, and broken value flows are indicators of missed opportunities for maximizing value. Sequencing transactions as they occur in the overall activity helps reveal missing links and poorly configured value paths.

10. Does every action elicit a response?

Every action either triggers another Transaction or has an internal impact on the Receiver. If an action does not trigger a positive value-creating response or generate additional value interactions, one needs to ask why is that activity happening? Is it really necessary? Is there a better way to utilize assets?

Useful Reciprocity indicators

Classic network analysis often looks at Reciprocity - the extent to which ties are reciprocated between Roles or Participants. Some theorists feel that asymmetric (unreciprocated) ties may be unstable. A network that has a predominance of reciprocated ties over asymmetric connections may be a more "equal" or "stable" network than one with a predominance of asymmetric connections. A lack of reciprocity sometimes indicates there is a more hierarchical structure. The following examples are from the same example of scheduling procedures in a health care organization as the other topics in this series

All transactions: Of all pairs of Roles that have any connection 53.33 % of the pairs have a reciprocated connection.

Intangible transactions: Of all pairs of Roles that have any connection, 44.44 % of the pairs have a intangible reciprocated connection.

Tangible transactions: Of all pairs of Roles that have any connection, 46.15 % of the pairs have a tangible reciprocated connection.

Channel Management for Optimizing Value Network Flows

Thu, 13 Aug 2009 17:27:56 -0400

Indicators and Metrics for Monitoring and Predicting Performance

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."

Channel Management

The Channel profiles provide a way to consider the effectiveness of different delivery mechanisms for specificDeliverables. For example, some companies rely heavily on face-to-face meetings, where video conferencing might be a more effective way to work. Other companies rely on technology and systems for delivering information or automating provisioning.

In the application it is possible to select the Channel for the transaction from the appropriate drop-down list. The channel is the medium or mechanism used to transport the deliverable.

The default choices for Channels are:

•      Phone conferencing
•      Web conferencing
•      Face to face meetings
•      Virtual team workspace
•      Instant messaging
•      Shared applications
•      Shared drivers/directories
•      Physical Transport
•      Wiki
•      Blog
•      Other

The three charts below are generated in the Reports and show the distribution of different channels viewed by All Transactions, Intangible Transactions only, and finally Tangible Transactions. These charts can be used to develop technology and communication strategies to better support transactions in the value network.

It is also helpful to look at channel usage by role. In a value network technologies are enablers to support the transport of deliverables or to enable role execution. Every technology selection should have a positive impact on either the speed or quality of a transaction or role execution - ideally both. The first step in such an evaluation is to understand channel support from both the transaction perspective (as above) and role execution as in these charts.

Value Network Analysis | ValueNetworks.com

Glossary of Terms Update October 2009

Agility

See Also

Reciprocity in a Value Network

Reciprocity

What to look for

Useful Questions

Useful Reciprocity indicators

See Also

Channel Management for Optimizing Value Network Flows

Channel Management

See Also