Value Network Analysis | ValueNetworks.com

Glossary of Terms Update June 2011

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 with publication of the online book Value Networks and the True Nature of Collaboration. This comprehensive document is also available as a PDF download here. Some terms here, such as Impact Analysis, are more thoroughly explained in the book.

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.

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 to the sender role, to the receiver role, or to the network itself can be determined. 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.

Attribute

An attribute is a descriptor or property that defines the characteristics of an object.

Business Model

A business model is a set of "rules," interactions, and relationships that define how a business generates value. It describes the rationale of how an organization creates, delivers, and captures value - whether economic, social, or other forms of value.

Business Relationships

See: Relationship Capital.

Centrality

Centrality is a classic network indicator that shows which roles have the most ties. Roles (nodes) with more ties are said to be more "central" to the network and may have advantaged positions. They may have alternative pathways to satisfy their needs, less dependency on other individuals, and access to more of the resources of the network as a whole.

Channel Management

See: Mechanism or Channel Analysis.

Customer Capital

Customer capital refers to the quality of an organization's relationships with its customers. It is a component of relationship capital.

Deliverable in a Value Network

A deliverable is the specific value or object 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 or informal offering (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

An exchange refers to two or more transactions between two or more roles or participants, and it evokes a quality of reciprocity (e.g., an exchange of money for service). More formally it is a process in which one role as an economic agent receives resources from another role or other roles as economic agents, and it provides resources in return.

Exchange Analysis

The Exchange Analysis, a core analysis in the Value Network Analysis methodology, is an assessment of overall patterns and network dynamics of value exchanges. It determines if the value system is healthy, sustainable, and expanding.

Explicit Knowledge

Explicit knowledge is knowledge that is codified and conveyed to others through dialogue, demonstration, or media (e.g., books, drawings, and documents).

Flows of Value or Value Flows

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.

Flow Analysis

Flow analyses are techniques that can be used to explore different kinds of physical flows, and sometimes non-physical flows, in which there is a time-ordered sequence or a chain of cause and effect. These approaches come from many different disciplines such as systems engineering, material flow analysis, and data flow analysis.

Feedback

In Value Network Analysis feedback is the return of information about the impact of an activity. In other uses it can also mean the return of a portion of the output of a process as new input.

Goodwill

Historically, goodwill has been considered as the positive disposition of a customer toward a particular enterprise. Goodwill, however, also includes intangible assets or qualities of the company, or its management, that cause people to hold the company in high regard.

Human Capital or Human Competence

Human capital and human competence refer to the knowledge, skills, and competencies that reside in individuals who work in an organization, or that are embedded in the organization's internal and external facing social networks.

Impact Analysis

The Impact Analysis, a core analysis in the Value Network Analysis methodology, is an assessment of how an input for a role is handled. The analysis assesses tangible/intangible costs (or risks) and tangible/intangible gains or value realization, derived from the input, that:

- generates a response or evokes an 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. 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 roles and participants as informal, non-contractual activities or deliverables 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. An example would be research organization asking someone to volunteer time and expertise for a project in exchange for prestige by affiliation. Intangible deliverables can be exchanged when people "trade favors" to build relationships.

Intangibles

See: Deliverable in a Value Network.

Intellectual Capital

Intellectual capital is another term for intangible assets and collectively refers to all resources that determine the value and the competitiveness of an enterprise. As such, it includes as subsets the attributes that concur to building all financial statements as well as the balance sheet.

Intellectual Property

Intellectual property refers to content or concepts over which a company enjoys a legally protected owner's interest (e.g., patents, trademarks, copyrights, registered design, and trade secrets).

Internal Structure

See: Structural Capital.

Key Performance Indicators (KPI)

See: Performance Indicators or Measures.

Knowledge

In organizations, knowledge is experience, ways of working, concepts, beliefs, or principles - all of which can be learned, communicated, and shared.

Knowledge Management (KM)

Knowledge management refers to the facilitation and support of processes for creating, sustaining, sharing, and renewing of organizational knowledge in order to generate social or economic wealth or to improve performance.

Learning Organization

A learning organization is an organization that is able to adapt to change, move forward, and transform itself by acquiring new knowledge, skills, or behaviors.

Mechanism or Channel Analysis

A mechanism analysis or channel analysis can be included in a Value Network Analysis. It helps determine the most appropriate technology and infrastructure support for each transaction or group of transactions in a value network.

Organizational Learning

Organizational learning refers to activities or processes whereby an organization collectively makes sense of its environment and responds with more adaptive behaviors.

Organizational Network Analysis (ONA)

Organizational Network Analysis involves the application of Social Network Analysis (SNA) as a diagnostic tool 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. Other examples are subgroups, organizations, collectives or aggregates, communities, or nation-states.

Perceived Value

A key focus in Value Network Analysis, perceived value is how valuable senders and receivers perceive a deliverable to be.

Perceived Value Analysis

The Perceived Value Analysis in Value Network Analysis is a way to assess the level of value that roles or participants feel they receive from individual deliverables. Such deliverables can come from other roles and participants, and from the network as a whole. Perceived value is usually assessed as part of the Impact Analysis. Conversely the analysis is also done to assess the level of value that other roles or participants feel about their deliverables.

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. The somewhat broader term, indicators can include second-order indicators that point to possible progress, even if that progress cannot be measured directly. The term key performance indicator (KPI), which refers to any aspect of human and business performance, has become part of the business language.

Reciprocity in a Network

Reciprocity is the extent to which value contributions (ties) are reciprocated between roles and in the network as a whole.

Relationship Capital

Relationship capital is the quality of alliances and business relationships with customers, strategic partners, suppliers, investors, regulatory bodies, and government groups.

Resilience in a Network

Resilience refers to the power or ability of the network to reconfigure to respond to changing conditions, then return to its original form.

Return on Investment (ROI)

ROI is a cost/benefit comparison of the cost of an investment or activity compared with the financial and/or non-financial benefits that result.

Roles in a Value Network

Roles are the contributing actors or economic agents in a value network. They are generic value descriptors that 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. Roles can be filled by individuals, groups or subgroups, organizations, collectives or aggregates, communities, or even nation-states.

Scenarios

Scenarios are stories, similar to case studies, which describe a series of events. They are usually developed to test out the robustness of a model such as a value network.

Social Network Analysis (SNA)

Social Network Analysis is a social science discipline that focuses on relationships between social entities. It views social relationships in terms of network theory. Social graphs consist of nodesand ties. Ties are also called edges, links, or connections. Nodes are the individual actors within the networks, and ties are the relationships between the actors. There can be many kinds of ties between the nodes. Research in a number of academic fields has shown that social networks operate on many levels, from families up to the level of nations. They play a critical role in determining the way problems are solved, organizations are run, and the degree to which individuals succeed in achieving their goals.

Stability in a Network

Stability refers to the firmness of the configuration of the network and its ability to resist disintegration. 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. Weak Tie Stability is the most significant density indicator, showing the extent to which the loss of connections in the network will impact performance of the network as a whole.

Stakeholder

Stakeholders have an interest in, provide resources for, or are affected by sets of activities and any changes to that activity.

Stakeholder Analysis

A stakeholder analysis is an evaluation of which stakeholders are most important, either for a system as a whole or for a particular activity. It helps determine who needs to be included in a system-level model or who would be affected by an activity, changes, or decisions.

Structural Capital or Internal Structure

Structural capital refers to the infrastructure, routines, concepts, models, information systems, work systems, and business processes that support productivity and that stay behind in an organization when its employees go home.

System

A system is a whole that cannot be divided into interdependent parts without losing the integrity of the whole.

Systems Thinking

Systems thinking is a way of thinking about and describing the forces and interrelationships that shape the behavior of systems.

Tacit Knowledge

Tacit knowledge refers to deeply personal experiences, insights, and know-how that are difficult to communicate in an explicit way.

Tangible Assets

Tangible assets show up on the financial balance sheet. Examples are 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, revenue, or funding. Tangible value transactions involve all paid or funded exchanges of goods, services, or revenue. They include all transactions involving contracts and invoices, return receipt of orders, request for proposals, confirmations, and payment, etc. Knowledge products and services that generate revenue are part of the tangible value flow of goods, services, and revenue. These include products that are expected as part of a service, such as reports or package inserts.

Tangibles

See: Deliverable in a Value Network.

Transaction

A transaction is a transfer of a role-generated or participant-generated value deliverable can be tangible or intangible.

Value Chain

See: Value Stream.

Value Conversion

A key focus in Value Network Analysis, 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

The Value Creation Analysis is a core analysis in the Value Network Analysis methodology. It is an assessment of the tangible and intangible costs and gains for each value output a role or participant contributes to the network 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

- assessing cost/benefit in terms of industry, society and the environment

Value Network

A value network is a set of roles and interactions that generates a specific business, economic, or social good. Any formal or informal group of participants or roles that are engaged in tangible and/or intangible exchanges can be viewed as a value network. Participant organizations can be private industry, government, or public sector.

Value Network Analysis (VNA)

Value Network Analysis is a whole-system mapping and network analysis approach to understanding tangible and intangible value creation among roles and participants in any purposeful activity.

ValueNet Works(TM) Analysis

A trademarked but open resource methodology for Value Network Analysis.

Value Realization

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

Value Stream

Value chain and value stream are process views of how a business works. They focus on inputs, capabilities, resources, and processes that generate a final deliverable or output to the customer.

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 ValueNet Works application, in addition to Animations and Detailed Visuals. 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 Value Net Works 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 June 2011

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