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Advances in Value Modeling

Sun, 25 Sep 2011 12:01:30 -0400

OMG submission in Value Delivery Modeling Language

I have just returned from a week in Kissimee Florida working with the OMG (Object Management Group) submissions team for the Value Delivery Modeling Language. OMG is expanding their focus from technical standards to methods that can be used by business leaders and managers. Thus there is a growing interest in business ecology and cross boundary collaborations.

After two years of work first undertaken by Fred Cummins and Henk de Man, we have made excellent progress in developing a modeling language that supports the following views: Value Networks, Value Chain, Business Model, REA (resources, events, agents). It also holds strong possibility of supporting other views as well such as system dynamics. All of the basic building blocks of business model frameworks such as Osterwalder's and Peter Lindstroms are represented in the different views so this will provide a way to go beyond frameworks into actual modeling. The team is also closely associated with the Neffics Project in Europe with Arne Berre taking a strong leadership role in both the VDML project and Neffics. A year ago the VDML team was expanded to include me, Peter Lindstrom and Pavel Hruby, experts in business model innovation and REA respectively. Other supporters from OMG include Pete Rivett.

One of several innovations in the modeling language addresses the sometimes puzzling and conflicting ways people describe capabilities. We are taking the position that capabilities and functions can simply be modeled as value networks. This then leaves resources and assets to be handled as they are in VNA (Value Network Analysis) by associating them to the roles that control them through either use (if consumable) or application (if they are assets that are not consumed such as intangible assets).

A second innovation is in the area of collaborations. EVERY purposeful network is referred to as a collaboration - this means the the org chart is simply one more collaboration focused on resourcing and accountability. To support this we have adopted the VNA convention of roles. Every individual or actor is assigned to one or more roles. When roles are combined that is what we call a collaboration. Thus we can "nest" roles within collaborations to depict very large collaborations such as business webs and global networks. Yet, through the roles we can identify contributors right down to the level of the individual without losing the thread of connection.

We now have a period of two months in which to refine the submission and present it at the OMG meeting in December in Santa Clara. We will probably do a special one day event dedicated to this work. It is very gratifying work and a real opportunity to advance business modeling from linear models to more human centric collaborative models.

Organizations as Living Networks

Tue, 12 Jul 2011 10:51:21 -0400

Human interactions follow the network pattern of life itself

The pattern of life is a network pattern. The individual links in the network of life, of course are strands of DNA. But without the network of connections linking DNA and our cells, those individual strands are useless.

The pattern of intelligence also is a network pattern. The network pattern of neurons in our brain provides the pathways for human intelligence function.

Social systems of course operate as networks as well. Human society has always functioned as networks. Not surprisingly, organizations, as social networks also follow the network pattern of life. True, we have imposed a hierarchical network structure on certain relationships that we call the organization chart, but the work depends as much or more on the informal networks.

What indicates something is “alive?”

Living systems, unlike mechanistic systems, continually renew themselves through two basic exchanges with the environment: matter and energy and cognitive exchanges that demonstrate intelligence.

Living systems are also dissipative structures that are open to the flow of energy and matter. They exist on the edge of chaos. With too much openness, they disintegrate; with too little they become rigid and closed and can no longer exchange energy and matter.

The pattern of organization in a living system is consistent with that of an autopoietic network. An autopoietic network is one that continually produces itself, so that the being and doing are inseparable. That continual process of producing is cognitive in nature. So living systems also exhibit intelligence.

Network Patterns of Exchanges

From a living systems perspective, the molecular level of business economic activity also is the exchange. In traditional business thinking we have thought of economic exchanges only in terms of goods, services, and revenue – the “value chain” transactions. One can thing of resources and money as roughly equivalent to the living systems exchanges of energy and matter.

In addition, as living networks, companies and business webs engage in more than material exchanges - they also engage in cognitive exchanges. Sustainable business success depends on exchanges of information, knowledge sharing, and open cognitive pathways that allow good decision making. These exchanges not only have value, but are essential for the success of the enterprise, so they must also be considered as economic exchanges.

So one can model any business activity as a network pattern of human interactions involving economic exchanges and exchanges of intelligence. As value creating networks this pattern can be mapped by identifying the nodes in the network, the roles that people play in the activity. The links are represented as specific exchanges of formal business transactions and informational and social exchanges.

Modeling business as value networks brings us one small step closer to the reconciling our business and economic models with the fabric of society and the web of life.

This blog is adapted from the white paper A Value Network Approach and the book The Future of Knoweldge: Increasing Prosperity through Value Networks.

Where is the heartbeat of a network?

Sun, 10 Jul 2011 20:57:58 -0400

A Living Systems Approach to Network Performance

Organizations are complex adaptive systems. People organize their work according to the pattern of life itself – the network. As social networks organizations and collaborations have many of the same characteristics of living systems. There have so many variables they operate more in the realm of probabilities than predictability. Behaviors are predictable according to certain patterns but not in specifics – and then only to a limited degree.

Value network modeling defines the basic pattern of organization as that of a network of contributing roles and their exchanges. Describing work this way allows a detailed description of the structure of any specific business activity or organization as a living network.

So if behaviors cannot be absolutely predicted, then what is a manager to do? How do we monitor the health and vitality of a value creating network in such a way that we can intervene before it gets out of balance?

The heart of the network

From a living systems perspective it doesn’t makes sense to to monitor every single interaction in a network. After all, when you visit your doctor they only check a few key indicators such as pulse and temperature and only do a deep dive into finer indicators where there are problems.

This is also a common sense approach to monitoring network performance. Think of the value network as a living system. What would be the indicators that tell us things are working well and the network is healthy? Our two favorite questions challenge people to find the “heartbeat” and the “pulse points.”

Finding the “heart beat” and the “pulse points” in a value network

Where are the "pulse points" in the network - those key interactions that provide important clues about the health of the entire network?

It isn't necessary to monitor every single interaction in a network. However, there are some interactions that are particularly critical to the overall health and vitality of the network. Surprisingly, people can readily identify two to four key "pulse points" even in very complex networks. Pulse points are places where monitoring performance is essential.

Is there is a "heartbeat" in this network?

- What role(s) is most essential in the life of this network?

- What happens if the person in a "heartbeat" role is replaced with someone else?

- What if the "heartbeat" role disappears or is not well supported?

- What ties and deliverables would be affected?

The heartbeat is not the same as the most connected or most powerful role in the network. The heartbeat is the role or roles that provide the most critical value in the network.

Sometimes the most important roles are simply overlooked. Either the role is taken for granted or it appears to be peripheral to the network, such as a champion or resource provider, or even an unnoticed administrative role. But if that particular role was not there or someone else took on that role the whole dynamic of the network could change in - well, in a heartbeat.

For more on this approach and the breakthrough business results it can bring see the online book Value Networks and the True Nature of Collaboration.