If we are going to be productive in terms of adding value in our contemporary world, we have a number of choices about how we go about doing that. What kind of human and business relationships do we develop with those around us? This post looks at the value chain, the value network and developing ideas of the business ecosystem and then moves on to address specific aspects of ecosystem design.
Among the options in answering the above question is the traditional linear value chain in which value is sequentially added in a tightly-coupled system in order to efficiently deliver value to a designated customer. The customer is someone who we hope to capture on a consistent basis. The definition of value here is done by the producers which involves branding as part of a marketing initiative.
The next option is a value network which is also governed by the goal of delivering a pre-determined type of value to a customer. Along the continua of tightly to loosely-coupled, this is somewhat less tightly-coupled than the value chain in that it is a network. The value network relies on established relationships with entities who contribute to value delivered to the customer. This may involve a greater degree of collaboration among the members of the value network than in the value chain since the nature of the relationships needs to be continually negotiated. Along the continua of structures and governance in a network, the value network is at the extreme end of being a more structured network. The definition of value here continues to be done by the producers.
The last option is that of an ecosystem. The ecosystem relies on its nature as a loosely-coupled network. Such an ecosystem in my view embodies the ideas set out in a perspective called Service-Dominant Logic (S-D) which differs from Goods-Dominant Logic (G-D).
The linear value chain and the value network are both most commonly based on G-D logic which means that value based on skills and knowledge is embedded in tangible goods or services which are then delivered to the designated customer. Our management tradition has taught us that the purpose of a value chain is to transform goods and services. The usefulness of a value chain concept starts to quickly erode when we try to apply it to the transformation of knowledge.
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