Simon Terry

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Value creation in networks

The old way industrial of creating value is well understood and commonly implemented. Develop a unique proposition with a discrete market. Create a simple linear process to deliver the proposition by turning inputs into outputs with value creation at each carefully delineated step. Maximise control at the choke points in the process to maximise returns. Manage efficiency and throughput of the process to minimise waste. Reduce risk. As easy as that sounds we have spent over 200 years perfecting the process and still have much to learn.

We know far less about creating value in the massively scaled digital networks that we face today. Mostly we know what doesn’t work. Failure is accelerating. A focus on efficiency will kill a company competing with disruptive competitors. Networks specialise in routing around control points. Parallel disaggregated processes disrupt the linear, particularly if relentlessly focused on key opportunities to create value. Transparency across the process and rapid exchange of information changes the organisation-customer-employers-supplier- community dynamic in radical ways.

Value creation in networks to date has defaulted to the nearest analogies of the industrial model. Build a platform with a unique global scale that you can control. Strip the value creating process back to customer acquisition and platform development. Control advertising revenues ( or less commonly enterprise sales) as the principal form of monetisation. Experiment and acquire relentlessly. Be transparent internally and leverage networked models of organisation internally, but behave like industrial peers to the external market, except for carefully structured communities of co-creation and innovation.

The latest clues in the Cluetrain Manifesto are a reminder that this model is not guaranteed. At the same time, the lessons of the last Dotcom bust documented in Seely-Brown and Duguid’s ‘The Social Life of Information’ are a reminder that we have not yet reached our disaggregated and disinter mediated ‘markets are conversations’ utopia.

What is clear is that we need new ways of working. We will build new practices using our new global networks and relationships to exchange what works and to discard what does not. The key to success will be effectiveness. Effective organisations will mobilise their potential, connections and capabilities to pursue the ever-changing network opportunities, to learn together with their customers and community to realise a meaningful purpose. Embracing the new network economy and networked ways of working is fundamental for any organisation seeking to make this shift. Any organisation that takes this leap is on the path to becoming a Responsive Organisation.

Value has never been created around a board table. That is where value and the resources to create value have historically been acquired or allocated, often poorly. Value has never been created by data alone. People transform the data into hypotheses, insight, decisions and actions. Value has always been created by that action in networks, even if those networks are the crippled relationships of hierarchy. Those are network of people, not data. The organisations that reap the potential will be led by Network Navigators who can help their organisations through the journey.

The network must do the work to create value led by Network Navigators. As Esko Kilpi put it ‘the time for reductionism as a sense making mechanism is over’. The way forward will emerge through practice, interaction and learning in the network. We will need Network Navigators to help us to work on the whole system.

Harold Jarche reminds us ‘the work is learning and learning is the work’. We have entirely new systems and practices of organisations to develop, to test and to share. Like our efforts to date we will begin with fixes and variants to the systems we have. Over time we will make more new sense of the future of work. We will need to learn to trust and enable people to leverage their networks and experiment. Then we have the journey of change advocacy to spread the successful practices. The widespread use of enterprise social networks is just one such step and even it has not addressed the potential of adoption, let alone value.

The fun of value creation in networks has only just begun. Our job is to make that fun a very human and purposeful experience.


1 Comment

  1. […] Value: What value are you trying to create to fulfil your purpose? What kinds of value matter most to your […]

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