In many companies, traditional business processes are always open to working on continuous improvement.
Every organization exists to deliver something of value to a client or customer. Relationships are established, maintained, and developed to gain good short-term economic growth to ensure long-term survival and development.
These alliances are essential because it is rare to have firms that can exist as self-supporting businesses today.
However, the digital age not only requires organizations to form relationships and make radical changes in every business model to survive, but they also need to redefine it.
Businesses must identify people’s roles and how they are connected in the organization because it helps with collaboration and productivity to prosper in the digital age.
A value network analysis goes beyond continuous improvement to achieve a significant business transformation.
What is a value network analysis?
Value network analysis is a business approach that establishes the link between company operations and the value network by assessing organizational members.
Most forms of this analysis are done in a visual format using charts or diagrams to represent processes, activities, personnel, and business units in the value network.
Participants in the value network analysis are evaluated individually based on the benefits they bring to the network.
Value network analysis provides a powerful platform for assessing a company’s intangible and tangible assets.
Further, it is vital in the organization as it helps determine members’ value-creation properties and their value interactions.
What is a value network?
A value network is a collection of affiliated organizations and individuals whose interactions benefit the entire group.
Value networks are initially used in e-commerce, where marketplaces are redefined. In business markets, this is an example of an economic ecosystem.
Plus, it comprises workgroups and structures involved in producing goods or services.
In value networks, an organization should concentrate on performing suitable activities. They should also keep their clients satisfied with their service because they are the ones who ultimately define the value of the business.
One best example of a value network is an investor guiding a startup so it can benefit from its development.
That guidance can take the form of expertise, and as a result, the investor can foster more significant relationships with the startup founder.
Further, you can use a value network for the following reasons:
- Understand relationships
- Design value streams
- Check the interrelation between your company and stakeholders
How does value network analysis function?
Value networks analysis looks at performance indicators such as asset management, brand management, role contribution, and ease of asset conversion value.
It is best for complex organizations in which collaboration, relationships, and knowledge-sharing are necessary.
If a company is undergoing a business process transformation, a value network analysis provides a clearer picture of the changes that must be made.
And when the organization needs to formulate a new business model, it can apply a value network analysis to identify resources that can provide new insights.
Two types of value network analysis
Value network analysis provides a way to model, analyze, evaluate, and improve a business’s capability to convert tangible and intangible assets into other forms of negotiable value.
Here we have the two types of value network analysis:
Internal network analysis
An internal network analysis lies within an organization. This may include employees, management, different departments within the business, processes, and activities that take place internally.
The internal network is assessed by analyzing the relationship between these different organizational points.
External network analysis
An external network depends on the factors happening outside an organization. This may include an analysis of the suppliers, business partners, stakeholders, customers, and other end-users.
An external value network analysis reviews the relationship and value created by these external factors of the business.
Three elements of value network analysis
There are three elements of value network analysis:
Network nodes
Network nodes represent specific people contributing to the activity by playing a role in it.
Exchanges
A value network has a set of roles and interactions that generate a concrete result (in the form of business, economic goods, and social goods) through the exchange of value in tangible or intangible deliverables.
Deliverable
This element of value network analysis is a tangible deliverable. It refers to a business factor that can be touched, such as new product features or tools.
There is also an intangible deliverable, for example, a training program in the organization.
Application of value network analysis in the organization
Everyone in a network has a shared vision, allowing the network to establish practical alignment and collaboration with an overarching goal.
The use of value network analysis may assist businesses with various needs, including enhancing workflow between departments and planning projects.
A value network analysis can also assist an organization in completing a merger or acquisition. In this case, the company will look for ways to better connect with and use the new divisions and activities that must be merged.
