A comparison of value network concepts

BIn the 1990s, value networks were called network organizations, joint ventures, modular corporations, value-adding partnerships, virtual corporations, and extended enterprises (Van Alstyne, 1997). We earlier used the term value webs (Gordijn & Akkermans, 2003).

Our concept of value network was inspired by the concept of value constellation introduced by (Normann & Ramirez, 1993), defined as a value-creating system in which economic actors –  suppliers, business partners, allies, customers – work together to co-produce value. In a networked world, a company’s strategic task is the reconfiguration of its value constellation to co-create value. This requires the ability to conceive the entire value-creating system and make it work. Where Normann and Ramirez define a value constellation as a set of business alliances, we describe it as a network of commercial transactions.

(Tapscott, et al., 2000) introduce business webs as “strategically aligned, multi-enterprise partner networks of producers, suppliers, service providers, infrastructure companies, and customers that conduct business communication and transactions via digital channels” Importantly, customers are part of business webs.  Like Normann & Ramirez, they view a business web as asset of alliances.

Another inspiration is Verna Allee’s value network (Allee, 2003). Like Allee’s value networks, our value networks describe commercial exchanges of tangible and intangible value, which we call value objects. The difference with Allee’s concept is that we can quantify value networks. Revenue models, introduced in Chapter 7, are quantified value models which can be used to run simulations to assess commercial viability.

(Christensen, 1997) defines value networks as nested networks of producers and markets through which product components at each level of the product architecture are made and sold to integrators at the next higher level. Value networks are characterized by a specific rank-ordering of product attributes valued by customers, and by a specific cost structure. Disruptors come from outside a value network and assume a ranking of product attributes and a cost structure incompatible with that of the incumbent (Christensen, 1997).

The isomorphy between product architecture and value network architecture is also a central feature in our value network design approach (Gordijn & Akkermans, 2018). To generalize it to offerings of services and outcomes, we focus in Chapter 6 on identifying the value activities needed to produce an offering and creating a value network where these activities are allocated to economic actors.

Another predecessor of our concept of value network is Parolini’s value nets (Parolini, 1999). However, Parolini describes a value net as an activity system and does not consider allocating value activities to economic actors, as we do. Neither does she offer the possibility to quantify and simulate value nets.

(Adner, 2017) defines “ecosystems” as the set of actors whose interaction is needed to satisfy a value proposition.  This is a restricted version of what we call a value network, because in our value network we find not only collaborators but also competitors. And customers are part of the network too. The goal of our value networks is to satisfy customer needs. But the exchange in which a customer buys the offered value, is part of the value network. Customers may actively co-create value with other partners in the network.

As we explained earlier, our concept of ecosystem is borrowed from biology (Willis, 1997). The idea to borrow the biological concept of an ecosystem was first proposed by (Moore, 1993) (Moore, 1996) and later used by (Iansiti & Levien, 2004) (Iansiti & Levien, 2004). In addition to value networks, business ecosystems also contain governance networks and may contain networks of research, innovation, and standardization.