Value Networks

 and the true nature of collaboration

   

Chapter 4: Analysis Basics

Realizing Value Impact within the Network

 

 

Realizing Value Impact within the Network 

The questions in the Impact Analysis help us understand how 
we realize or gain value from the things we receive.
VNA considers both tangible and intangible interactions to try to better understand how intangibles can contribute to our success and help create greater value for ourselves and for our stakeholders.

No one person really administers or manages an entire network or system. What we really manage in our roles are our inputs and outputs. So, from a practical standpoint we find the focus on the individual role or participant is very useful.

Value realization is the act of converting a value input, either tangible or intangible, into gains, benefits, or asset improvements that contribute to the success of a role or organization.

This first level of the value analysis - Impact Analysis - shows whether a role or participant is realizing value from their inputs.

The second level of value analysis - Value Creation Analysis - explores how the value network creates value by role and as a whole. The Value Creation Analysis helps to identify value creation opportunities and prioritize current activities for each role.
The Impact Analysis

The Impact Analysis is typically conducted at the role level. Any given role in a value network has a set of tangible and intangible inputs. It is not necessary to complete the Impact Analysis for each deliverable in the network. Sometimes only a single problematic role is explored in depth. In other situations only a few of the transactions on the network are selected for a closer look. If every role in the value network assesses its own inputs then it is very easy to compile the data for the entire network.


The Impact Analysis helps to:

- Assess how specific inputs are bringing value or benefit to the role.

- Evaluate the overall tangible and intangible cos/benefit for each value input.

- Link specific value network transactions and deliverables to financial/non-financial scorecards.

- Reveal key value linkages and "missing links."

    - Assess how specific inputs are bringing value or benefit to the role.
    - Evaluate the overall tangible and intangible cost/benefit for each value input.
    - Link specific network transactions and deliverables to financial and non-financial scorecards.
    - Reveal key value linkages and "missing links."
    - Show role-level patterns of value creation or value loss.
AgResearch map with focus on value inputs for Commercializers.
The full maps are at AgResearch - Bringing Innovations to Market in the Examples chapter. 
Impact Analysis basic questions

- How well are we converting our inputs into value - tangible and intangible - for ourselves?

- How do inputs help us build our capabilities in terms of tangible and intangible assets?
Questions to ask about cost/risk for handling an input

- What are the handling costs or demands on tangible assets - operating capital, time, materials, facilities and equipment?

- What are the handling costs or demand on non-financial or intangible assets - human competence, internal structures and systems, business relationships, brand?

- What is at risk when handling this input or in not handling it well?
Questions to ask about benefit/gain from an input

- Is there a gain, increase, or positive impact on tangible assets in terms of generating revenue, improving quality, or reducing production costs?

- Does it help improve current capability by generating innovation, improving organizational environment, helping people be more productive?

- Does it build strategic capability for the future (intangible value) by increasing knowledge or competence, enabling collaboration or learning, improving ways of working, enhancing brand, being a better citizen?
Collecting and displaying data

Use a table or spreadsheet to organize your data. A suggested format is in the example below. This example is based on the Intangible Asset Monitor (IAM) of Karl-Erik Sveiby, which has the non-financial asset categories of Human Competence, Internal Structure, and Business Relationships.

 

For example, receiving a particular knowledge input may increase Human Competency, a measurable gain for that intangible asset. Conversely the skill required to process the input may place time demands on certain categories of skilled people, which has both a financial cost and an intangible opportunity cost as skilled people are not able to be deployed elsewhere.

 

In some companies the Impact Analysis might include leadership, or even culture. We recommend assessing the larger impacts on industry, society, and the environment in the network Value Creation Analysis. The Impact Analysis is concerned solely with the way we ourselves manage our assets and performance, and realize value for ourselves.

It is possible to add or substitute other asset or capabilities models in the spreadsheet as well. Some companies use a balanced scorecard performance model instead of intangible assets. Others have capabilities or more detailed resource models. The same cost/benefit evaluation approach works fine with these.
Sample spreadsheet for organizing data
This is a suggested spreadsheet layout for the Impact Analysis that includes all of the core questions. The layout can be simplified, expanded, or customized for any financial and non-financial scorecard and other indicators.

Transactions

Impact Analysis

Deliverable:

Nature of Deliverable:

 

(intangible

or tangible)

Comes From:

 

(role)

Goes To:

 

(role)

What activities does the input generate?

Impact on financial resources:

Impact on intangible assets:

 

Human Competence (HC)
Internal Structure (IS)

Business Relationships (BR)

Overall cost/risk:

Overall benefit:

resources

revenue

HC

IS

BR

Sample reports

This first set of figures is a sample report that shows which assets are most impacted by the value inputs.
- The first pie chart shows which assets are being impacted by all deliverables in the network. 
- The second chart shows the asset impact of intangible deliverables only. 
- The third chart shows the asset impact of tangible transactions only.
A sample report that shows which assets are most impacted by the value inputs.
Ctrl+scroll to see larger.

The next chart shows one way to display the aggregated cost/benefit for value inputs.


Note that the categories of assets used here are financial assets, human competence, internal structure, and business relationships. Other asset categories may be used as well. The chart shows the overall cost/benefit percentages for each of the key assets or capabilities.
A sample report that shows the aggregated cost/benefit for value inputs.
Other useful indicators
These indicators are explained in Value Network Indicators.
        Resilience
        Asset Management - Asset Impact
        Asset Impact by Roles
        Reciprocity
        Risk
        Structure and Value
        Agility
        Stability

 

 

  

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