What Is a Value Network?
A value network is a set of connections between organizations and/or individuals interacting with each other to benefit the entire group. A value network allows members to buy and sell products as well as share information. These networks can be visualized with a simple mapping tool showing nodes (members) and connectors (relationships).
How a Value Network Works
In business and commerce, value networks are an example of an economic ecosystem. Each member relies on one another to foster growth and increase value. Value network members can consist of external members (e.g., customers) or internal members, such as research and development teams.
Value networks enhance innovation, social welfare, the environment, as well as many other areas. Weakness in one node can affect the entire network. For example, if a development team is weak, the production team has a harder time creating the product, which can leave a buyer waiting for their shipment.
There are different types of value networks to employ, including the Clayton Christensen network, Fjeldstad and Stabells networks, Normann and Ramirez constellations, and Verna Allee's networks.
Advantages of a Value Network
The advantage a value network provides comes from the way a business or individual applies the resources, influence, and insight of others to whom they are connected. A startup, for example, may look to its external connections, such as its investors and mentors, to provide experienced guidance on how to approach the development and growth of the business.
While many founders have a deep understanding of the product or service they develop, bringing that service to market, finding customers, and scaling up the business may be unfamiliar to them. To make up for this shortcoming, they may seek the advice of trusted stakeholders with experience on such matters, which is considered an intangible benefit of their relationship. They might also look to groups that specialize in assisting startups, such as incubators and accelerators, to increase their exposure to potential mentors and investors.
- Value networks are connections between individuals or individuals and corporations in which their interactions benefit the group.
- The primary advantage includes the way a business or individual applies the resources, influence, and insight of their network connections.
Example of a Value Network
An investor typically provides her guidance to the startup they are backing because, by helping the leaders grow their ideas into a tangible company, shareholders stand to benefit from the startup’s development. That guidance can take the form of expertise the investor possesses.
The investor might foster introductions between the founders of the startup and other businesses they can work with to further their plans. For example, if the company needs to produce a prototype of its product, an investor might be able to direct them to another company that creates made-to-order prototypes. Likewise, if the startup is looking for a mass manufacturer or a distributor, the guidance they receive may benefit all involved as it can mean increased business for each organization and individual.