If we are going to be productive in terms of adding value in our contemporary world, we have a number of choices about how we go about doing that. What kind of human and business relationships do we develop with those around us? This post looks at the value chain, the value network and developing ideas of the business ecosystem and then moves on to address specific aspects of ecosystem design.
Among the options in answering the above question is the traditional linear value chain in which value is sequentially added in a tightly-coupled system in order to efficiently deliver value to a designated customer. The customer is someone who we hope to capture on a consistent basis. The definition of value here is done by the producers which involves branding as part of a marketing initiative.
The next option is a value network which is also governed by the goal of delivering a pre-determined type of value to a customer. Along the continua of tightly to loosely-coupled, this is somewhat less tightly-coupled than the value chain in that it is a network. The value network relies on established relationships with entities who contribute to value delivered to the customer. This may involve a greater degree of collaboration among the members of the value network than in the value chain since the nature of the relationships needs to be continually negotiated. Along the continua of structures and governance in a network, the value network is at the extreme end of being a more structured network. The definition of value here continues to be done by the producers.
The last option is that of an ecosystem. The ecosystem relies on its nature as a loosely-coupled network. Such an ecosystem in my view embodies the ideas set out in a perspective called Service-Dominant Logic (S-D) which differs from Goods-Dominant Logic (G-D).
The linear value chain and the value network are both most commonly based on G-D logic which means that value based on skills and knowledge is embedded in tangible goods or services which are then delivered to the designated customer. Our management tradition has taught us that the purpose of a value chain is to transform goods and services. The usefulness of a value chain concept starts to quickly erode when we try to apply it to the transformation of knowledge.
The business ecosystem or any human-originated ecosystem is based on S-D Logic which means that value involving skills and knowledge is directly conveyed from one participant in the ecosystem to others. This skills and knowledge is not seen as needing to be indirectly embedded into goods and services. Some authors have described this exchange of knowledge and skills as an exchange of services and designated the overall system as a "service-ecosystem." These exchanges are supported by our highly networked and digital global world.
In the business ecosystem, the customer becomes an actor along with everyone else in the ecosystem process of co-creation. As opposed to the value chain and the value network, here the customer helps to define what the value is, i.e. the customer determines how to best make use of the value proposition of the ecosystem and that determination in turn adds value to the ecosystem and the original value proposition. One example is the "off-label" uses of baking soda. This opens the door to continually expanding uses of the original value proposition, e.g. upcycling. In these actions, the customer like all of the actors in the ecosystem makes use of and integrates the skills and knowledge of a variety of actors in their context in the ecosystem or with whom they may otherwise have weak-ties.
The functions of structure in a business ecosystem are partly provided by the role of integrator which role anyone in the ecosystem can play as reflected in the case of the customer. However, given the reality of network dynamics, those most centrally located and connected can play this role better than others. The ecosystem can become more effective if it also has other types of governance functions. These include an overall sense of purposefulness or identity. They include common norms around collaboration and shared values around such things as human dignity or environmental sustainability.
Design Interventions
It is with regard to strengthening the supporting network in a business ecosystem that opportunities for design may most arise. How does one most effectively go about sharing knowledge with others and being collaborative? How does a member of this ecosystem best access, absorb, adapt and integrate resources so as to be fully co-creative? How does one best maintain long-term relationships? Design interventions may focus on the customer journey and experience and ask how the touch points of interaction with the customer can be improved.
Design interventions may also focus on the governance functions in the ecosystem or its overriding structure, e.g. norms, values. Another opportunity for intervention is with regard to how one conducts oneself so as to be a constructive and value-adding member of this business ecosystem as in engaging in productive dialogue with other members of the ecosystem. Design can address how to increase the density of resources available to an actor in the network in the process of increasing the capability of the system to combine resources on an ongoing basis. All of these ongoing design activities support the business ecosystem in flourishing as both a business and human system.
The discussion now turns appropriately to the issue of how to approach design in such a business ecosystem.
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