What Is a Value Network Analysis?
Let me explain what value network analysis really is: it's the assessment of an organization's members and the interactions among them within a value network. You typically perform this analysis by visualizing relationships through a chart or web.
In this process, you evaluate participants both individually and based on the benefits they bring to the network. Value network analysis examines the business as a whole, covering financial and non-financial aspects of operations.
Understanding Value Network Analysis
Value network analysis gives you ways to assess both the financial and non-financial values and aspects of a business. Most analyses are done visually, often through a diagram or map that shows the important relationships and transactions between different points in the network. These points usually represent people—individuals, groups, business units, or even entire businesses in an industry.
Value networks consist of members and their interactions while producing a product or providing a service. These connections are crucial for identifying strong companies and spotting potential risks.
Important
Value network analysis helps you identify company strengths as well as risks for a business. For example, if a network member has a large influence, losing that member could devastate the entire group. This is known as intrinsic value analysis because there's value involved, but it's hard to assign a price tag to it.
Applying Value Network Analysis
The methodology of value network analysis can help you optimize your organization's internal and external value networks, making the most of outside relations and the synergies among teams within the operation. This includes exchanging knowledge, information, and expertise across the relationships in the organization. The goal is to improve communication and collaboration with all involved parties to operate at peak efficiency and boost overall productivity.
You can apply value network analysis for needs like internal restructuring, improving workflow across interrelated departments, or project planning. It also assists organizations undergoing a merger or acquisition by helping to better connect with and utilize new divisions and operations that need integration.
If your company is undergoing process redesign with an extensive overhaul and new framework, value network analysis provides a clearer picture of the changes that must be made. When formulating a new business model, this approach identifies resources you can draw upon for new insights into developing the model and how it can operate going forward.
The research and development (R&D) aspects of your organization can benefit from value network analysis by identifying available information and expertise for collaboration in creating new services or products.
Key Takeaways
- Value network analysis is the assessment of an organization's members and their interactions within a value network.
- Participants of the value network analysis are evaluated both individually and on the benefits they bring to the network.
- The analysis is generally depicted visually, generally in the form of a diagram or map.
- Value networks may be internal—factors within the business—or external—factors that are outside the business.
Internal vs. External Value Networks
As I mentioned, there are two types of value network analysis—internal and external. The internal factors lie within the business, including employees, management, different divisions, and processes and activities that take place internally.
In some cases, the value created by these networks can apply outside of business, such as the relationship between two people working toward the same goal. You assess the value of an internal network by analyzing the relationships between these different points within the business.
An external value network analysis depends on factors outside the business, such as suppliers, business partners, other stakeholders, customers, and end-users. When you conduct an external analysis, it reviews the relationships and value that these external factors bring to the business.
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