Traditional networks are integral to management

Gartner analyst pushes value networking

On the project level, an academic research organization may discover a new molecule and may partner with a pharmaceutical company to bring a new product to market. The pharmaceutical will further research the compound and take it through the clinical study process, which demands excellence in complex operations.

Once the FDA approves the drug, the pharmaceutical company may partner with a contract manufacturer to make it in large quantities and with a sales and marketing specialist to furnish doctors with the information they need to prescribe it to patients. The pharmaceutical company may also want help in establishing a strong brand presence for the new drug against existing competition. The value network analysis helps the pharmaceutical company understand which potential partners have the right qualities to provide the best chance of success at each stage in the product development life-cycle.

Network design

One approach to measuring the value of each relationship in a network is to quantify the number and kinds of interactions among the members of the network. This can be refined by identifying the characteristics and value of each interaction. This has implications at multiple levels of the organization, including network design, security and access. Obviously the network needs to be designed to support expected data flows, and routine interactions need to be automated so that business partners have access to the internal staff members and data they need while restricting their access to only that data.

When deciding where to support the interactions with technology, the network designers might want to give higher priority to interactions that have a higher value and occur frequently. And, Rozwell says, not all interactions should be automated with technology. "It may make more sense to handle occasional or low frequency interactions manually, as one-offs," she says.

This does not mean these occasional interactions are low value. For instance, the CFO of an important client may only need to exchange data with the enterprise CFO a few times a year, but those exchanges may be critical to the business relationship. The value network can help network staff identify and prepare for potential important -- but low frequency -- interactions so that they do not create ultimately embarrassing emergencies when they occur.

In contrast to the old concept of the supply chain, which Rozwell dislikes because of its implied linear rigidity, the value network shows a more complicated set of two-way relationships. "Life and business don't work as a series of sequential handoffs from A to B to C," she says. Rather, multiple participants interact simultaneously in complex ways. "Back in 2003 I was working with a bio-pharma. I put up the value network picture and they gasped at the complexity --- nearly 20 different entities. They had never really examined their company' relationships with all the other players, so they found the value network map to be very enlightening."

Mapping these relationships among multiple individuals or entities as value networks provides a much more realistic view for understanding complex interrelationships that can lead to insights that can change the business and improve its chance to prosper in a complicated, fast-evolving environment.

For more information on value networks, Rozwell suggests the entry for "value network" in Wikipedia and the writings of Verna Allee on the subject. And, of course, Rozwell can be reached through Gartner.

Bert Latamore is a journalist with 10 years' experience in daily newspapers and 25 in the computer industry. He has written for several computer industry and consumer publications. He lives in Linden, Va., with his wife, two parrots and a cat.

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