A value network constitutes the chain from suppliers to the ultimate customer which serve a specific set of customer needs. A simple example would be of value network of Flash memory sticks. The participants in this value network and their products serve low and portable memory storage needs of the customers. Another example would be value network of long range aircrafts which serve long distance mobility needs of people.
For a given value network there are related value networks which share some common traits. For instance, value networks related to Flash memory are portable computing, desktop computing and mainframe computing. A company may serve more than one value network by different product range.
A company tends to be occupied with shifts in its own value network to compete and survive in the marketplace. The shifts in related value networks and beyond get ignored. As a result, companies are caught off-guard when shifts in other value networks transform their own backyard.
Taking the popular disk drive example where the 3.5in drives in mini-computers value network entered as game-changer in the desktop computing value network.
Taking the portable music player example which was serving mobile music value network. The portable music players were wiped out when the smartphones from mobile calling value network added multimedia capabilities.
In present times, a company needs to monitor shifts/changes in related value networks and beyond. For instance, an aircraft manufacturer can monitor shifts in value networks of regional, short haul, long haul, business, hobby, cargo and even beyond like space travel, surface transport etc.
While monitoring the various value networks, its important to investigate in various dimensions:
- Can a emerging product/technology in other value network impact my value network?
- Can a changing business model in other value network be applied to my value network?
- Can my product/service fit in other value network as well?
The investigation will reveal both threats and opportunities for a company outside its value network.
