VALUE ENCOUNTERSsupporting value network

analysis

Hans WeigandTilburg UniversityThe Netherlands

E3-value business model (Gordijn & Akkermans, 2004) – basics

Main goals:understand businessachieve shared meaning between stakeholderschange/improve businessstarting-point for IS design

Co-creation of value

- Customers involved in product design (Nike, crowd-sourcing)

- Customers involved in marketing (Facebook)- Customers involved in development (open

source model)- Co-creation of value in service encounter (S-D

logic: “all firms are service firms”)- Co-creation in all business activities (e.g.

employee training

Source:Stephen Vargo, 2009www.sdlogic.net

Two-sided markets

• Eisenbaum & Parker, Van Alstyne, 2006.

• Examples: – Google (searchers, advertizers) – Playstation (players, developers) – Wi-Fi equipment providers (laptop users,

access points)

• Challenges in pricing vs subsidizing and coping with winner-take-all competition vs sharing.

E3-value- example hospital

Limitations of e3value

• Activities are located within actors. This makes it impossible to model activities in which multiple actors are involved (that is, they have to be split up)

• According to the work of Thomas Choi, the units of analysis in networks are triads.

Triads in networks(Choi & Wu, 2009; Li & Choi, 2009)

suppliercustomer suppliercustomer

agent

Serviceoutsourcing

supplier1buyer

supplier2

Multiple suppliers

+

--

Value encounter

• A value encounter is an interaction space between multiple actors where each actor brings in certain resources; these resources are combined then in such a way that value is created to all of them.

• Value encounters can be connected by means of a causal relationship (“+”), when activity in one encounter reinforces the activity in another encounter

value activity

actor

value transfer(proposition)

value transfer(derivation)

source

to

beneficiary

from

reinforce

1 1

1 1

internal resource

controlled by

1 1

value object

value encounter

value object

TypeOf TypeOf

** **

object object

*1

value activity

actor

value transfer(proposition)

value transfer(derivation)

source

to

beneficiary

from

reinforce

1 1

1 1

internal resource

controlled by

1 1

value object

value encounter

value object

TypeOf TypeOf

** **

object object

*1

FINANCIAL-How is the money distributed over the partners?-What is the expected profitability for each actor (short-term, long-term)?-What institutional form is taken to distribute the money?

OPERATIONAL-How is the value activity to be characterized (pattern)?-How is the value activity supported (technology)?-What are the goals and metrics?-How is the optimization ensured?-How are responsibilities assigned?

KNOWLEDGE-Is knowledge gained from available data?-Are core competencies systematically maintained?-Is knowledge acquired also explored?-Is there a healthy mix of explicit and implicit knowledge?-Is there an optimal use of standards?

SOCIAL-Is the social network actively developed?-Are social networks maintained systematically?-How is the social network explored-Is there a healthy mix of formal and informal contacts?-What is the contribution of the network to social capital of the environment?

Value Encounter Analysis Model

Conclusions

• To capture the logic of co-creation of value, e3-value should be extended with the notion of value encounter and the process of value encounter analysis.

• More network analysis methods should be worked out.

• For both analysis and design, the recognition of basic patterns (analysis, solution) can be useful.

• Analysis of relationships between value encounters may be useful for exploring innovation.