To Create or not – is no longer the Question

October 14, 2015

In my previous post, I made an artificial distinction between Value Creating Systems and Value Receiving Systems. That distinction caters to our extant way of looking at the world in terms of enterprises that create value and its customers or receivers.

However, useful as that distinction is for practical purposes, it actually distorts our understanding of the process of value creation. And in fact, in a world of extensively networked extended enterprises, the boundaries of an enterprise are no longer easily distinguishable (Rachel Happe rightly brought up this point in a comment on my earlier post).

A note: Value and its associated generative systems are contextual – the system that creates value for health being different than the one that does so for education, for example. All participants/stakeholder in any ecosystem are active contributors to the value created – and to the extent that they intend to remain viable members of the ecosystem, their contributions need to be at a minimum – positive. Thus all value is co-created by all the participants or stakeholders in the particular ecosystem.

As an enterprise, we often tend to see the process of value creation and delivery coming to an end with a transaction or a little beyond that at most. There is now a substantial body of work that understands that value creation continues way beyond the customer’s contact with the enterprise.

In fact that process, actually begins before the customer even comes in contact with the enterprise and continues over a lifecycle of value well beyond the contact. And during this activity of value creation from the subject’s viewpoint, many stakeholders other not related to the enterprise contribute. One way of thinking about this is that, the subject creates value, whether or not the enterprise exists.

And as my friend and colleague Doug McDavid consistently maintains – all these participants are engaged in the production of services – a view that aligns with the notion of Service-Dominant logic (as against a Goods-Dominant logic view of the world). This is the critical shift in perspective that we need today.

Having understood this, an enterprise has a choice as to the extent it wishes to become an integral part of the co-creating ecosystem – a strategic decision. and one that requires a transformational shift. While in the past, it made sense to remain outside the ecosystem, and therefore have essentially hands-off transactional relationships, as the locus of value creation increasingly moves to the empowered end-user/producer, enterprises must consider becoming a part of and equal partner in the value creating ecosystem.

In all value ecosystems the co-creation of value involves an architecture of value, something I had referred to in my previous post, and a grammar of value construction – a grammar that is available to all stakeholders. This grammar and its associated rules for the construction of value, constitute what I term a ‘design system’. Any participant has access to this system, and they may use its components, grammar and language to construct value as appropriate.

This design system thus serves as a platform empowering all participants. I am using the term platform here in a broader sense than it is used in the context of digital ecosystems. All ecosystems in my description have platforms that specify and coordinate the production of value. This does not preclude the existence of multiple platforms and corresponding design systems.

The enterprise as a participant, that chooses to participate in the ecosystem in order to make a positive value contribution, can also choose to provide leadership, envision an ecosystem of value creation and provide a platform that enables not just one target within the ecosystem, conventionally termed the customer, but recognize all the stakeholder participants and support them all.

This is the other choice enterprises can make – to envision a healthy ecosystem and to choose to be a platform provider.

In summary, value ecosystems include many stakeholders other than the enterprise, who provide services to the ecosystem and together participate in the overall creation of value. An enterprise can choose to be a part of this ecosystem or have a hands-off relationship to the process. Should it become integral to the ecosystem it could also become a platform provider and create the grammar for the language of value creation in the form of a design system.