Posts

The Time Continuum – A Co-Evolving Universe of Value

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October 19, 2015

In my last post, “To co-create or not….”, I had painted a picture of the world of value-creation as comprising of an ecosystem and a co-creating web of entities. The enterprise, as we understand it in the conventional sense, has a choice as to the extent to which it intends to participate in this value ecosystem. I had also suggested, that as our world changes, driven by technological and other drivers, to participate intimately in the process of value co-creation will no longer be a choice. There is, on the other hand, an opportunity to become a keystone, or a platform / design-system within the ecosystem, that defines the grammar of value, with a sense of service.

Today, I want to add another perspective to the value-creation ecosystem idea – that of dynamics and time. Richard Normann in his wonderful book – Reframing Business, had described how all enterprises live on a time continuum. They all have a history, and at any instant, involved in the dynamic process of evolving to a future, actually not just evolving but co-evolving with all the other entities in the ecosystem.

This dynamic conception is of course very different from the static conception of the enterprise that we are used to and comfortable with. Many have argued how, these static conceptions were useful and valid when in the recent past things were relatively stable and predictable. Those conditions as we now know, are better described with the acronym VUCA (Volatile, Ambiguous, Uncertain and Complex). To this I add the letters UM to suggest unmitigated messes that have resulted from our lacunae in operating in a dynamic world and not being dynamic learners.

Not only is the enterprise evolving in time, but the value ecosystem it serves is also evolving in time. It too has a history, fundamentally non-linear, and at any instant it too is dynamically working out a state of being that resolves all the complex vectors of change that are acting on it. Where these vectors will lead in the future is immaterial to the value ecosystem since it is usually not a purposeful entity.

The enterprise on the other hand, as a purposeful entity, that intends to create a positive, distinctive and enduring impact on the target ecosystem, is concerned about how the vectors of change might impact it, and what the implications might be for its own continued existence. I will elaborate on this idea of foresight in another post.

Factoring this dynamics conception of the value universe in how we sense, act and learn is the critical challenge of the enterprise. Normann, mentioned earlier provides a wonderful nine-box framework, that allows us to integrate our knowledge and frames of the past, and the evolving future into a dynamic realization in the present.

One of the most important concepts from the perspective of the purposeful enterprise in this sense, is that the enterprise, a complex adaptive social entity, works with frames – frames that order how it makes sense of its own history, the world around it, and who it is and wants to be. These frames, too co-evolve over time to some extent. However, they, a manifestation of a complex of values, beliefs, worldviews etc, become integral to structures and systems, cultures and practices.

These cultures become rigid over time, and prevent frames from evolving. It is when frames and the structures we build on top of them, become invalid with the current and evolving context of the target ecosystem and its own context, that the enterprise, experiences misalignment and ceases to be a productive member of the value co-creation enterprise. That is when, the enterprise is no longer healthy or living to endure.

In the accelerating and dynamic, co-evolving world that we live in, enterprises must design themselves to be living enterprises, to constantly sense, act and learn, while examining the appropriateness of their frames. Without that there will be no co-evolution. Without that there is no opportunity to make a positive, distinctive and enduring impact.

Of the Concept of Value and Generative Ecosystems

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October 15, 2015

The concept of Value is an intriguing one. We are quite familiar with terms such as Value Proposition and have an intuitive understanding of the term Value as well. We often think of it as transactional. As an enterprise we make something, either a product or a service or some combination of the two, with a target client in mind, and to us, it represents the value we create.

This understanding though is rather simplistic and often the reason why some offerings experience great success while others have to wonder why they did not find traction. Perhaps it is time to take a slightly different look at the idea of value and the associated systems.

Value, I argue is better understood as a complex concept with emergent properties. It emerges out of the interaction of and at the intersection of two broad organic systems – a Value Creating System, which is often a single enterprise, and the Value Receiving System, which in common language is usually referred to as the client or the customer. In reality, both Value Creating and Value Receiving Systems are actually complex networks of collaborating and competing entities, which actually quite contributes to their intrigue and charm.

I also like Elke den Ouden’s representation of Value:

I use the term ‘System’ rather deliberately. Thinking of these two entities as systems provides us with interesting perspectives and insights into the nature of the whole value enterprise. It provides us an understanding not only of Value but also what it means to create and introduce new value, topics of great concern in the domain of Innovation.

The notion of Value Receiving Systems is perhaps new, for I have not seen any reference in literature to such an idea. In very simple terms, no target of an offering stands alone, but rather, is embedded in a system, social or socio-technical. Sometimes these systems happen to be another enterprise. Having stated it this way, it seems obvious that indeed we must see the receivers of our value as embedded in systems.

These targeted receivers of value, are multi-faceted and multi-dimensional entities, even though we might be thinking of individuals, and have a complex set of needs, most of which they have a way of satisfying using services within the ecosystem in which they are embedded and operate.

It is important for us as value creators to understand this system or perhaps even many systems, for while the value they receive currently might not be perfect in its individual dimensions, the totality might indeed be quite substantial.

We are therefore challenged with having to understand the architecture of the current Value to begin with, and understand the systems that currently produce and receive it. That Value, even today, we must recognize, is occurring at the intersection of a complex of producing and receiving systems. Unless, this value is substantially dysfunctional, the system will not easily reconfigure to accept a new architecture of Value.

So not only must be have a better solution for a need, but we must be able to displace an incumbent value offering.

I have argued elsewhere, that an offering is always a solution. (I will write another post that describes how I understand offerings as generative design systems). We sometimes hear of people describing this in terms of offerings, products or services, doing a job for the client. I use the term solution, for just like in the case of the term system, it allows us to see the offering as a resolution of a set of intersecting and often contradictory vectors.

It is this perspective of displacing incumbents and introducing something new into a Value Receiving System that are critical ideas for thinking of disruptive innovation and innovation management. When we think of disruptive or radical innovation, that is what we are up against. The more we master these perspectives, the better we will be at being disrupters, for while simple offerings might afford to not invest in such understanding, nobody can nurture ambitions of being disruptors without a deep understanding of their Value Receiving Systems.

The Architecture of Value as an emergent idea and the Architecture and Design of the Value Creating System, follow from this first step.