Constructing a Value Web

Now that we have defined the Value Web and described the benefits for strategy formulation, let’s look at how a firm would actually go about constructing the framework. In the next sections of this chapter, we will walk you through the steps required to develop and complete a Value Web. We will follow the same approach that our consulting teams use when creating the analysis for one of CGE&Y’s clients. A little later, we will explore how to analyze the completed framework to distill insights that we then can use to set a firm’s strategy.

Before we jump into the details, let us quickly review some of the guiding principles to be applied during the exercise. First, as mentioned earlier, the focal point of the Value Web is the customer. Located at the center of the framework, the customer is the ultimate recipient of value; only if there are unmet customer needs or wants will companies strive to provide an offering that will fill the void. Thus, all activities in the web should be focused on delivering value to the customer.

Second, the exchange process forms the basis for creating relationships among the web’s constituents. When we talk about providing “value” to the customer, we refer to an offering that may consist of a physical product, a service, information or any combination thereof. Providing such an offering takes the form of an exchange, where a firm gives something of value to a customer, usually in return for a monetary payment. Exchanges, however, also take place between web constituents other than the customer. Those exchanges, for example between the firm and an independent service provider, usually entail information. Thus, exchange processes illustrate the relationships, or linkages, between Value Web participants.

Third, the scope of an initial Value Web analysis should be bounded by first order relationships. By this we mean that our focus is to identify the critical constituents and to map obvious power relationships to be used as the basis for further analysis. Second and third order relationships are analyzed as required; for example, when the firm is interested in discovering constituent-specific strategies, possibly in the form of a detailed competitor analysis.

Let’s now look at the individual steps for creating the web. To render this chapter less of a strictly academic model, and provide you with a more practical application of the Value Web concept, we will walk through the
steps from the perspective of a fictional company called Acme. Acme, a nofrills provider of diversified financial products and services, wants to use a Value Web analysis for the purposes of identifying opportunities to use mobile technologies. The steps that Acme follows in creating a Value Web include:

1. Defining the solution and competitive space
2. Selecting target markets and market segments
3. Defining customer needs and identifying customer experience lifecycle constituents
4. Defining value transactions

Taken From : Enterprise Guide to Gaining Business Value from Mobile Technologies