This concludes our introduction to Cap Gemini Ernst & Young’s Value Web framework for strategy formulation. You learned that the Value Web is a customer-focused, firm-coordinated network that consists of interconnected constituents that provide elements of a total solution. Value Webs can be developed for entire industries, a specific firm located within a specific market, or for functional departments that exist within a corporation. The entity that leads the web’s constituents is the one that will have established
a sustainable competitive advantage. When applying the Value Web at the corporate level (versus the Read the rest of this entry

If a firm manages to establish relationships with strong independent authorities, these linkages should be strengthened via relationship building and capability sharing to ensure a lasting, favorable impression. Establishing relationships with weak independent authorities may not be a priority for most firms. Read the rest of this entry

Establishing preferred relationships, pursuing joint marketing or brandingcampaigns, or bundling products/services to raise switching costs areexamples of actions a firm may pursue with strong complementors. Alternately,weak complementors may be persuaded to allow for exclusive relationshipsor to open their channels of distribution to also include the firm’sofferings. Read the rest of this entry

The last step in our exercise is to develop a set of strategic initiatives. Because such initiatives are unique to any given firm and the industry it is operating in, we cannot attempt to lay out specific recommendations for your organization without further due diligence. However, we can present you with a set of generic actions that any company could undertake given its position in the Value Web relative to the other network participants. We hope that you will find this list of actions to be a good starting point for your own analysis and development of a custom-tailored initiative portfolio that is right for your company. Read the rest of this entry

Step #1 entailed analyzing value and sustainability. Starting with a completed power grid, step #2 will help us to develop the strategic direction for our firm, Acme Financial, and to anticipate the strategic moves of otherconstituents in the grid. Read the rest of this entry

Now that we have prepared both the value index and the sustainability index, we are ready to take the last activity required to complete the power grid. Combining value with sustainability helps us define the power of theincumbents, anticipate power shifts, and develop effective strategies based upon these insights. Read the rest of this entry

Our next activity is to prepare and assess the sustainability index. This index tells us the staying power of each constituent. It contains two important measures: entry barriers and importance to the network. Read the rest of this entry

Now that we have determined the importance of each value transaction to the receiver, and specified the number of value providers, we can calculate the incremental value for each constituent group. Let us revisit the previous example. We will work with two cells: the one that contains the value a customer provides to the firm (E, I) and the one that contains the value he receives from the firm (E, I, T). Figure 5.8 shows how we calculate the total value for each of the two cells. First, we multiply the importance rating (importance of transaction to receiver) by the degree of concentration (number of providers) to arrive at the incremental value for each of the three value dimensions (E, I, T). Next, we add these values to arrive at the total value received. Then, we transfer this number to the corresponding cell in the value index table. Adding the values of each cell in a row (and column) yields the total value each constituent group receives (or provides). Read the rest of this entry

Figure 5.7 shows a partially completed, generic value transaction matrix.Note that some cells contain all three value dimensions—that is the two constituents transact with each other along the lines of a monetary, informational and intangible value—whereas other cells may show only one or two value dimensions. For example, the value provided by a firm to its customers usually involves all three value dimensions (E, I, T), Read the rest of this entry