Value networks and ecosystems (Value Network)

Question 1

What are platforms?

Answer 1

Operationally, value networks organize around the platforms that enable connections and their associated exchanges.

Question 2

Creating value with the Value Network

Answer 2

• Linking people, places, and things for the exchange of atoms, elections, and cash.
• Modern society is characterized by a complex set of actual and potential relationships between actors, people, and organizations. Linking, and thus value creation, in the value networks is the organization and facilitation of exchange between customers

Question 3

Value for customers related to connectivity and conductivity:

Answer 3

1. With whom (or what) can customers communicate, and

2. What can they exchange in what which ways?

Question 4

What is Connectivity?

Answer 4

• Refers to who or what can be reached (exchange between who/what)
• Networking/mediation services provide opportunities to exercise existing (e.g., Facebook) and potential (e.g., Tinder) dependencies (connectivity)
• Captures the effects from both scale and composition of the customer base.
• Scale (global size): how many be reached? (e.g., Amazon, Finn.no)
• Composition (local): who can be reached? (e.g., Skype, Vipps)
• Connectivity is frequently determined by layering of services and interconnection of multiple otherwise competing firms (cf., ecosystems)

Question 5

What is Conductivity?

Answer 5

• Refers to properties of the conduit and it determines what types of objects (atoms, electrons, or cash) can be exchanged and the capacity and the quality of the exchange
• Conductivity is frequently determined by complement layers of mediation services (cf., ecosystems)

Question 6

Economic network effects

Answer 6

Mediation services offered by value networks represent the extreme case of [network externalities] because the dependency among customers is the main product delivered. Stated differently, in value networks, the other customers are the key part of the product. The services of a value network mainly deliver the customers’ opportunities to exercise those dependencies. Size and composition of the customer base are therefore the critical driver of value in the value network.”

Question 7

Economic network effects

Answer 7

• Global network effects (scale) drives how many a customer can connect with
• Local network effects drives who (specific other) a customer can connect with
- Important for mediation services where the identity of customers matters for value creation

Question 8

Local network effects

Answer 8

Local effects drive who (specific other) a customer can connect with.

• Lower recruitment costs (you don’t need the entire network)
• Lower competition due to differentiation
• Increase the need for coordination of marketing and distribution across specific customer groups

Question 9

Network/platform ecosystems

Answer 9

The core of a network ecosystem is typically stacked/layered and interconnected – in turn reflecting the structure of the value creation activities.

• Conductivity is frequently determined by complement layers of mediation services
• Connectivity is frequently determined by complement layers of mediation services and interconnection of multiple otherwise competing value networks/mediating firms