Organizations as value networks - Verna Allee

Tuesday, November 6th, 2007
Organization Charts: Kiss Good-bye or Keep?
20071106_Verna_Allee_KMWorld2007.jpgVerna Allee, founder of Allee & Associates and author of The Future of Knowledge: Increasing Prosperity through Value Networks, just presented on the future of the organizations as value creation networks. Org charts, once the blueprint for the organization are now being relegated to the role of directories in our age of horizontal organizations.

The evolution of business. Allee begins by sharing her favorite Drucker quote about how the corporation will not survive the next 25 years.
The corporation as we know it, which is 120 years old is unlikely to survive the next 25 years. legally and financially yes, but not structurally and not economically.
- Peter Drucker, Fast Company, 2000

If we will have a new economy, where will the new theory come from?
  • Living systems theory
  • Complexity theory
  • Chaos theory
  • Network analysis
  • Intellectual capital

We must look at how knowledge value is created (see Hubert Saint-Onge)

The strategic capability for the future is about how you are building the intangible assets in the organization - this is where is real payoff is for focusing on knowledge.

Open source, Open Innovation, KM professionals are asking questions (See slide)
How do we reconfigure our organizations to be more responsive to the knowledge economy.

Example: Orienting new hires at CapitalOne:
  • Everyone has a "home base" department or business unit
  • They are expected to play a role in at least one learning community
  • Will play variable roles in teams and projects

First trend in learning community is to help people shift their identity out of the box and into the learning pool.

Let's look at an org chart and do a SNA:
- Look at information, social exchanges, connections between resources. (Reminds me of the work that I did at Xerox in the 1980's)

- Compare information sharing within a formal communities information sharing without

Value Network:
Any purposeful organization or network that engages in a complex dynamic exchanges of both tangible and intangible value to create social or .... good.
The molecular level of value is exchange (See slide
  • Tangible exchanges
  • Intangible exchanges
  • Benefits or favors

Look at Cisco as an example of an organization with a high number of intangible examples to create extraordinary value.

Case Study: Value Network Analysis at Boeing

Value Network Analysis as a business modelling tool - a new way to looking at roles and relationships.

For the past 2-3 decades, the organizational design has used the following tools:
  • Lists
  • Org charts
  • Process flow diagrams

These are linear and mechanistic, based on the production line, and they do not scale with complexity.

Value Network Analysis to provide a systems context:  (things you do not see at the process level, you only see it at the systems level)
  • How well do our knowledge networks actually mat the business transaction network?
  • How well do the processes perform in relation to the Business transaction network?
  • Social/Organizational network analysis
  • Process modelling/workflow

A shift in thinking - think about roles instead of jobs

In process, variation is seen as a problem
In complexity, variation is seen as a given.

Many organizations still clink to their org chart; focus on the roles instead. (Org charts are still useful for accountability and structure, but not for looking at knowledge sharing in a complex organization trying to compete in the knowledge economy.)

Value Network Principles
  • You do not administer networks - you serve them (What networks do you serve?)
  • missed slide...

Q&A -
1. How to do this? Don;t tell them you are doing a VNA. Instead, ask them "Help me understand how you do this? What is it you work on the most? In that activity, what are the roles people play?" The less you actually say, the better. People will pick it up naturally. Your responsibility in doing a VNA is to make sure that knowledge sharing happens.

2. So, what's the next step of taking this into a KM implementation?  Part of the value of the VNA is that the people are a part of the process and the process, the VNA, is visible to everyone. So, people become aware of their role in the value network.  Then ask "what would help you the most?" "Is there a technology or methodology" to help you be more effective in your role?"

3. Are you suggesting that there is no need for processes?  Absolutely not. The processes are what drive the system. However, we need to understand the system itself so that we can spot opportunities for innovation and enhancement rather than starting with the process itself as a given. We need to ask "what if?" If you focus on the process, you cannot see the system. if you focus on the system, you can see the processes that make it up. Use the right tool.

The strength of VNA is in wholistic thinking and pattern sensing, when compared to linear thinking.

Resource: Value Network Consortium and Verna Allee's web site.

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