I asked Vern Allee this question in a past podcast, “A lot of that work seems to have evolved into Value Networks. Can you explain and give a little background on Value Networks for me?”
Related Podcast and Transcription: Mapping Value in Your Organization
Her Answer below:
Verna: Many, many years ago, in the early ’90’s, I was working two questions. I was working the knowledge question, and I was also working the business modeling question. The early ’90s were the heyday of process engineering when everybody was modeling the work as a business process, which is really a great approach, and it was a learning curve that we needed to get through. But if you think about process, process is basically the industrial age production line, right?
It’s linear, and it’s mechanistic. Even in the early ’90s people were starting to use computer technologies. Companies that I was working with, like Telecoms, were very large and complex. They had working groups; they had project teams, and work was more chaotic than process.
So I said, “Well, how can we model the work as a dynamic flow system, but still get some rigor behind that?” So I looked at virtually every modeling method that was out there from system dynamics to interrelationship diagraphs and context diagram and even object-oriented data analysis.
At that time I was helping companies through the benchmarking phase of very complex re-engineering process, through the learning phase of that. The challenge we were running into was people were trying to compare business processes with industries that were very unlike their own.
So at a level of knowledge complexity, a flow chart is not a systems tool. It doesn’t help you understand the whole system; it helps you understand one process within that system. So I said how can I find a modeling approach that will allow us to model not just the processes, but their interrelationships and a whole lot more besides so that we can actually compare one system to another?
So I tinkered, and I experimented and I started using what is now Value Network mapping in its early stages to support benchmarking projects, to map the activity. I like to use the term activity now instead of process for a reason.
If you think of the term process and you visualize process in your mind people generally say I see an engineering type schematic, a drawing, a flow chart. If I use the term business activity, the image that pops in their mind is real people interacting. So can we model the real activity of people interacting in a way that also shows us how the processes are working? That’s how I developed the modeling method.
I realized that even though I was helping people do these maps to support benchmarking as a way to talk to another industry, people were getting dramatic breakthroughs.
One of my favorite stories is a very large Telecom trying to redesign all of technology support worldwide. This was a very high level team, and it was in still the early stages, both of my consulting work and this modeling method. These people came in from all over the world, corporate headquarters. It was a very big deal for me to get this opportunity.
So we’re doing this mapping to try to describe the activity in a general way to talk with other companies and all of a sudden the room goes dead quiet. You could hear a pin drop. And I look around at all these guys, and they were all men. This was still back before women were in the technology field so much. And they were all giving each other a look like, “Oh my gosh, do you see what I see?”
I said, “Well, what is it?” One of them finally walked to the map, and he pointed to one area in the network map and he said, “It’s right here.” This whole group of people is literally in the way. If they weren’t there, everything would run smoothly.
Nine months, we never saw this. We’ve used every process tool. We’ve flow charted, we’ve scatter-grammed; we fish bombed. Nine months and we never saw this.
I said, “Well, that sounds pretty serious because I knew at the level we were talking this group’s probably hundreds of people.” And he said, “It’s very serious. It’s us. It’s our own group.” What I didn’t realize is that was actually what they were looking for is that kind of breakthrough because they were facing a very, very serious reorganization. And they did it. They designed themselves right out of the job.
But I thought wow, this has such potential for helping people cut through complexity and deal with the real issues. But it was really early. It was in the early 1990?s, so I continued to work with it and experiment with it.
Then in 1997-98 I was working with Don Tapscott and his group showing them how to do this Value Network modeling, and we were very interested in knowledge flows. Knowledge management was a big topic. My new book “The Knowledge Evolution” in 1997 was one of the big best?sellers in that area.
So I got invited into this project, and I said wait a minute. I think I mapped knowledge plays, and I went back to this modeling and found that it worked not just for the formal transactions of the process interactions, but also to depict the way specific kinds of knowledge, information, and intangible run through the activity.
That’s where it really came together and then I started calling it Value Network analysis because I was able to link those knowledge flows into intangible asset management as the engine for creating value.
But what happened in that period was, it brought together the best that we understood about knowledge and knowledge flows and the importance of human to human knowledge. It brought together the process management and engineering concepts that were so critical for productivity. It brought together the intangible asset management and dynamic pull systems as a way to model all of this.
So I was very excited about it, but it was still too early as far as the market, so I didn’t start publishing about it until the early 2000. But that’s how it came together, and I see it as the trending. I saw the potential for it and now people are really starting to really gravitate towards it as the importance of value creating in networks is really coming to the forefront.
Value Network Map: Can be found at valuenetworks.com
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