Value Creation is vital to know about. Where is it coming from? What is being put into place to nurture, develop and allow its creation to evolve and spread so that it can attract more understanding?
Within Ecosystem thinking, the more we open up our thinking and ideas, the more we can build from this. We attract others to work together and create new points of value that are mutually rewarding. That openness offers so much more value creation possibility, yet we don’t talk about it; we simply generalize it like a “buzz word.” We need to be explicit on our value creation capabilities.
When we begin applying our thinking to Ecosystem designs, knowing where and how your value creation is generated becomes vitally important.
So what is value creation?
Value creation is highly dynamic; it is going on all the time and can increase, decrease or transform, in different ways; when you exploit your different capitals, that will be in constant change and adjusting to reflect your organization’s business activities and eventual outputs. Can you imagine what potential you have when you open up to an Ecosystem design?
This is when you can begin to see the value created by deploying all the capitals to build new growth and what I call “stock” that, along with “flow” make the impact and value points we need to explore and exploit. I loved this explanation of stocks and flows.
Value is not just from within; it is the links our organizations are constantly making with others, in the interactions, relationships and the combining of the activities. The vital need is to manage the stocks and flows of the capital. You need these constant stocks and flows to build and spread for any ecosystem dynamics.
The role of all the capitals is crucial to understand; they create or destroy value. The constant flow between all the capitals deployed makes up the value creation process.
Our management within our organizations needs to know where this actual value creation resides.
Understanding all the makeup of our capitals needs to be approached practically.
The focus is on recognizing the material components of what is making up the specific value creation aspects of exploiting our capitals that will provide benefits that have been captured, understood, maintained and then enhanced for the additional value creation.
Clearly, the ultimate objective is to enhance the organization’s abilities in the longer term to articulate the growth strategy and then build the capabilities to realize it. The more we know as outsiders of the value creation process, the more likely this will attract more significant investment of others, for a greater “ecosystem effect”.
Knowing and understanding your sources of fresh knowledge
Today, the intangibles are up to 80% of the value assigned to the (market value) worth. Managing these intangibles is critical to our future. It is becoming critical to understand our sources of knowledge, it gives us the unique capital that differentiates one enterprise from another. Yet, we still have a very poor grasp of how to capture these and drive this knowledge capital. That needs to change.
It is the Knowledge and Innovation combined that make the firm competitive; it gives the capacity to grow There is a positive correlation between these two. One amplifies the other, one deepens the other in the connected understanding. The basis for this comes from both human and artificial intelligence. As we learn to capture from both we build our capital base and strengthen our future potential. We make ourselves more sustainable as well as increasingly adaptive.
The greater the stock of knowledge understanding will increase the potential flows of innovation and this “powers” the future value creation and attracts others into the ecosystem potentials that a combined knowledge/innovation capability can bring.
We should talk of value creation in specific and detailed ways.
Value creation comes from understanding where it resides.
So to understand the value, you need to have a well-thought-through strategy for engaging and designing the potential for new sources of growth. How you articulate these gives others the attraction or not to form a unique ecosystem with you. Briefly, it consists of
- It is recognizing opportunities that will create new value and is open to building on these with others in a shared environment.
- You need to recalibrate your innovation radar and be selective on what offers new value, not just sustaining existing value, prune your pipeline to give additional ‘weight’ to what gives new value.
- The ability to be genuinely excited by all the new possibilities others can bring in insights, capabilities and competencies to accelerate ideas into concepts that lead to greater commercialization.
- Organize the organization into having a distinct, unique and consistent innovation rhythm of research, develop and then repeat this, time-in and time-out and harmonize this “rhythm” with fresh undertones of others contributing their distinct tempo and pulse. This is where the orchestrator brings it all together as that orchestrator of any business ecosystem design.
- Lay in the essential rewiring the organization always needs for aligning innovation to strategic goals, by making important organizational changes and rock-solid comprehensive governance structures and metrics that seek to measure ongoing value from the cradle to the grave.
- It is recognizing and applying the platform and technology solutions that connects and underpin collaboration in any alignment and new shared business value.
- Reinforce the value by knowing the success factors within the makeup of value- exploring all the capitals and stocks of all within the Ecosystem, ensuring it is robust in design and thinking by all concerned.
Ultimately value creation has transformation power.
Value creation is a core need in innovation, ecosystem design and strategy. We need to align our value creation story far better from our innovation and knowledge sharing activities. This is one of the critical sources of misalignment ecosystem leadership needs to address.
Understand the makeup of value creation in the capital, stocks and flows and that it is well seen, understood, appreciated and determined; it will deliver more on that promise that ecosystem design does provide.
