Dynamic Value Networks of the 2020's

The increasingly networked global economy is forcing companies to think beyond the concepts of traditional value networks and supply chains, and view their environment as rapidly evolving business ecosystems in which suppliers and customers are embedded and co-create value. We apply the term dynamic value network to highlight this evolution in the value network and logistics chain concepts.

Summary

The increasingly networked global economy is forcing companies to think beyond the concepts of traditional value networks and supply chains, and view their environment as rapidly evolving business ecosystems in which suppliers and customers are embedded and co-create value. We apply the term dynamic value network to highlight this evolution in the value network and logistics chain concepts

This research paves the avenue for an international research program exploring and subsequently helping Finnish companies to build the critical capabilities that successful organizations will need to prosper in dynamic value networks in 2020 and beyond. To set the stage for more elaborate research program this introductory research seeks to contribute to an improved understanding of dynamic value networks - and thereby pinpoint fruitful avenues for further research to be investigated in the elaborate program - by viewing the phenomenon of dynamic value networks through five distinct scientific disciplines and four research theme areas.

Figure,
Evolution of networking

The project builds upon its experienced international, multidisciplinary team consisting of manufacturing and logistics, psychology and cognitive science, marketing, entrepreneurship, and strategic management experts from both the academia and the industry, such as ones from Chinese Academy of Sciences, Nokia, and Stora Enso.

As mentioned above, the Chinese Academy of Sciences will cooperate with DVN2020 project. Prof. Dr. Xiong Gang has close contacts with Finnish industries and academia. His group of Complex systems will appoint upto 4 PhD level researcher to the topic of Dynamic Value Networks. There will be researcher visits from China to Finland and from Finland to China.

Other Chinese organizations will be chosen by the Chinese Academy of Sciences. The following organizations have been contacted: Development Bank of China, Huawei, and ZTE.

There will be cooperation with Stanford University, California. Several DVN2020 researchers have contacts and/or ongoing cooperation with Stanford.

The results of this project will deliver prerequisite knowledge and capabilities for conducting a new research program that, in turn, aims to help Finnish companies to be competitive in the 2020's.

Work packages are (1) methodological advances, (2) dynamic value network model with definitions, and (3) research and development initiatives.

The project is funded by Tekes and the industry partners. It has started on 1.1.2013 and it will end on 30.6.2014.

Project director: Timo.Nyberg (at) Aalto.fi

Research manager: Hannu.Tuomisaari (at) Aalto.fi

Project definition

• Introduction
• Objectives and Research Questions
• Work Packages
  
  

INTRODUCTION

Background and motivation

Finnish industries already have and increasingly will be touched by the value network transformation as has been seen e.g. in magazine & newspaper publishing and mobile phone businesses as a whole. Consequently, Finnish industries need to identify new gateways to the dynamic value markets and gain the needed capabilities to play and win there. The gateways will result from changes in global infrastructure developments, customer behaviour changes, consumer habits, market ecosystem evolution, and the emerging new service models and environments.

In dynamic value markets, firms’ challenge is not in delivering products they produce, but in making business out of solving consumers’ needs in their awareness environments ubiquitously and proactively. In a global market, none can accomplish this task alone. Hence, networking is the only way to go for any size of business.

Four theme areas of relevant research

As noted above, traditional network paradigms and industrial designs employed by Finnish companies increasingly fail to capture value. Finnish companies can no longer rely on current paradigms and designs. Dynamic value networks are proposed as the paradigm and design choice of future. This project builds on the following four theme areas pinpointing specific motivations for conducting this research:

First, network structure and location decisions. - In the recent time, organizations have increasingly moved their activities to low-cost countries, a behaviour that has impacted organizations’ locations and network structures. The cost differences among countries have, however, started to diminish, and other factors - such as customer needs and location, raw material supplies, knowledge and expertise, geographical distances, logistic expenses, and principles of sustainable development - have started to drive decisions regarding geographical location and network structure. It is, nevertheless, uncertain whether the globalization trend continues. The future may bring a new wave of localization that can take place either globally or in certain clusters.  It is evident that these global trends and the factors underlying them will drive the development of value networks in the future. - In this research, we aim to improve our understanding on these potentially emerging global and local trends through multidisciplinary investigation, so that further research can be carried out to elaborate on the most promising trends and their interrelations with the following other theme areas.

Second, agility of value networks. - Agility is of utmost importance in networks in the future. Dynamic value networks, in their desired state, need to be so agile that no matter what the future global trend driving the location and network structure decisions will be, the networks adapt to the emerging trends and requirements. This is in contrast to the traditional supply chains that are so rigid and nonflexible that they cause serious problems in today’s quickly evolving and changing economy, as they cannot keep up with the rate of change. Dynamic value networks provide a new networking paradigm that can co-evolve with the environment, preventing a loss of fit from occurring. - In this research, we aim to increase the understanding of factors affecting and driving the agility of value networks, using a cross-disciplinary investigation and employing a unique set of methodological tools.

Third, consumer-driven value creation and value capture dynamics. - Traditionally, the activities of Finnish companies have been production-driven, and the delivery has been viewed merely as an extension to the production. Such a fixed production paradigm is going to impose significant problems in the future, as customer needs change with an increasing pace. In contrast, dynamic value networks are required to be inherently consumer-driven and consequently their whole structure, organization, and processes (i.e., R&D, production, and marketing) are derived backwards from the customer needs and related business opportunities. Dynamic value networks are proactive, always ready to immediately satisfy the emerging need, anywhere. - In this research, we will contribute to our improved understanding of consumer-driven value creation and capture dynamics, utilizing a set of purpose-made tools and methods building on a variety of distinct scientific disciplines.

Fourth, Individuals, societies, cultures, and nations in value networks. - Traditionally, the focus on network paradigms and related industrial designs has mainly been on processes and various processing systems, leaving the role of individuals and related collective entities without attention. In the future, however, the individualistic factor is likely to play increasingly critical role.  - Therefore, in this research, we will unravel the role of human factors in value networks, building mostly on psychology (or cognitive sciences). In order to achieve and maintain the proactive mode the solution providers will need relevant individual and collective human behavior knowledge that has early strategic value. We will analyze these future knowledge demands and needs for data mining innovations.

OBJECTIVES AND RESEARCH QUESTIONS

Objectives

The objectives of this research project are to produce:

1. new cross-disciplinary research methods and tools to scrutinize and develop the dynamic value networks (= methodological advances),
2. new definitions, a framework model and improved understanding of proactive and ubiquitous dynamic value networks (= dynamic value network model with definitions), and
3. detailed and well justified research and development areas for further research and development on the dynamic value networks (= research and development initiatives that form the elaborate research program).

Research questions

The overall research question, or the research horizon, driving the proposed research agenda, is as follows:

How to tap into, develop, and exploit proactive and ubiquitous dynamic value networks of consumers and companies of the 2020s?

By investigating this overall research question through the four (4) research themes and five (5) disciplines, it is further refined into the actual research questions, as illustrated in the table below:

Four (4) research themes, five (5) disciplines, and research questions

These research questions are, however, only of tentative nature as they will be further refined during the course of the study.

The approach is illustrated by the figure below:

                     Figure, Research approach

WORK PACKAGES

General

According to the objectives this project results in (1) methodological advances, (2) dynamic value network model with definitions, and (3) research and development initiatives, each of which represents a separate work package.

Methodological advances – Work package #1

Methodological advances deliver prerequisite capabilities for conducting novel, interdisciplinary research on future value networks. It includes

1. an interdisciplinary research work model that describes the processes through which researchers from distinct disciplines, countries, and cultures work together to achieve the common goal,
2. concept definitions that enable researchers originating from distinct disciplines to have a shared understanding and common language of the central concepts, and
3. interdisciplinary research tools and methods that define a set of novel combinations of research methodologies originating from the distinct scientific disciplines employed in this project and that are used to investigate the phenomenon from a unique perspective and thereby produce new, insightful knowledge. These tools and methods will utilize new data sources and data acquisition methods, such as ones that enable collecting relevant individual and collective human behavior knowledge, and seek to enable incorporating complex data in network analyses.

Dynamic value network model – Work package #2

Dynamic value network model (i.e. the systemic whole) is a result of project’s cross-disciplinary and multi-thematic investigation of dynamic value networks. It illustrates the anticipated drivers of network dynamics and factors underpinning company competitiveness in 2020 and pinpoints potentially fruitful direction for further research. It includes the results of

1. network structure and location decisions research theme analyses,
2. agility of value networks research theme analyses,
3. consumer-driven value creation and capture dynamics research theme analyses, and
4. individuals, societies, cultures, and nations in value networks research theme analyses.

Research and development initiatives – Work package #3

Research and development initiatives, based on aforementioned dynamic value network model, are concrete project definitions (i.e. project proposals) that elaborate on the recognized potential further research and development areas, individually or together forming the subsequent elaborate research agenda. Each research/development initiative include

1. background and motivation,
2. research questions,
3. tools and methods,
4. results, and
5. hypothesized impact on growth and competitiveness of Finnish companies in 2020.