Technical update: GenIsis Middleware Suite Version 2.0 Alpha Version

The GenIsis Middleware Suite Version 2.0 for Value Networks was today released in its Alpha version to the development environment for testing. Running Oracle 10g, featuring a read/write API to the Workbook (desktop Excel 2003 client) and a read/write API to the web based Open GL Network Browser it is already beginning to set new processing records. The updated Excel 2003 client was tested successfully up to the limits of Excel 2003 (about 65 000 transactions and 1100 nodes), while the Access 2003 version was tested successfully with 290 000 transactions and 14 400 nodes. The Alpha version is being tested for implementation on client and server levels. Functional developments planned before shifting to a Beta version are integration with a normalized web based ONA survey, client optimization for MS Office 2007 and various expansions of business analytics. Testing with up to 1 million transactions and 200 000 nodes is planned for the fall as part of a client project. The Beta release is planned for Q1 2008, with a production release in Q2 2008. A full web services version remains planned for Q3 2008.

Value Network Centric Business Development - Part 2: Tier 1 - The Customer Value Network

As previously mentioned the Customer Value Network is the value network that enables an individual or organization to deliver value to their clients. The key to understanding how this value network is generated lies in taking a scenario driven perspective from the perspective of the individual or organization that is supposed to benefit from the products or services of an organization.

Let us take the travel industry as an example. One customer group of relevance could be frequent long haul business class flyers - usually a pretty interesting group since the relevant margins are pretty high! A challenge often voiced by airlines is how to increase the share of wallet and lifetime value. One way of approaching this is, instead of now just focusing on the transactions associated with boarding to departure of the airplane, let us consider the whole travel scenario that begins with the traveler needing to coordinate a complete round trip from their home to an event and back - including all the various travel modes (i.e. car, plane, taxi, hotel, etc.), the various stops (i.e. home, airport, customs, lounge, boarding etc). This would be our scenario. We can then move to identifying the roles and transactions needed to support this scenario using NetMat. Following this the key participants of the roles identified (i.e. travel transporter, lodging provider, travel mode switcher, etc) can be identified and GenIsis used to map out the relevant networks of organizational alliances and collaborations. When we then sequence the scenario carefully we are able to identify for example the switches between tangible and intangible transactions (often rather inconvenient media breaks), areas where third party services have merged to bridge interoperability issues, or areas where a tighter connection of roles through synchronized mechanisms would make a lot of sense.

Each of the above scenarios has its own value network that will be considered by the relevant industry value network(s). The important thing to recognize though is that the premium interoperability is often enabled by industries not directly related - Visa´s Global Platform, IT standards, common software applications, common hardware such as RFID, data standards such as XBRL etc. Any customer value network hence, by default, is enabled by numerous tradition industry verticals.

The fact that the customer value network leverages a number of different industry verticals makes it especially difficult to design solutions that increase the performance of these scenarios since the relevant industries are often heavily siloed and struggle to work in a cross-boundary manner for many reasons. It is for this reason that the other tiers are critical to understand as a specific industry value network needs to be architected to address the solution creation. In many cases we also see that besides the challenges of nurturing collaboration across industries per se, there are major challenges of nurturing collaboration among industry verticals of single organizations that have structured themselves in accordance with the verticals (this is typical in the software and services industries).

To summarize, the customer value network can be considered as that value network that manifests itself when turning the traditional value chain associated with a customer scenario into a value network perspective. The purpose of this is to identify the cross-industry roles, transactions, and participants that are part of the scenario, and based upon that architect a higher performance sequence that can be designed on tier 2 - the market space value network.

Value Network Centric Business Development - Part 1: Fundamentals

One of the most fascinating application of value network centric thinking is in business development. In this particular area of thought, value networks centric concepts are used to identify business opportunities, create the right product/service solution to serve the opportunity, to deliver the solution to those participants of the market space in a fast and low cost manner, and finally to involve the final beneficiary of the solution in such a manner as to create the main street (versus early adopter) market from the earliest stages of solution development.

This approach relies on being able to identify, integrate and energize five interlocked value network levels (so called "tiers") and can be considered as follows:

Tier 1: The Customer Value Network - this is the value network that enables an individual or organization to deliver value to their clients. An example might be the value network associated with virtual work in a global organization. This value network is usually based on a series of well defined processes, supported by technology, that are shifted to a value network perspective using the GenIsis application suite in combination with NetMat exercises.

Tier 2: The Market Space Value Network - this is the value network that depicts the key roles and interactions across multiple vertical industries based on use cases identified with key participants of the identified value network roles. At this level the GenIsis application suite is used to process large amounts of data from multiple industries in order to identify the underlying high performance archetypes of the market space. These archetypes are hence distilled from information and then validated by the participants. A key goal is to identify white space (opportunities for interoperability) with a high probability of being addressed by emerging services and technologies. An example would be the manner in which the Visa Global Platform "glues" use cases together in the travel industry. The purpose of this value network is to deliver value to a customer based on a variety of use cases (i.e. supply chain integration).

Tier 3: The Industry Value Network - this is the value network that draws together the key participants of the Market Space Value Network and ancillary roles (i.e. technology vendors or system integrators) in order to create the space for architecting the high potential solutions needed to pre-empt identified interoperability opportunities in the Market Space Value Network. Key participants of the Market Space Value Network assume the roles of Customers and Competition in this value network, while others such as marketeers for the future solution and funders make an appearance. At this level the GenIsis application suite continues to provide relevant business intelligence for fleshing out the potential solutions, however the primary tool of relevance is the expanded form of the NetMat tool using wallmaps and NetMat+ that supports the prediction of the dynamics in the Market Space Value Network. The purpose of this value network is to find that solution which has the highest probability of meeting (emerging) market space value network needs and making this explicit enough to initiate a relevant development project to be executed by the Project value Network.

Tier 4: The Project Value Network - this is the value network that provides the framework for creating the actual solution decided upon, whereby it is not created by the project team, but adapted from standard proven methodologies such as proposed by PMI or Prince2. Key participants of the Industry Value Network are involved in the actual development of the solution and while the GenIsis application suite is used for simulation of the impact of various product design features, the primary tool is a NetMat customized for the project management approach of choice, and used for negotiations among stakeholders and general project management. The purpose of this value network is to create and deliver the solution identified by the Industry Value Network.

Tier 5: The Solution Value Network - this is the value network as supported by the solution created by the Project Value Network. It is based on the manner in which solution functionalities are linked in order to support the high performance workflow of the Market Space Value Network. The purpose of this value network is to support and enable the value proposition of the Customer Value Network. The GenIsis application suite is part of the embedded business intelligence of the solution and provides continual monitoring and simulation capability to optimize performance management.

When these five value networks tiers are integrated the opportunities for value network centric business development can quickly be seized and the organizational business model effectively shifted from an industrial production mode, to one of continuous co-creation and innovation of products/services with all participants of the market space. In future posts the issues of organizational forms, suitable management forms, financing models, and IP protection will be explored, along with a series of case studies where value network centric business development has helped jump-start and accelerate value creation both inside and outside of organizations in a manner that directly impacts the bottom line.

"Proof of concept" project invitation to members of the travel and hospitality industry

Hello everyone,

We are currently convening a value network with participants from the travel and hospitality industry in order to develop a "proof of concept" that integrates the GenIsis application suite with an ERP module delivered via a portal architecture. In collaboration with a major ERP vendor, their qualified solution providers, and a venture capital group the intent is to set up a 3-4 month project that integrates the relevant technology as a proof of concept. Design, execution, and delivery will be performed by the value network itself.

In order to support this effort we would like to invite members of the travel and hospitality industry to join the project and benefit from the relevant learning and (potentially) a first user advantage. The effort is currently intended to follow a research format with the ERP vendor providing basic cost coverage and everyone else contributing resources and data. The venture capital group would be providing advice on how to design the effort for later funding rounds.

If you, or anyone you know in the industry, is interested in such an exploratory effort please contact me. We are also currently negotiating what can be fed back into this group and what components of the technology solution provided as open source at www.openvna.com. Industry participants will be expected to provide operational data (under non-disclosure) that is then used for the "proof of concept".

One very interesting aspect of this effort is that contrary to the traditional approach of identifying value networks, or creating the conditions for them to emerge, we are consciously architecting the roles and participants based on some deep research efforts conducted earlier in this year. The intent is therefore to also prototype a process for conscious and explicit creation of value networks with resolution of all the relevant funding, IP, project management issues etc.

GenIsis and working with artificial intelligence...

We had a very interesting conversation recently about whether a software application (workflow focused) could be considered as the key participant in a role based on the fact that it had a degree of autonomous decision making capability due to embedded artificial intelligence routines. While software of any kind should usually be considered only a mechanism for enabling transactions or supporting activities in roles, the artificial intelligence component brings a new perspective into play.

The role traditionally describes a behavior that participants of that role evidence in executing transactions in the value network, i.e. the role of "Seller" would be focused on transacting deliverables such as proposals or products, while receiving deliverables such as inquiries and orders. Traditionally we would also assume that individuals participate in this role to enable its behavior.

Assume now that we have a piece of software that is able to perform all of the behaviors needed for the transactions independently of human support. Could the software then be considered a participant? I would definitely argue that this can and should be the case, although we need to look at the intangibles the relevant role is involved in. The higher the number of intangibles a role is involved in, the more I would assume that it operates in a complex environment and hence required higher sense making skills (rather than simple transaction processing). This is obviously the point that artificial intelligence can be considered as the growing capability of software to work in increasingly complex environments. The greater the artificial intelligence, the more capable the application is in handling growing complexity and hence assume roles transacting more and more intangibles.

In a similar vein we could draw upon the growth of functionalities in GenIsis to consider whether it could be nurtured to a point where it contains artificial intelligence and then assume a role in our own value network. To date, there are no artificial intelligence components embedded, however the first step there would not be a significant one at this stage (assuming the relevant client engagement of course).

The vision underlying GenIsis is the ability to architect optimal value networks for value conversion, and then to automatically design workflow to operationalize this. Earlier reflections had included seeing the value network itself as a neural network (we did some exploratory design in this direction last year) and hence if achieved, would in itself create value networks with an embedded intelligence / learning capability. The steps involved are creating the value network, shifting it to a performance simulator (Vensim plays this role currently), and then architecting workflow based on this networks driven "user interface". As the value network (powered by GenIsis) gains experience in architecting and applying value networks to workflow, it will then also be in a position to re-configure itself based on scenarios being handled and experiences gained in past workflow configuration (experience is here equated with feedback from the workflow system into the performance simulation). GenIsis hence assume the role of "workflow configurer" for the ERP system and works as (or even more) autonomously that a typical business process group in an organization. Compared to a "human" participant GenIsis would not need more or less guidance or support than any such "living" participant.

Overall therefore I would argue that the more intelligence is embedded in an application, the more suited it becomes to assuming a role just as is done by a human participant. The starting point will in any case having the application as a mechanism enabling transactions, and then moving "closer and closer" to the role as its learning capabilities grow. Can a value network perhaps be completely automated - I would definitely argue so and believe that this is already partially the case in many industrial areas.

From a technical development standpoint the next step would be to architect the roles as neural networks and to begin simulations to train the value networks for decision making. The ideal context for such an effort would be the white space of an industry value network with participants that are already closely aligned and seek to automate high value sequences (i.e. in relation to customer loyalty).

Using GenIsis to predict value network dynamics

In preparation of facilitating a major customer event for an ERP manufacturer, we are currently working on a version of NetMat that will enable users, after drafting an initial value network, to predict short, medium, and long term dynamics of the value network with reasonable accuracy. The theoretical base lies in the considerations behind the Delphi method for one and social network analysis (SNA) as applied to value networks thinking.

In this preparation we are consolidating a list of indicators (based on our benchmarking data base) and experiences in applying system dynamics modeling to value networks, in order to identify those roles, transactions, and white space that are most likely to shift over time, to then go through a simplified and dynamic Delphi approach that can be completed in around 10-20 minutes. There will be some similarities with the stock market type of trading approach taken in other predictive perspectives, however the key difference will lie in identifying the change points from a (value) network perspective.

The other piece of the equation is that you cannot simply look at a value network and predict its overall development. The challenge is to first use the value network to identify the scenarios served by the value network and then to identify the structural issues from a use case perspective. An example might be breaks in a tangible process that are in the process of being glued by services - the loyalty program industry in travel and transportation is a wonderful example of this, as are the developments in the credit card industry (Visa is playing a leading role here by the way).

The specific value that this exercise will entail is that often when using NetMat, participants will ask questions whether they should model the current or future state of the network. The default approach asks for modeling first the current state, and then reflecting on what the future state should look like. The shape of the future state to date has been based on applying the exchange analysis developed by Verna - in itself a powerful approach of course! Growing from the exchange analysis then, the predictive NetMat exercise will include not only the indicators from the expanded network analysis (VNA and SNA), but also draw upon probability prediction approaches and deeper understanding of structural indicators.

Just as NetMat is intended as a primer to value networks thinking (the next step usually involves a couple of yards of butcher paper on the table as started by Glenda Turner), the predictive NetMat exercise will also be a primer to the more complicated evaluations that will be enabled by GenIsis. As things develop in the next months we will be driving GenIsis to point directly and automatically to those points in the value network that are most susceptible to change from a short, medium, and long term perspective. Due to the fractal nature of value networks this definitely appears as a viable approach for migrating from a current to a future state.

So... NetMat+ here we come and watch out for some experience reports - the last months have seen solid long term accounts established in aerospace, telecommunications, ERP and FMCG industries whereby the average number of value network sessions being run is probably breaking 100/month by now. NetMat+ will accelerate even further of course - plus the planned addition of ONA components to NetMat.

Licensing GenIsis into ERP/CRM

In the last week some interesting developments occured in respect to the technical roadmap of GenIsis I thought I would share - especially since writing about it helps me make sense of the relevant opportunities a lot more effectively.

Of special significance is that we have been invited to submit a proposal for integrating GenIsis into a leading CRM On Demand offering, whereby the invitation has come from the software house itself. They are additionally championing further partners to chip in significant development resources and also socialize the solution to be in their customer environment. On the business model side this is also interesting since the project will involve consciously architecting a value network and also applying value network principles in the project management itself. Commercially it is also the first move into solid six figure technology solution projects - which is in itself rather pleasing.

Another encouraging development was the request of a large German travel services provider to explore applying GenIsis to a years worth of transaction data (no doubt more than 10 million transactions). You might image we took a long deep breath when hearing this requirement, however recent efforts to refine the data model from a performance perspective, the addition of a powerful server hosting company to our partner network and some trial runs on a simple Oracle 10g application let us feel confident that this project can be delivered.

Frustrating on the other hand this week was that in development efforts it became very clear that we have reached the technical limits of our current development environment in Germany. The needed infrastructure is also going beyond what we usually pick up at the local computer store or rebuild ourselves - anyone have connections to help us out? Need a handful of loaded high performance workstations...

The exciting times continue and it seems as if we are truly turning onto mainstreet here and being invited to some very new and promising parties!