Verna Allee

Verna Allee

extract from :

http://en.wikipedia.org/wiki/Verna_Allee

Verna Allee, born 1949 in Kansas,[1] United States, is an American business consultant and writer on topics including knowledge management, organizational intelligence, intellectual capital and the value conversion of intangibles.

Allee is a co-developer of the ValueNet Works Fieldbook[2] (see FileNet) and the GenIsis application (see CDS ISIS). She co-hosts an open resource website[3] with content under a Creative Commons Attribution License for value network analysis practitioners.

Open Value Networks

http://www.value-networks.com/

Every business relationship includes contractual or mandated activities between participants — and also informal exchanges of knowledge, favors, and benefits.

A ValueNet WorksTM analysis begins with a HoloMapping® diagram that first shows the essential contractual, tangible revenue- or funding-related business transactions and exchanges.

Along with the more traditional business transaction the critical intangible, although informal, knowledge exchanges and benefits that build relationships and keep things running smoothly. These informal exchanges are actually the key to creating trust and opening pathways for innovation and new ideas.

Traditional business practices ignore these important intangible exchanges, but they are made visible with a ValueNet WorksTM Analysis.

A Value Network Approach

Extracts from PDF :

http://www.value-networks.com/howToGuides/A_ValueNetwork_Approach.pdf

A Value Network Approach for Modeling and Measuring Intangibles

White Paper

Author: Verna Allee

http://www.vernaallee.com

Proprietary Material 2002

Methodology

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The methodology is grounded in principles of living systems, and represents a decided shift away from mechanistic models. It expands current thinking about intangibles in three important ways.

1. It goes beyond the asset view of intangibles to also consider intangibles as negotiables and as deliverables.

2. It proposes a way to model organizations and business relationships as living networks of tangible and intangible value exchanges.

3. It provides a way to link scorecards and indexes to specific business activities, allowing people to more fully understand the impact of their decisions and actions in both tangible and intangible terms.

Enterprise as a Living System

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The key business question is, “How is value created?”

The traditional answer to that question is – “through the value chain.”

The value chain model, however, is a linear, mechanistic view of business that is based on the industrial age production line. This type of limited process perspective is woefully inadequate to understand the complexities of value in the knowledge economy. Further, most approaches to analyzing business relationships have not taken into account the role of knowledge and intangible value exchange as the real foundation for value creation.

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What makes something a truly living system?

There are two additional criteria that must be met:

1. The pattern of organization in a living system is consistent with that of an autopoietic network. An autopoietic network is one that continually produces itself, so that the being and doing are inseparable. That continual process of producing is cognitive in nature. So living systems exhibit intelligence.

2. Living systems are also dissipative structures that are open to the flow of energy and matter. They exist on the edge of chaos. With too much openness, they disintegrate; with too little they become rigid and closed and can no longer exchange energy and matter.

So, modeling business and enterprise from a living systems perspective requires being able to

a) Identify its pattern of organization as an organization

b) Describe its structure

c) Discover its most critical processes or exchanges from both a cognitive perspective and the flow of energy and matter.

Intangibles as Assets

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Intangibles are at the heart of all human activity, especially socio-economic activity.

Further Research References for Intangibles

A number of intangible accounting approaches have been proposed to explain, measure, and manage intangible assets. Intangibles, like other assets, are increased and leveraged through deliberate actions.

Among these efforts, one finds the intellectual capital methods of Karl-Erik Sveiby ² , Leif Edvinsson ³ , Johan and Goran Roos 4 , Annie Brooking 5 , Pat Sullivan 6 .

Related work from the U.S. is the Balanced Scorecard approach of Norton and Kaplan 7 .

There are also a number of other experiments such as Kanavsky and Housel’s 8.

...

Virtually every accounting standards body in the U.S. and Canada has special task forces on accounting for intangibles, and the OECD in Europe has also held special hearings.10

Typical categories of intangible assets include business relationships , human competence , internal structure , and social capital or culture and values.

Core Assumptions about Value Networks

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This method and approach is based on some basic understandings and assumptions:

1. Participants and stakeholders participate in a value network by converting what they know, both individually and collectively, into tangible and intangible value that they contribute to the network.

2. Participants accrue value from their participation by converting value inputs into positive increases of their tangible and intangible assets, in ways that will allow them to continue producing value outputs in the future.

3. In a successful value network, every participant contributes and receives value in ways that sustain both their own success and the success of the value network as a whole. When this is not true, participants either withdraw or are expelled, or the overall system becomes unstable and may collapse or reconfigure.

4. Successful value networks require trusting relationships and a high level of integrity and transparency on the part of all participants.

5. Insights can be gained into value networks by analyzing: 1) the patterns of exchange 2) the impact of value transactions, exchanges, and flows, 3) the dynamics of creating and leveraging value.

6. A single transaction is only meaningful in relation to the system as a whole.

Transparency and Self-Organization

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Complex living systems are self-regulating and self-managing. They cannot be designed or engineered from the outside; there are simply too many variables. For decades, we have tried to manage our organizations from the outside in – by designing structures, systems, rules, and formal reporting relationships. Now, many such efforts seem to get in the way more than they help. In a rapidly changing economic and business environment self-organization is the only way complex webs of business activities can respond quickly and effectively to change.

However, for self-organization to happen there must be autonomous agents, such as people, who have the information and whole system understanding they need to make good decisions and initiate effective action.

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People must also have the supporting mechanisms they need for both tangible and intangible exchanges, so they can negotiate their own activities with those they interact with. No one person or group of people can manage a complex system. However, as participants, people can self-organize their inputs and outputs and negotiate exchanges with others in the system as they need to. Modeling the business as a dynamic pattern of tangible and intangible exchanges helps people find themselves and their role in the system in a completely transparent way. They can then manage their activities in ways that assure success for themselves, their business, and the economic ecosystems they are part of.

Conclusion

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As the natural network patterns of business are better understood, people are increasingly seeking management tools and methods that help them manage their activities in ways that support the health and vitality of the economic and business systems they are part of.

The linear, mechanistic, engineered approaches of the past cannot meet this challenge. Approaches based on the principles of living systems are required to manage the complex interdependencies of the networked knowledge economy.

To be successful, people need to understand the patterns of value exchange, the value impact of the tangible and intangible inputs they receive, and the dynamics of creating and leveraging value.

The whole-system value network approach described in this paper is a powerful and robust tool for supporting the types of business analysis needed for transparent enterprise, yet is a simple method to master and understand. By incorporating new understandings about knowledge, intangibles, and living systems, it provides a foundation for much more effective management practices in the networked world of organizations.

The power of an intangibles perspective and the self-organizing potential of a truly transparent organization can then be fully realized.

References

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1 Fritjof Capra, The Web of Life, Anchor Books, 1996.

2 Karl Erik Sveiby, The New Organizational Wealth: Managing & Measuring Knowledge-Based Assets, San Francisco: Berrett-Koehler, 1997.

3 Leif Edvinsson and Michael S Malone, Intellectual Capital: Realizing Your Company’s True Value by Finding its Hidden Brainpower, New York: Harper Business, 1997.

4 Johan Roos, Goran Roos, Leif Edvinsson, and Nicola C. Dragonetti, Intellectual Capital: Navigating in the New Business Landscape, New York University Press, 1998.

5 Annie Brooking, Intellectual Capital, 1996. London: International Thompson Business Press, 1996.

6 Patrick H. Sullivan, Profiting from Intellectual Capital, John Wiley & Sons, 1998.

7 Robert Kaplan and David Norton, The Balanced Scorecard: Translating Strategy into Action. Boston: Harvard Business School Press, 1996.

8 Tom Housel and [[Valery Kanavsky, “A New Methodology for Business Process Auditing,” Planning Review, v23n3, May/June, 1995.

9 UnSeen Wealth: Report of the Brookings Taskforce on Understanding Intangible Sources of Value. The Brookings Institution, 2000. Available through http://www.brook.edu. Baruch Lev, Intangibles: Management, Measurement and Reporting. Brookings Institution, 2001. Available through http://www.brook.edu.

10 Measuring Knowledge Assets, The Society of Management Accountants of Canada, 2000. Available through http://www.cma-canada.org.

11 Verna Allee, “The Value Evolution,” Journal of Intellectual Capital, May, 2000.

12 Deloitte and Touche Tohmatsu, Corporate Environmental Report Score Card, (Deloitte & Touche, 1997).

13 Tachi Kuichi, and Bill Shireman, What We Learned in the Rainforest: Business Lessons From Nature, Berrett-Koehler, 2002.

14 People, Planet and Profits: A Summary of the Shell Report 2000. Shell, 2000. Available at http://www.shell.com/shellreport.

15 Verna Allee, The Future of Knowledge: Increasing Prosperity through Value Networks, Butterworth-Heinemann, 2002.

16 Verna Allee, “Reconfiguring the Value Network,” Journal of Business Strategy, July-August 2000.

17 Verna Allee, “ValueNet Works Analysis,” White Paper, author 2001. Available through the Verna Allee Toolkit, http://www.alleetoolkit.com.