Value Ecosystem Design

Value Ecosystem Design

DOI: 10.4018/978-1-7998-1550-1.ch004

Abstract

Chapter 4 provides a set of key components and their underlying concepts needed to configure a value ecosystem that develops and delivers the high-value described in Chapter 3. As such, this chapter focuses on the second dimension (business objective priority on value ecosystem) of the business reinvention methodology. These components and concepts are about system thinking, value activities, value networks, value ecosystem configuration and sense-making, and evolutionary economics of ecosystems. This chapter lays the foundation for an ecosystem's value that would be further enhanced by its flexibility and empowerment as discussed in later chapters.
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Foundational Theories And Basic Concepts

System Thinking

Within the notion of system thinking addressed by O’Connor and McDermott (1997), a system is a set of parts that interact to produce behavior (i.e., a macro view) in light of the system’s purpose. This view centers around the feedback relationships between the part being investigated or explored and the other parts of the system; it deals with their interactions, not the activities. Accordingly, it is good for complex problems and helps to see the big picture.

As depicted in Figure 1 (Von Bertalanffy, 1972), the system’s purpose is often the most pivotal factor of the system’s behavior. The significance of each part of a system is attached to its relationship to the whole. A considerable amount of the interconnections in systems operate through the flow of information. The system’s structure is the source of system behavior, and it pertains to where a system action affects (or is affected by) the surrounding environment.

Figure 1.

System thinking theory

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According to system thinking (Checkland, 1999), a service ecosystem (or simply called service system) indicates that value co-creation stakeholders are involved in a participatory process and consider the interactions between a focal B, involved stakeholders (including digital operants enabled by technologies), customers, and their context. Given a purpose (or a value proposition), a service system refers to an identified whole (system) where the thing under investigation or exploration is explained as a part, revealing the behavior or properties that make up the whole and the behavior or properties of the thing to be explained in terms of its role(s) or relationship(s) inside its containing whole, as exemplified in Figure 2 (Kwan & Yuan, 2010).

Figure 2.

Service ecosystem of value co-creation

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A service system can be regarded as a value co-creation configuration of people, technologies, organizations associated by means of value propositions, and shared information like language, laws, and measures (Maglio et al., 2009). It is an open system of resources (operant, operand) equipped for enhancing the state of another system or its own system, where the interactive exchanges are voluntary and reciprocal toward the co-creation of the given value proposition. A service system itself can also be regarded as a resource.

Figure 3.

The elements of a service system

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The design of a service ecosystem involves seeking entities that derive the value-cocreation outcomes from their interactions that co-create the value as depicted in Figure 3 (Spohrer & Maglio, 2010). This design needs to predict and manage the continuous enhancement of entities, interactions, and outcomes over time. The design also needs to monitor its evolution and explain the specific types of entities, interactions, and outcomes that have arisen over time.

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