Value Net

The Value Net Model is a strategy tool introduced by Adam Brandenburger and Barry Nalebuff in their book "Co-opetition." It represents all the players in the game of business and helps companies to see the strategic interactions in their industry in a whole new way. [1]

Purpose and Role: The Value Net Model is used to identify and categorize the different types of players in an industry or a company's business environment. The players are divided into four roles: Customers, Suppliers, Competitors, and Complementors. The purpose is to understand and strategize interactions and relationships with these players for competitive advantage.

Components: The Value Net Model has five components:

  1. Customers: The people or organizations who buy and use your products or services.
  2. Suppliers: Entities that provide what you need to produce your products or services.
  3. Competitors: Other organizations offering similar products or services.
  4. Complementors: Entities offering products or services that add value to your own when the customers use them together.
  5. Company: The organization that is examining its strategic business environment.

Importance: The Value Net Model is important because it expands traditional competitive analysis. By considering Complementors, businesses can identify opportunities for co-opetition (collaborative competition), where they can collaborate with others in their industry for mutual benefits.

History: The Value Net Model was first presented in the book "Co-opetition" by Adam M. Brandenburger of Harvard Business School and Barry J. Nalebuff of Yale School of Management in 1996.

Benefits: The main benefit of the Value Net Model is that it provides a wider view of a company's business environment, not only focusing on competition but also on beneficial relationships. It helps to identify strategic opportunities for cooperation and new market possibilities.

Pros and Cons:

  1. Pros: Broadens view of business environment, identifies opportunities for collaboration, encourages innovative strategic thinking.
  2. Cons: Might not suit all types of businesses, risk of collaborative relationships turning into competitive ones, may require substantial time and resources to establish and maintain collaborative relationships.

Examples: The tech industry is a good example of the Value Net Model. Companies often collaborate on certain projects while competing in others. For instance, Google's Android system is used by various smartphone manufacturers (Samsung, LG, etc.) making them complementors, even though they compete in the same market for the same customers.

See Also