||Modeling Language Spotlight
(the ValueWeb Model)
September 30, 1996
Like the other models of the MG Taylor Modeling
Language, the Business of Enterprise Model is protected by
copyright. You can use it only by meeting these
a model of the old way of doing things:
Some notes about the players in the model:
||The investor provides capital to the enterprise
with the hope of receiving a return on the investment, and
a return of the original investment as well at some point
||The producer actually makes the product. Producers
are employees, vendors and suppliers that make up the entire
chain required to create and deliver a product or service.
||The customer buys and uses the product.
||Management provides the information and communication
hub between the other players. At different times in history,
managers have focused alternately on fulfilling the desires
of one player or another.
And here's how the old model works:
Management's stuck in the middle, at an intersection of conflicting
needs. The investor wants a higher return and a lower risk. The
producer wants higher pay or fee for service for less time. The
customer wants a higher quality product for less cost. Since there's
no way of rationalizing these conflicting demands, management alternately
focuses on one constituent at a time. For a while it was the worker:
working conditions, compensation, benefits, a guarantee of a job.
Products were expensive and margins slim. Then the customer was
king: a lower price could be had if the suppliers were squeezed.
And then getting a higher return for the investor or owner took
top priority. It's as if the three constituent groups were seats
on a Ferris Wheel going round and round, and whichever group happens
to be at the top gets the priority
And here's a model
of the new way of doing things:
The same players but with slightly different
||The investor still provides capital to the enterprise
and gets a return of and on the investment. However, more
and more investors are also providers and customers.
||The producer still makes the product or creates
the service. But producers are more involved in understanding
how the company works through programs like open book management.
||The customer still purchases and uses the product.
But customers are also interested in how well and ethically
the companies are run--they vote with their investments. And
customers are included in production.
||Management still balances the business of the
whole web, but the management function is more distributed.
There is more management going on, but fewer managers.
And here's how the new model works:
Some companies are learning how to transform a zero-sum game into
an infinite game. In a zero sum game, there's a finite amount of
resource and the game is to decide how it gets distributed. In an
infinite game, the purpose of the game is to continue the game--to
grow and expand the resource base and the distribution model. The
best models to use when playing infinite games are living systems
models. Ecologies of organizations, or value webs, are in the business
of growing the pie and making their webs larger.
But just growing an organization does not eliminate the conflict
inherent in the old model. After all, many organizations experience
tremendous growth rates yet only exacerbate the conflicts between
their constituents. There are two more factors that must be added
for the new model to be truly transformative.
Take another look at the picture of the new
model and the picture of the old model.
You're looking for the connections between constituents. Notice
that in the old model, all of the connections go through Management.
In the new model, Management is the largest hub connecting the constituents,
but there is a whole web of lines that connect customers, producers
and investors. It's these many sub-networks that tie the players
more tightly together and make them interested in their shared fortunes.
These links represent true knowledge--or experientially applied
information about how the different portions of the enterprise work,
and about how the enterprise works together as a whole. With this
knowledge in hand, each constituent can act responsibly with respect
to the enterprise and serves in a small cybernetic-style management
There's one more necessary factor that doesn't jump out at you
from the model. Not only are subgroups of constituents linked together
into mini nets but an individual constituent may play more than
one role. An individual could be an investor, a customer and a producer
all at once, and therefore have a true stake in every facet of the
enterprise. To leverage that stake, the individual must also play
a role in the management function--in understanding the body of
knowledge that helps him or her make good decisions as a customer,
investor and producer.
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