Prior to constructing the ROUNDMAP™, we created the Value Hub™ theory which in retrospect correlates to Michael Porter’s Value Chains and (later) Value Streams.
11.1 - VALUE HUB THEORY
In 2012, Edwin Korver was invited to sit at a roundtable to help a local radio station to adapt to and benefit from the digital age. During this meeting, he described how they should perceive the role of a (modern) radio station. Which implied ‘the curation of relevant content, collected from multiple sources and then published via multiple channels, to please an audience. All they needed to do was to describe and organize their internal processes to be able to collect, curate, and package content in such a way that it pleased their digital media users.
Edwin soon realized that the same process could also be applied to regular business. All he had to do was replace ‘content’ with ‘product’. In fact, what he described was the Value Hub™ theory, which we’ve described in more detail here (part 1) and here (part 2).
In short: every entity, whether a corporation, hospital, government, church, or an individual has some (hopefully relevant) value to offer, while to create that value it needs to obtain knowledge, know-how, machines, materials, parts, and so, allowing the entity to satisfy a specific need of a customer, client, fan, or patient. This entity is what we refer to as a valued hub.
Communication between Value Hubs occurs using signaling, while, and this is key to understanding the rationale behind the circular shape of ROUNDMAP, customer feedback is used to enhance the process of value creation. After drawing the feedback lines, from the value surplus back to the value deficit, he realized that similar to Earth’s magnetic field, the hub was in fact a three-dimensional sphere.
As such, another way of explaining why we divided Porter’s Value Chain ─ consisting of primary and secondary (supporting) activities ─ into separate dynamics is by perceiving the entire value orchestration process (see figures below) as a value hub:
11.2 - NOTES
In general, the creation of tangible value comes at a cost (credit) which is driven by the business dynamics. Value delivery, on the other hand, creates revenue (debit) which is driven by Customer Dynamics. The result (margin) ─ what can be captured as value to offset the costs of the value orchestration process ─ is determined by the market dynamics.
As we have seen with the rise of digital platforms, markets can be restructured to allow value to be created and captured in innovative ways. In process improvement, the Value Hub Orchestration Model relates to the SIPOC/COPIS model, originated in the late 1980s and continues to be used in Six Sigma and business process management.
"You've got to start with the customer experience and work backward to the technology."
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