The Value Net model takes an alternative approach to viewing completion. Instead of trying to eliminate it, it seeks to explore new ways for companies to think about their competition. Adam M. Brandenburger and Barry J. Nalebuf have proposed that it is better for competitors to work together rather than battling in nowadays crowded marketplace. The authors suggest that by cooperating and collaborating, companies can achieve great results that could not have been achieved via a fierce competing between them. The Value Net Model identifies four types of players that directly affect the company and provide opportunities for collaboration. These are Customers, Suppliers, Competitors and Complementors.
It goes without saying that customers are one of the most important factors that determine a business’s success. Whether we are in a B2B or B2C context, businesses need customers in order to survive. The more customers a firm has, the greater the revenue, and the greater the market share.
This is another vital factor to be considered. Suppliers are the ones that will provide your company the raw materials, resources or finished goods that you will eventually bring in front of your end consumer. Suppliers play a key role to your company’s strategy since they affect the availability of your resources, the prices, the quality of the materials and so on. Choosing the right suppliers and developing long-term relationships with them is definitely one of the keys to success.
This factor does not need much explanation. It is obvious that all companies know their competition well, including what is currently doing and what is planning to do. This factor is often viewed too narrowly since every company is constantly on the lookout for ways to eliminate competition and defend itself. This is where the Value Net Mode attempts to bring a new perspective to the business landscape. The authors suggest that companies can often benefit from competition by collaborating on various dimensions such as in production, manufacturing and sales. For example, companies could employ bulk purchasing in order to benefit from discounts or they could take advantage of each core capabilities. This scenario is often seen in the automotive industry, with Nissan and Renault being a vibrant example.
The last factor examined by the Value Net model is complementors and it is a category that is often overlooked. Complementors are the organizations that offer complementary products or services that could be combined with your end product in order to make it more appealing to your target audience. In other words, consumers will value your product more if they have the complementor’s product as well. Some examples are:
- Airline companies and hotel booking agencies
- Hardware and software companies
- Fitness center and FMCG company specializing in high-protein meals.
By using the Value Net Model you can gain a deeper understanding of your company’s position within the wider picture. You need to think in terms of your customers, suppliers, competitors and complementors and how each one of them influences your company and its future. While doing that, do not neglect to think outside of the box and do not overlook any opportunities for collaboration and cooperation that could provide a mutual benefit for you and your competitors.