Market turbulence and the emergence of virtual value systems of organisation

This paper examines the links between increasing market turbulence and the emergence of new business models. It argues that competitive advantage depends upon managing processes that facilitate rapid and flexible responses to market changes, and developing capabilities for partnering relationships. A new model of organisations, termed the 'virtual value systems' model, is presented as a variant of the more generic networked or holonic structure. Virtual value systems are designed to sharpen the strategic focus of participating organisations in terms of their role in creating value for the customer, and optimising operational and strategic cash flow for themselves and other members of the system. They are structured responses to business opportunities that involve changes to the management of internal and external resources comprising assets, processes and capabilities. The paper describes virtual value systems, and the basis for the positioning of participating organisations in the system. It also considers the drivers of value across industries: knowledge management, technology management, process management and relationship management. The paper concludes with suggestions regarding the applications for businesses in all areas where market turbulence has increased competitive pressure, including re-evaluation of strategy and leveraging of core firm competencies for optimum positioning of the firm within industry value chains.