Value Net Model by Adam Brandenburger and Barry Nalebuff explained

The Value Net Model helps you look beyond competition alone. In many markets, success isn’t just about beating other players, but also about collaborating more effectively with customers, suppliers, competitors, and complementors. This allows you to identify dependencies more quickly, see where new value is created, and determine which relationships are strategically important.

In this article, you’ll discover what the Value Net Model is, how Brandenburger and Nalebuff developed the model, and how to map out the four players. You’ll also find a step-by-step guide, a practical example, common mistakes, and recommended reading. This will allow you to use the model immediately to identify new opportunities, collaborations, and strategic actions. Enjoy the read.

What Is the Value Net Model?

The Value Net Model (VNM), developed by Adam Brandenburger and Barry Nalebuff is a strategic framework with which organisations can classify relevant actors in their branch and their surroundings.

The VNM identifies four types of players with which every company must work, and who have a direct influence on the company, and its results: customers, suppliers, competitors and complementary members.

Every player, all equal in value according to the Value Net Model, offers opportunities for cooperation with the organisation, including competition. For example, one of these four can take on several roles. A company can be both a supplier and competitor, and both a customer as well as supplier.

Value Net Model versus Porter’s Five Forces Model

The VNM is based, among others, on the Five Forces Model by Michael Porter and elaborated on by Barry Nalebuff, professor at Harvard University, and Adam Brandenburger, professor at Yale University.

In their view, Porter’s Five Forces Model concentrated entirely on competition and failed to evaluate cooperation potential in industries, which could precisely lead to a lot of value creation. When companies in a certain industry work together, they can create a larger and more valuable market than they could ever achieve working alone. This means players in the industry should focus more on the total market potential and allow it to grow rather than on dividing the market potential and trying to win individual market share.

The Value Net Model and Porter’s Five Forces Model are both used for strategic analysis. However, they place different emphases. Porter focuses primarily on competitive pressure and market attractiveness. The Value Net Model takes a broader view of collaboration, interdependencies, and joint value creation.

In practice, both models complement each other well. The Five Forces Model helps to understand competitive pressure in a market. The Value Net Model then helps to determine which players are potential partners and where new value can be created.

Value Net Model: players in the value chain, including examples

The starting point of the Value Net Model is to consider business as a game and to model who the players in the game are, what their roles are and what their net worth is. The goal of every ambitious company is to grow.

The total balance of value consists of customers, suppliers, competitors and complementors / complementary members. The result is a complete overview of the company and environment. The following four players in the game are identified in the model:

Customers

Without customers, a company does not have much chance of survival. More customers means more sales and probably a larger market share. Customers can either be home users or other companies in the case of business 2 business.

Porter labelled this category as buyers. A clearly segmented group of buyers must be defined and all company activities must be focused on recruiting as many customers as possible.

Suppliers

The suppliers are the parties that provide an organisation with the resources needed to produce or sell the final product. Resources are important external factors to take into account, because suppliers have a direct influence on the price at which they are supplied and quality of the end product.

Maintaining good relationships with suppliers or risk distribution, by choosing several suppliers, is therefore highly recommended. Suppliers play a key role in future success and shouldn’t be neglected. The Kraljic Matrix is a tool for choosing the right strategy for suppliers.

Competitors

Both the Porter’s Five Forces Model and Porter Diamond Model describe the need to analyse the competition.

In most markets there are several competitors: those who compete on price and those who compete on quality. Knowing one’s competition has long been a crucial success factor, which will always be the case.

Although competitors are often seen as players with whom one has to fight for market share, it is also possible to cooperate and increase profitability. An example of this is the joint purchase of resources from suppliers.

If everything is purchased in bulk, discounts can be given and the costs per production unit can be reduced. Such an alliance was started in 1999 by Renault and Nissan. By joining forces, they could benefit from each other’s complementary possibilities. Renault benefited from Nissan’s excellent production capabilities and Nissan benefited from Renault’s strong financial position.

Complementary members

This is the category for which Nalebuff and Brandenburger have partly came up with the Value Net Model. Rather than just competing with similar companies in the market, this category describes why competitor products and services can be combined to make the end result more attractive to consumers.

Players are considered complementary members if the consumer appreciates the product while another’s company product is incorporated therein or when he owns both products. By being open to such partnerships and other types of agreements, a company can potentially grow further than what could have been achieved individually.

Applying The Value Net Model

The VNM is a visual model and can be drawn with pen and paper or software. The most important part of this process is identifying the company’s most influential business and economic relationships. This includes the four players in the game from the Value Net Model: competitors, suppliers, customers and complementary members.

Sort this list based on significance, the most important relationships at the top. Then start by critically reviewing the relationships and identify the potential of each group. Conduct a competition analysis to determine the influence of competitors on your customers and business operations and assume that suppliers are a major risk. Consider working together with a rival to enforce cheaper purchasing prices.

The Value Net Model is ideal for companies that work with unprocessed materials and capital goods, because the distinction between competition, suppliers and complementary members is clearer. Every company that falls into this category benefits from carrying out an analysis based on the Value Net Model.

At the same time, other companies may also benefit from applying the Value Net Model. After all, every company has multiple economic and business relationships, and there may be hidden potential that is not being fully utilised.

Applying the Value Net Model in 5 Steps

Applying the Value Net Model helps organizations look beyond just competition. By mapping out customers, suppliers, competitors, and complementors, organizations gain greater insight into interdependencies, opportunities for collaboration, and strategic choices. The step-by-step plan below helps you apply the model in practice.

Step 1: Define the strategic question

Start by defining the situation to be examined. Is the focus on growth, market entry, collaboration, innovation, cost reduction, or strengthening the competitive position? A clear question prevents the analysis from becoming too broad.

Examples of strategic questions include:

• Which parties have the greatest influence on our market position?
• Which players can we collaborate with to create more value?
• Which suppliers, partners, or competitors pose a risk or present an opportunity?
• How can we strengthen our position in the value chain?

Step 2: Identify the four players

Next, list all relevant players associated with the organization. Categorize them into the four categories of the Value Net Model: customers, suppliers, competitors, and complementors.

Customers are the parties that receive or pay for the product or service. Suppliers provide resources, knowledge, technology, data, people, or raw materials. Competitors offer similar solutions to the same target audience. Complementors provide products, services, or platforms that enhance the value of your own offering.

Step 3: Analyze the interdependencies

Next, examine how the players influence one another. Which suppliers are essential? Which competitors could also be partners? Which complementors make the offering more attractive to customers? And where is the organization vulnerable?

This step clarifies where the greatest strategic influence lies. Sometimes it turns out that an organization is not primarily dependent on direct competitors, but rather on technology partners, distribution channels, platforms, or suppliers.

Step 4: Identify opportunities for collaboration and value creation

The Value Net Model is particularly valuable because it demonstrates that competition and collaboration can coexist. Therefore, explore where collaboration is possible, even with parties that are competitors in other areas.

Consider, for example, joint procurement, shared standards, joint market development, knowledge sharing, distribution partnerships, or combinations of products and services. The goal is not only to gain market share but also to increase the total value of the market.

Step 5: Determine the strategic action

Conclude the analysis with concrete decisions. Which relationship should be strengthened? Which dependency should be reduced? Which partner can add extra value? And which player can help change the dynamics of the market?

A good Value Net analysis does not end with an overview, but with a decision. Consider entering into a new partnership, seeking alternative suppliers, developing a partner program, adjusting market positioning, or creating a new ecosystem around the product or service.

Tip: Don’t use the Value Net Model as a one-time analysis. Markets are constantly changing. New technologies, shifting customer behavior, platforms, and partnerships can cause players to change roles. For example, a competitor may later become a partner, supplier, or complementor.

Value Net Model example

A practical example of the Value Net Model is an organization that offers an online learning platform for professionals. The company sells digital training courses, templates, and knowledge products to users who want to develop themselves or train their teams.

Using the Value Net Model, this organization can analyze which players influence the platform’s value and where opportunities lie for collaboration, growth, and differentiation.

Customers

Customers include individual professionals, managers, coaches, HR departments, educational institutions, and organizations seeking to develop their employees. They use the platform to gain knowledge, strengthen skills, or apply practical models in their work.

For the learning platform, it is important to understand which customer groups derive the most value from its offerings. For example, an HR department seeks scalable learning solutions for teams, while an individual professional primarily needs quick, practical explanations and tools that can be applied immediately.

Suppliers

Suppliers are parties necessary for the platform to function properly. These include authors, trainers, editors, software vendors, hosting providers, payment providers, designers, and specialists who contribute to the platform’s content or technology.

If a platform depends on a single major software vendor or payment provider, this can pose a risk. At the same time, strong supplier relationships can actually help improve quality, reliability, and the user experience.

Competitors

Competitors are other providers of online training courses, management models, knowledge bases, coaching platforms, or business learning environments. They target, in part, the same audience and also seek to attract attention, build trust, and acquire paying users.

However, competitors need not be viewed solely as a threat. In some cases, collaboration can be valuable. Consider joint webinars, guest contributions, research, knowledge sharing, or combining complementary areas of expertise. In this way, the overall value for the target audience can increase.

Complementary Partners

Complementary partners, also known as complementors, are parties that enhance the value of the learning platform without offering the same product. Examples include HR software, learning management systems, consulting firms, training consultants, book publishers, universities, or team-building tools.

For example, when the learning platform integrates well with a learning management system, the offering becomes more valuable to organizations. Users can then not only learn but also track progress, link training courses to development goals, and share results with managers or teams.

Strategic Conclusion

This analysis suggests that the greatest growth opportunity lies not only in more content or more marketing, but rather in better collaboration with complementors. By integrating with HR systems, forming partnerships with training consultants, or offering additional templates, the platform can create more value for customers.

The Value Net Model thus helps us look beyond direct competition. The central question is not only: How do we beat other providers? It also becomes: With which players can we collaborate to create more value for the market?

Pros and Cons of the Value Net Model

Pros:

• The Model is based on the principles of game theory
• The Value Net Model elaborates on the idea that cooperation or Co-opetition is at least as important in business as competition, and that competition and cooperation can complement each other.
• In contrast to the Five Forces Model, which focuses on a particular industry, Brandenburger and Nalebuff involve different industries in the model to stimulate interesting business opportunities and ideas.

Cons:

• The Value Net Model can be considered highly abstract, because the definition of competitors and complementary members is broad.
• The Value Net Model stimulates creative thinking but does not offer a clear answer to everyday business problems.
• Because of its common ground with the game theory, the Value Net Model also reflects the weaknesses of this model. As more players or options are added, the application of the theory becomes more complex.

Common mistakes in the Value Net Model

The Value Net Model helps to better understand strategic relationships within a market. However, the model is not always used to its full potential. In practice, errors arise mainly when organizations focus too quickly on competition and pay too little attention to collaboration, interdependencies, and complementors.

1. Focusing Only on Direct Competitors

A common mistake is that organizations use the Value Net Model as a standard competitive analysis. They tend to focus primarily on direct competitors but fail to properly account for customers, suppliers, and complementors.

As a result, a significant portion of the market remains out of sight. It is precisely the interplay between multiple parties that often determines how much value can be created in a market.

2. Forgetting Complementors

Complementors are an important part of the Value Net Model. Yet these players are regularly overlooked because they aren’t always immediately visible. These are parties that enhance the value of a company’s own offering without providing the same product or service.

Think, for example, of software that integrates well with a platform, a distribution partner that provides access to a new target audience, or a knowledge partner that enhances the quality of a service. By failing to include complementors, valuable collaboration opportunities may be missed.

3. Viewing Suppliers Solely as a Cost Center

Suppliers are often evaluated based on price, delivery time, and availability. While these factors are important, in the Value Net Model, suppliers can also play a strategic role. They can contribute to innovation, quality, scalability, and differentiation.

For example, a supplier can contribute new technology, specialized knowledge, or improved processes. Those who view suppliers solely as a cost item may miss opportunities to create more value together.

4. Failing to Formulate a Clear Strategic Question

The Value Net Model works best when the analysis begins with a clear question. Without clear boundaries, the model quickly becomes too broad or too abstract.

For example, an organization can explore how to enter a new market, which partners are needed for growth, or where dependencies exist in the value chain. A well-defined question helps make the analysis concrete and actionable.

5. Rejecting collaboration with competitors too quickly

One of the most important insights from the Value Net Model is that competition and collaboration can coexist. Yet organizations sometimes find it difficult to consider collaborating with competitors.

In some situations, collaboration can actually be valuable. Think of joint standards, shared infrastructure, market development, research, or joint procurement. This does not mean that competition disappears, but it does mean that parties can create more value together in certain areas.

6. Failing to translate the analysis into action

A Value Net analysis is only valuable when it leads to concrete decisions. Simply listing customers, suppliers, competitors, and complementors is not enough.

The most important question is what the organization does with these insights. Is a dependency being reduced? Is a partnership being strengthened? Is a new collaboration being explored? Or is the market approach being adjusted? Without a follow-up step, the model remains primarily a theoretical exercise.

Tip: Always use the Value Net Model as a tool for strategic decision-making. The goal is not only to map out players, but above all to discover where new value, collaboration, or growth is possible.

Recommended books and publications on the Value Net Model

The Value Net Model helps to view an organization’s strategic position from a broader perspective than just competition. The model clarifies the roles that customers, suppliers, competitors, and complementors play in value creation. This provides greater insight into collaboration, competition, interdependence, and strategic choices within a market. The books and publications listed below offer additional depth on the Value Net Model, coopetition, game theory, value creation, strategic networks, and collaboration with market participants.

1. Brandenburger, A. M., & Nalebuff, B. J. (1996). Co-opetition. New York, NY: Doubleday. → This is the core source behind the Value Net Model. Brandenburger and Nalebuff demonstrate that organizations must consider not only competitors but also customers, suppliers, and complementors. The book helps readers understand markets as networks in which parties can both compete and collaborate simultaneously.
2. Brandenburger, A. M., & Nalebuff, B. J. (1995). The Right Game: Use Game Theory to Shape Strategy. Harvard Business Review, 73(4), 57–71. → In this article, Brandenburger and Nalebuff demonstrate how game theory can help organizations approach strategy differently. This is relevant to the Value Net Model because organizations do not merely have to play the existing game; they can also influence the rules, the players, and the distribution of value.
3. Dixit, A. K., & Nalebuff, B. J. (2008). The Art of Strategy: A Game Theorist’s Guide to Success in Business and Life. New York, NY: W. W. Norton & Company. → This book makes game theory accessible for strategic decision-making. It aligns well with the Value Net Model, because strategic choices often depend on what other players do, how they react, and what collective value is possible.
4. Gulati, R. (1998). Alliances and Networks. Strategic Management Journal, 19(4), 293–317. → Gulati demonstrates how strategic alliances and networks emerge and function. This publication is relevant to the Value Net Model because value creation often occurs in collaboration with other parties in the network, such as suppliers, partners, and complementors.
5. Kim, W. C., & Mauborgne, R. (2015). Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (Expanded ed.). Boston, MA: Harvard Business Review Press. → Kim and Mauborgne demonstrate how organizations can create new market space. This aligns with the Value Net Model, as the model helps organizations look beyond direct competition and discover new combinations of value, collaboration, and market position.
6. Lado, A. A., Boyd, N. G., & Hanlon, S. C. (1997). Competition, cooperation, and the search for economic rents: A syncretic model. Academy of Management Review, 22(1), 110-141. → Lado, Boyd, and Hanlon demonstrate that competition and cooperation need not be mutually exclusive. This aligns well with the Value Net Model, as organizations sometimes create more value when they combine rivalry with cooperation.
7. Ritala, P. (2012). Coopetition strategy: When is it successful? Empirical evidence on innovation and market performance. British Journal of Management, 23(3), 307–324. → Ritala examines when coopetition can be successful. The publication is valuable for the Value Net Model because it shows that collaboration with market participants only works when the context, goals, and interdependencies are well understood.
8. Shapiro, C., & Varian, H. R. (1999). Information Rules: A Strategic Guide to the Network Economy. Harvard Business School Press. → Shapiro and Varian discuss strategy in markets where network effects, standards, and complementary products are important. This is relevant to the Value Net Model because complementors and platform-like markets often determine how much value an organization can actually create.
9. Tirole, J. (1988). The Theory of Industrial Organization. Cambridge, MA: MIT Press. → Tirole provides a solid economic foundation for competition, market structure, and strategic behavior among firms. The book is relevant because it helps contextualize the Value Net Model within broader questions about market power, interdependencies, entry, and strategic interaction.

How to cite this article:
Janse, B. (2018). Value Net Model (VNM). Retrieved [insert date] from Toolshero.com: https://www.toolshero.com/strategy/value-net-model/

Original publication date: April 12, 2018 | Last update: July 6, 2026

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