1. Kristian Möller Petteri Ollila Mikko Laukkanen
How to Create Value System Innovations Value Network Analysis in the Finnish Packaging Business
Kristian Möller
Petteri Ollila
Mikko Laukkanen

2. Perspectives guiding this study
Value system innovations – network roles and positions
Value activities, capabilities, and resources in values-system innovations
Business model changes in value-system innovations
Management mental models in value-system innovations

3. Value Network Analysis
Mental Models & Dominant Logic
Packaging machinery
manufactor
Package manufacturer
Central corporation (retail)
End user (consumer)
Packaging / brand owner
Package retailer
Refiner / printer
Recycling company
Forest owners
Pulp mill
Paper- / corrugated cardboard mill
End user (company)
Other suppliers
(e.g. chemicals)
Machinery
Energy
Contract packaging
Retail
Wholesale
Value Benchmark Cases
Tetra Pak
Japanese Printers
Sinebrychoff
Toyota
VRIN =
Valuable, Rare,
Inimitable, Non-substitutable

4. Domestic Packaging Industry
Characteristics & Consequences
Traditional vertical, multi-tiered supply chain structure
Firms have specific and narrow roles
Technical collaboration and long-term relations yet – ‘playing the market’
Little value-system innovations
Domestic market too small – limited value potential
Structure: Large Suppliers – Small service providers – Large customers
Notable exceptions:
Huhtamäki – Global service integrator
Sinebrychoff – Strategic brand network orchestrator 4

5. Mental Models from the Field
PROVIDE FULL SOLUTIONS
”In Finland we only sell blocks. Nobody wants to pay much for blocks, instead we should find out what the customer really needs and sell the full solution. Milk producer wants to pack milk. Give him the machinery, packaging material and full service, the whole thing, and you will have a long term customer with good profits.”
– CEO of a consulting company
CUSTOMER NEEDS ARE KING
”Forest industry should stop trying to find out how to find fibre-based packaging solutions. They should try to find the best solution for consumers and the society, how to tackle the packaging issues in a best way regardless of the material, and then network accordingly. Technology- and historical industry perspectives are not helping them to solve their problems.” – CEO of a packaging company
UNDERSTANDING NETWORK PARTNERS
”Forest companies are incapable of admitting that hey, we are forest companies but we need others as well. In a network every actor has to feel that they are benefitting from the relationship and forest companies obviously haven’t understood this simple fact.” – CEO of a packaging company
INNOVATIONS DO NOT HAVE BE TECHNOLOGICAL
”There are so many great examples of value system innovations worldwide that have changed whole industries, but in Finland we don’t understand business at all. For example UPM’s innovation center in Lappeenranta is very technology oriented, the guys are researching chemical processes and that is all they see.”
– Owner of a consulting company
5. SOLVE REAL PROBLEMS
“The forest industry has their own agenda of trying to be associated with forest and fiber, but I think it is much more important to find the solution, or understand the problems and find answers, instead of focusing on a certain technology or certain materials.” - CEO of a packaging company

6. Finnish Packaging Industry - Huhtamäki
Packaging machinery
manufactor
Package manufacturer
Legislation (lobbying)
Central corporation (retail)
Consumer trends and attitudes
(e.g. environmental friendliness)
End user (consumer)
Packaging / brand owner
Package retailer
Refiner / printer
Recycling company
Forest owners
Pulp mill
Paper- / corrugated cardboard mill
End user (company)
Safety
Education
Research labs
External factors affecting
Competitivity (e.g. currency
exchange rates)
Other suppliers
(e.g. chemicals)
External factors:
Machinery
Energy
UPM, M-real
StoraEnso,
Peterson Packaging
Ciba
Metso
Germany, Switzerland, Italy
Walki,
Rosenlew RKW
SOK, Kesko
Finnstaples
Contract packaging
Fazer
Novelpack
Huhtamäki,
Pyroll
NP-kierrätys
Retail
Wholesale
Mikko tai Petteri
Vähän metodologiaa ja kuvia verkostosta

7. Illustrative Benchmarks
Value network innovations open new opportunities
Tetra Pak
Japanese Printers
Network innovations require network management
Sinebrychoff
Toyota
Innovation is about ideas and execution

8. In conclusion…
Structural and environmental conditions make value system innovations challenging in the Finnish packaging industry.
However, a service integrator may find interesting opportunities.
Our cases show that value system innovations require an understanding of one’s own network, the willingness to challenge existing structures, and the ability to execute change.

9. Network Roles in the Future?