More on who is the customer in the business model and how confusion can lead to big problems.

I became re-acquainted with the "who is our customer dilemma"  in two instances in recent times.

Firstly in a government institution who provide a facility to members of the public, but the facility was a requirement based on  legislation not on consumer need. Secondly in a financial services company selling its products through intermediary parties.

The stakeholder tension and confusion in both organisations creates complexity in applying normal models and tools. The proposition dilemmas of either, a proposition to an end user but where revenue is generated by a different stakeholder who perceives value differently as in the case of the government example, or where a complex and cultural commitment to selling a proposition to a third party introducer like an IFA both make using tools like the business model canvas much harder.

Of course the important problem is not tool or technique related but the confusion and communication issues that arise as a consequence within the organisation itself. In the case of financial services potential regulatory conflict. What is good for the IFA may not of course be good for the consumer and this tension between stakeholder conflicts is a difficult thing to manage.

I spent a lot of my early career in asset finance where we sold  finance through the manufacturers of equipment - vendor finance. The perennial problem was that the dealers wanted: low rates, everyone accepted for credit and for the finance company to fall on the side of the seller in disputes. In the industry, over a period of time, this inevitably resulted in "tears"; with finance companies lending incorrectly, some going to the wall on occasions, and incidents of mis-selling by finance companies, manufactures and their dealer networks. This was all created by a poor understanding of who is the customer? the dealer, manufacturer or the the borrower (lessee). The business model was not clear and not communicated correctly into daily operations; the culture and messaging was poor with staff behaviours affected as a consequence.

How can business architecture help this?

We need to use views that clearly explain the roles of stakeholder and define the propositions that are aimed at particular customers or stakeholder groups with clear linkage that shows how intermediary partners fit into the flow of value. We need to show who creates the value and how the value is enabled though partner engagement and partner management. These double facing approaches can be applied through  popular techniques with a bit of thought and adaption, so don't just dismiss an approach because it seems to only to fit a B2C simple business model. Create clear business models to communicate to all staff what your business is about and how the relationships fit together to make your business what it is.

If you want to hear more and learn how to do this properly through our learning offerings contact us via  mail@deversolutions.co.uk