Replies to This Discussion

Permalink Reply by Mike Lachapelle on May 31, 2010 at 11:26pm

Hi Tor

I work in a government environment and have used the business model ontology at the business line, and Branch levels of a department. I am currently working at an inter-departmental level.

There are a couple of questions I have regarding your request. What area specifically of "public sector" are you considering? What is your current challenge?

I can certainly share my experiences with the government area.

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Permalink Reply by Tor R. Grønsund on May 31, 2010 at 11:39pm

Hi Mike,

I am thinking of a generic public service delivery model. Currently I seek to identify the meta-model building blocks.

Thanks.

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Permalink Reply by Mike Lachapelle on June 1, 2010 at 1:25pm

I have used the canvas as the meta-model for the work I have done. Though I must admit I haven't done a complete business model for the whole of the Canadian government, just business line and department level.

Personally I haven't seen the need to adapt the components of the canvas. I have used them as they are. Some of the analytical models underlying the canvas need to be adjusted. For example the channel strategy. Normally one would use the buying cycle as one of the axis, however that is not applicable to almost all government operations (there are some in which it would apply), so one has to use something like the value creation cycle against the channels.

I have had discussions with other people using the canvas in a government (and NGO/not-for-profit) sector who like to add a components below the financial components. They add social benefits accrued and social costs as a way of tracking value creation that isn't financial.

When working at a departmental level or at a business line level one has to keep in mind that the business model has to show the whole of government as one of the client segments. In the third party pay structure, the government will give appropriations to the departments to deliver services to citizens. The department does not get its revenues directly from the citizens (there are some exceptions). Therefore, in looking at the business model one has to keep in mind what segment is the revenue generator and and track the value proposition for that client, i.e. why does the department exist.

Does this address you questions?

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Permalink Reply by Erwin Fielt on June 2, 2010 at 3:14am

Taking the whole-of-government (or the parent corporation in a business setting) as a customer segment is an option, I am also considering this for shared service models (both in public and private sector) I am working on (http://www.businessmodelhub.com/forum/topics/any-examples-experienc...) and hopefully can update the hub on that soon too.

Here we run into a problem with one of the strengths of the Canvas, its simplicity and straight-forwardness. Some business models have to deal with complex multi-stakeholder interests. I don't know yet whether the Canvas is always the right tool and should include these stakeholders as customers.

Another option may be to recognize that the business model is a mix of two (or more) elementary business models, like Weill & Vitale suggest. But this introduces also new complications. Haven't really tired this out yet.

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Permalink Reply by Mike Lachapelle on June 2, 2010 at 12:47pm

Hey Erwin

I would be interested to know who is included in the category of stakeholder. In the government sector there are always a number of stakeholders who have a vested interest in the operations. In Canada these incude the central agencies; policy, financial and management influencers over the way the government operates - Privy Council, Finance and Treasury Board.

For modelling any business line or departmental operations I wouldn't include them in the canvas itself. I see them as influential in the larger environment. They play an important part in the environmental scan as regulatory forces or trend setters to be concerned with. So I would separate stakeholders from customers/clients.

I quite like Mark Johnson's take on describing the customer/client value proposition in his book "Seizing the White Space". His take is focussed on understanding what job the customer/client must do, and what need they have that your business can help satisfy. I have found that approach really helps you (and your client) to understand the relationship with the targets for your business.

As to your second point, about multiple business models in one organization I quite agree. I recently worked with a Branch of a department that clearly had multiple business models at play. Their core business was a problem solving (value shop) finding procurement solutions for the rest of the government; a shared, common service delivered internally to the government. They had separated part of their business into a platform operation (value network) based on establishing and managing pre-purchase relationships between suppliers and departments.

How this plays out in the canvas is in the nature of the activities that one has to focus on to deliver the business. The shop business has to be concerned with acquiring the problems, finding options and selecting and implementing the solution. Where as the network activities are driven by establishing the relationships, making information on the the options available across the network, and managing the infrastructure. It can make for very busy canvas so it can be very useful to unbundle the businesses to examine the details of each business in a separate canvas.

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Permalink Reply by Tor R. Grønsund on June 5, 2010 at 12:17pm

Hi guys,

Great elaboration. As far as I can see the discussion and change model seem to first center on stakeholders/customer segments.

Erwin: "Some business models have to deal with complex multi-stakeholder interests" + Mike: "Mark Johnson's take on describing the customer/client value proposition"
I believe that each element with the business model canvas already comprise stakeholders of some kind, in-house/internal or out-house/external. In case of the latter, the stakeholder might be viewed with Partner-element. I reckon that the business model ontology methodology tends to start with modeling the customer segments and value propositions, respectively. Indeed, the problem-solution fit (ref. Steve Blank) or Jobs-to-be-Done (ref. Clay Christensen) could be the locus of analysis when mapping the stakeholders, i.e. customer segments, in public services.

I believe that it would be favorable to define the business model archetype in order to understand the underlying of the actual public service. That might be Erwin: "I am also considering this for shared service models".
Clay Christensen, in Disrupting Class and The Innovator's Prescription, borrows from Øystein Fjeldstad's Casting off the Chains, in describing three such archetypes: the value chain (e.g. manufacturing), value shop (problem-solving, e.g. lawyers/consulting) and value network (facilitating connections between to stakeholders, e.g. dating venues). Service models might be described using either the value shop or the value network. In many cases I think that the mission of a public service delivery is to create value and facilitate connections between the different levels with the government and the citizens. Or in the case of an industry-public education connection the goal would be to educate the citizens. Yes, that leaves us with a multi-sided model. However, I depends whether service design in terms of public service delivery model (as the popular theme it is) would require a [fourth] model in its own right?

Otherwise, you'll have to excuse my ignorance as I am new to, and not even in, the public.

Casting of the Chains: http://www.espen.com/papers/casting-off-chains.pdf

Thanks,

Tor :-)

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Permalink Reply by Hunt Lambert on October 8, 2010 at 5:28pm

They key for me is to be sure you agree on the outcome metrics. In business it is pretty easy, cash flow. In the public sector it is not so easy as you must understand your legislated mandate, your public good and the expectations of various related and often competing constituencies. I think the tool still works well, but like Jim Collins said in his public sector addition to the Good to Great concept, revenue may not be the right bottom R box.

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Permalink Reply by Andrew Warner on October 28, 2010 at 2:13am

I don't have an answer but here are some thoughts.

The ontology represents a view of a business. When we talk about government the concept becomes a little blurry and that might be the source of some of the confusion.

If we articulate the "system" we're dealing with along with its purpose that might help clarify how the various elements of that system map to the ontology.

For example, if we're talking about an individual agency, it's relatively easy. The value proposition revolves around the services that agency provides, whether it's funding to apply "levers" to the economy (e.g. apprenticeships, roof insulation, etc) or other facets of government work e.g. workers' compensation insurance, occupational health and safety regulation or taxation.

If you talk about whole of government it gets more difficult. Still, revenue streams are taxes, general revenue, cost recovery exercises, etc. since the government is a single entity.

I'm in the middle of organising a business model for something that is a government concept. It's a system comprising individual state and territory authorities but isn't any of them. There is probably an overall purpose but it's difficult to pin down. I can't go into the details for reasons of probity and I'm still wondering if the business model canvas and associated tools is the right tool for the job. I might post a ficticious scenario that is similar when I get time and if anyone's interested.

Anyway, back to the purpose of the post. From what I've seen in the business model generation book and after quite a lot of work in various government departments I think the ontology is quite applicable. As long as you have a clear idea of the purpose and identity of the "thing" under consideration. It's all too easy to get mixed up by perspective. As an exampl, the Australian Government Architecture is designed to be used for inter-agency operations. That is, interoperability. However, it's often used mistakenly for internal enterprise architectural initiatives with fairly predictable results.

I'd better get back to work now. I'm rushing, so I'm rambling
Regards,
Andrew.

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Permalink Reply by L. C. (Skip) Lumley on December 5, 2010 at 10:31pm

I've used the ontology with public sector agencies but only as a training aid and certainly agree that there are basic differences between commercial and non-commercial entities. If we could understand those differences at a deeper level, we would know where and how to apply those tools that typically grow out of a private sector paradigm. My hobby is collecting remarks that underscore this:

"The business notion of delighting customers suffers in government because almost every segment we delight matches another segment we anger as a result!" - one of my public sector clients.

"I am not a customer of my government! I am a citizen, a subject and a client!" - Henry Mintzberg HBR May 1996. The remark is paraphrased - he acknowledges being a customer when he buys a map or surplus government assets and the like, but those transactions are not central to government purposes.

Public sector business model stakeholders are business analysts, service providers, program managers and planners, and policy makers - and I think their resistance to private sector semantics and business patterns grows from the beginning to the end of that list. Semantics are only part of the problem; I've never found patterns from the private sector that can represent regulatory and enforcement activities, or express policies like equal access - I think because the frameworks just don't contemplate and therefore aren't built to accommodate distinctive public sector concepts. These major gaps destroy confidence in the framework.

To answer your specific question, I've developed a number of business models for public and civic sector agencies with the following metamodel elements: agency, jurisdiction, policy, program, outcome, service, output, process, resource, population and need. Many of these elements and their relationships are based on the 'program logic model' that is a basic analytic tool in government. Direct revenues and costs are typically views of models built from these elements. The elements have been mapped to several frameworks, including the business model canvas, but only for teaching purposes.

The metamodel is one area of difference but the use cases for a business model also differ significantly between public and private sectors. For example, there is an emphasis on understanding the potential impacts on populations from complex legislation, and tracing authority, responsibility and accountability among multiple actors. One popular business model 'game' is to determine who 'goes to jail' in various scenarios, e.g. an apartment balcony breaks and causes a child's death. If we don't see the business model as a tool able to uncover flaws and improve policy, program and service design, then it will never be seen as more than a process improvement tool at best and an IT tool by default.

Cheers

... Skip Lumley

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