Business Model UK Public Sector

Information

Business Model UK Public Sector

Using the Business Model canvas in the UK public sector.  Both reducing costs and monetising/commercialising services. 

Location: United Kingdom
Members: 7
Latest Activity: May 17

Discussion Forum

Using an amended Value Proposition Canvas to show internal issues

Started by guy hancock Dec 7, 2015. 0 Replies

I thought it might be sensible to move this into a separate discussion (only just learning my way around here).As a local authority in the UK we are starting to use the BMC and VPC. However, I guess…Continue

Comment Wall

Comment

You need to be a member of Business Model UK Public Sector to add comments!

Comment by Mike Lachapelle on December 7, 2015 at 3:53pm

Thanks, this is a really interesting discussion. I am in Canada but my wife's family is in Swynnerton (just outside Stafford), and I have often wondered about services delivery. We have talked about having a place there now that she is retired.

@Guy - that is an interesting adaptation of the model that could show the constraints and challenges acting as a filter on the design of the services and how they create or relieve the outcomes and barriers of the targets.

@Stephen - sounds like there is also a customer relations & channels challenge here regarding the relationship and  how to communicate the true value being delivered to the various segments.

It seems the funding model is certainly complex enough it needs it own bm canvas, to reflect the various sources of income and the vp for each. What is also necessary is to understand the infrastructure needs to apply for and manage the funding sources. This is a big drain that is rarely reflected in government organisations' business models.

@both - though it would be a challenge, it would be very important to have customer profiles built for each of the segments you identify to understand what their individual needs are - where there are commonalities and where there are specialize needs.

Comment by guy hancock on December 7, 2015 at 3:03pm

Stephen

I think that is how we are addressing our customer segments to reflect this. Looking at it from the customer's perspective we have segments that show where they have little desire/need to interact with us and so we can shape our proposition accordingly.

For example, the "Living Here" segment pay their council tax, expect their bin to be emptied and not a lot more. We don't want to have a heavy relationship with them, we need to make sure we deliver this in an thin, efficient manner (digital first). With someone receiving support from Social Services , they expect and need a very different relationship.

That's how we are looking at this.

Comment by guy hancock on December 7, 2015 at 2:59pm

I've just created this as a discussion.

That may be better than filling up this space.

cheers

Guy

Comment by Stephen Booth on December 7, 2015 at 2:54pm

Forgot to mention, the problem with charging recipients for services is that very often the people in most need of local government services (in particular the most costly services to deliver, social care) are the ones least able to pay.

A lot of people all the council does is empty the bins and sweep the streets, the reality is that the largest expenditures are on services the public don't realise they receive, think are provided by someone else (e.g. central government or the NHS) or are only needed by a small proportion of the population at a given time.  How do you sell a value proposition when the customer doesn't know they receive the service from you (if at all)?

For example:

* Youth Offender Rehabilitation - Only directly recieved by young offenders but reduces crime for everyone

* Youth sports and leisure clubs - Again only received by young peopel but contributes to reducing crime for everyone

* Social Care - Releases working age adults from having to care for dependant children and adults

* Public Health/Food Inspectorate - Reduces food poisoning and other health hazards but many in the public don't think it exists or think it's delivered by the Police

* Crematoria and Cemetries - A lot of people assume they're run by the Church of England and are surprised when organising a funeral to discover most are operated by the local council

Comment by guy hancock on December 7, 2015 at 2:53pm

Here is the amended VPC I knocked up.

Hopefully it shows how we are thinking of incorporating the internals. We wanted to use this as we may (as in, we may be prepared to) create more pain for customers to help solve our own, more pressing, concerns.

value%20proposition%20canvas%20%28gh%20version%29.pdf

Comment by Stephen Booth on December 7, 2015 at 2:34pm

Mike, 

Local Government funding in the UK comes from three sources:

* Central Government grant

* Council Tax/Business Rates (basically local taxes based on properties, domestic and commercial)

* Traded Services

They may also recieve one off grants from Central Government and the European Union (usually for specific projects such as infrastructure redevelopment).

The central government grant is set by government and is supposed to balance the different demographics that may impact on income from other sources, so a council which has areas of high unemployment and deprivation should typically receive more from central government than one that does not as their income from council tax and business rates will be lower.

Whilst council tax is set locally councils are restricted by central government on how much they can raise it each year, and also have to be aware that if they raise it then that will have an impact on their citizens and likely at the ballot box.

Traded Services are the varioaus things the council can charge for, things like commercial waste collection and rental on properties owned by the council.  Again the councils are restricted on how much they can charge, but typically more by market forces than central government.  It's not unusual for a large employer to threaten to pull out of an area or not set up a new site in an area to get a reduction in their business rates and commercial waste services, since the council wants as many of their residents in work as possible (so they are paying council tax and spending money on the area rathet than drawing benefits) this can be an effective strategy for businesses.  I'm including social housing as a traded service although in many cases it costs more to provide than it brings in.

In recent years, due to austerity cuts, most councils have been looking at what services they can cut to reduce costs.  Personally I think it would be helpful to look more at how to increase income from Traded Services.  This is where Business Model Canvas could be helpful, how can the council get more people (and businesses) to pay for services they currently don't take or take but don't pay for.

One issue that I repeatedly see is that councils will outsource services to the private sector hoping to save money but then see costs rise; either in direct payments to the private sector provider or indirectly due to the private sector provider reducing quality standards to make a profit so the council has to pick up the parts the private sector provider doesn't provide.  I wonder why no council management team has figured that if the private sector could provide service for a profit then so could the council.

Comment by Mike Lachapelle on December 7, 2015 at 2:29pm

More so. The vp canvas is intended to understand the pains and gains of your customers, then to design solutions to meet those needs. I would be interested to hear how you are incorporating your pains into a vp canvas. Where are you capturing the issues and designing a solution?

It seems the problems you are facing are a product of funding trends and the need to adjust the business model to reflect reducing revenues. 

Where I would be addressing this is in a strengths and weaknesses assessment of the current state business model. Then combine that with an environment assessment that would show (in the industry and the macro-economic forces) the trends in funding and support.

These analyses would be the basis for a strategic discussion about re-designing the business model to meet reduced resources. Whether that means changing the infrastructure, changing the vp and the offered services, or changing the revenue streams to capture directly from beneficial customers. If the solution includes changing what you offer, then I would get into a vp canvas analysis of the customers Ps&Gs, and how to re-design the services to reflect your available resources. It also may include looking at potential for new partnerships to augment service delivery.

Comment by guy hancock on December 7, 2015 at 1:57pm

Mike

Thanks for that, I'll check out the video.

We're keen to show the funding as standard (because we want to get services to start considering how they could generate some/more revenue rather than just rely on central funding.

The idea of show internal pain/gain was to enable us to say "Actually, we're not changing anything for the customer with this project, we're focusing on addressing our internal problem". Easiest example is: I have to continue to deliver this service with a 30% cut in funding. A clear pain internally.

Does that make it clearer?

cheers

Guy

Comment by Mike Lachapelle on December 7, 2015 at 1:52pm

Guy;

I see a couple of issues in the ideas you have put forward.

I have used the BMG approach in the government context at various levels: business unit, program, sector, department and multi-department. I have not seen a need to redefine the structure of either of the canvases.

On the issue of funding: It is common for government organizations to identify issues around their funding. If they are spending money they must be receiving money (appropriations or budget allocations); if they are receiving money there must be someone giving them the money or deciding how much money they get; if someone is giving them money there must be a reason, purpose, or expectation of a benefit for giving them money.

There you have the 'golden triangle' of the revenue, customer segment and value proposition. The difficulty is most government organizations operate in a 3rd party funded model - A is giving money to B to deliver services to C. B may not be charging C for the services, but have to justify to A the money they receive. Most government groups do not understand the funding is part of their business model.

I often deal with this dichotomy by creating a separate canvas (different story) for the funding component. It can the be combined with the service delivery canvas for a complete picture of the business model. You can see what I mean by looking at my video on Kiva here. This is another 3rd party funded model.

What a lot of government organizations miss is the captured revenue from the beneficial customers (C) is often an alternative currency of data. This is necessary for reporting back to the funding body (A) to justify the funds and prove the vp. So the organizations forget to build data capture as part of the business model.

I am not quite sure what you mean by "internal" pain & gain. Is that because part of the services are delivered to customers or clients inside the government, or is it the value proposition related to funding?

Comment by guy hancock on December 7, 2015 at 11:46am

Hi Mike

I guess the biggest difference we are seeing is that the canvas has a clear demand/market focus. As our funding is far less driven by sales and customer retention/acquisition we want to reflect this.

In the UK the main pressure on local government is drastically reduced funding. This means that the key driver for us is to redesign how we deliver our value proposition (or how we change it) rather than to win customers.

I'm proposing that on the Value Proposition Canvas we split the internal part to include space for internal pain and internal gain. I think this will allow us to show where we need to focus programmes and projects.

Naturally any ideas and input for others, such as yourself, would be greatly appreciated.

cheers

Guy

 

Members (7)

 
 
 

© 2016   Created by Alex Osterwalder.   Powered by

Badges  |  Report an Issue  |  Terms of Service