New Method of Organizing Business - Need for Adoption by Software Service Providers
Date: Tuesday , February 21, 2017
Compared to employees, entrepreneurs are more responsive to customer needs, adapt product to changing customer needs faster, and take responsibility for customer satisfaction. This difference can be attributed to an entrepreneur getting the residual share (profits) as opposed to an employee receiving fixed pay or incentive.
A group of entrepreneurs jointly providing a product can result in entrepreneurial insights being converted into value. This method of organising entrepreneurs is entirely different from other approaches. In the value-chain approach, the organisation leading the value-chain (brand owner) interacts with the customers and bears the risk of final sale. All other entrepreneurs get paid by the lead organiser irrespective of final sale and realisation of the proceeds. As the other entrepreneurs are not interacting with the customers, their entrepreneurial insight into customer feedback is lost for the value-chain. They only contribute to efficiency and not to effectiveness. The other approach where entrepreneurs gather at a place to provide their own products (boutique approach, exhibitions) does not help either. As these entrepreneurs provide different products/services, they would be interested in getting the feedback for their products only \' and not of other entrepreneurs.
Organising entrepreneurs to jointly offer the product is a novel approach. Imagine a situation where several entrepreneurs come together and put in different items that constitute the meal being served. Till the meal is actually served and consumed, the items that constituted the meal are owned by different entrepreneurs and not by the lead entrepreneur. These entrepreneurs jointly decide on a price for the product, and their respective share in that price. After the price for the meal has been paid by the consumer, all the entrepreneurs simply take their own share from the sales proceeds. In such a scenario, each of these entrepreneurs are waiting for the customer feedback not only on the item that he had served but also on the entire combination that constitutes the meal. If all the entrepreneurs work towards improving their part, while at the same time being conscious of the manner in which the all the items are put together and served, the capture of customer feedback and improvement in product would be immense. This benefit simply cannot be achieved in any other form of organisation.
The inherent risk of business, i.e., successful final sale of goods to the customer and recovery of the sales proceeds, is not on one entrepreneur but on the entire group of entrepreneurs. If the product is not sold, all the entrepreneurs participating in the joint provision of product will have to bear the loss. In the context of services to the low-income communities, the group of entrepreneurs can also act as a pressure group to realise the sales proceeds. One of the lessons learnt in microfinance is the importance of social pressure in realising the loan instalments provided to the community. In many situations, sale of a product cannot be postponed till the full amount is realised from the customers. In such case, more than one entrepreneur trying to realise the money has better chances of realisation.
LifeSpring Hospitals has adopted this kind of an approach to leverage the entrepreneurial spirits of a group of entrepreneurs. It provides protocol-compliant core maternity care services to the urban poor communities at affordable prices. Sometimes, maternity service needs to be provided in emergency, and waiting for realisation of full payment could be inhuman - it could cost two lives.
The software provider needs to take part in understanding the customer needs and play an active part in packing the customer need to include its offering. The system provider has to charge based on the service delivered at the end point and payment received - thus bearing the full risk of final sale and realisation for service provided.
Being a healthcare service, the customer may not perceive direct value from software. She may not realise that this improves her service. However, customer can easily become dissatisfied if the system results in some delays in billing, admission or discharge. Towards this, the system provider has to closely look at the users of the system to understand their capabilities and constraints in the real time and provide a solution to optimise customer\'s experience. To complicate the matters, the system will also be used by other entrepreneurs who are part of service provision network and therefore, the software provider has to take their needs into consideration. Any errors in billing or allocation of the receipts among various entrepreneurs can lead to friction among the entrepreneurs and result in disowning the software.
Software provider has to work closely with other entrepreneurs to identify the information needs and overall constraints of network. Being an entrepreneur whose returns depend on the ultimate customer satisfaction, they may have to take the extra-step of getting customer feedback and its analysis, and pass on the insights to all other entrepreneurs involved in service provision. This organisational model takes the concept of \'SaaS\' to a higher level. This is the new model to which the software providers will have to be ready for.