So you targeted the right problem, but your solution still failed. Meet Value Chain Alignment - your next headache.

... and no, I am not talking about tax strategies.

In my previous article, we discussed why all products are not created equal if you forsake the customer. That said, your problems still far from over. We spoke about the four fundamental questions you need to dispassionately answer to ultimately joyously proclaim, It's Alive!

• What problem are you solving, and for whom?
• How big is this problem?
• How are you going to solve it?
• Does your solution work when rubber hits the road?

Today, we will talk about a critical pillar of "How are you going to solve it?" - Value Chain Alignment. I'm going to take the example of a government initiative several of you might of heard of - The Business Correspondent Model.

About Business Correspondent Model

The BC model was launched around 2006 by the government and RBI to increase financial inclusion in India.

Mechanism -

• RBI would authorized banks to provide no-frill banking services to the underbanked population via Business Correspondents (BCs), who could be an individual (kirana shop owner, for example) or larger bodies such as NGOs etc.
• The larger BCs engaged a network of Agents/ Customer Service Points (Kiosk outlets) to help open No-Frill Accounts (NFAs) and were to provide a limited range of services such as transaction, micro-credit, and general insurance to customers.
• BCs/ Agents were typically paid through a commission model - INR 20 per NFA opened, and 0.5% or INR 15 (lower amount) per transaction

Landscape - 

• Most accounts opened barely see any activity - for example, in 2017, while 80% of the adults had bank accounts, a whopping 48% of these accounts had remained inactive
• This suggested that mostly, BCs and Agents earned through opening of NFAs, but once the market was saturated their earning potential plummeted
• There are close to 10L agents in the country currently, however, a good 67% of these treat this as their full-time job which further adds pressure. This is a much higher fraction compared to other economies such as Kenya, Pakistan, and Bangladesh

Secondary services arising from BC Model -

• BCs also started providing other services such as ecommerce, epharma, Telco (recharge, SIM purchase, etc), and last mile logistics (kiosks/centers to help promote and market the sellers, and assist customers in browsing, purchasing, and return/ cancellations).

BUT here's the kicker, the BC model never really took up.

One would think, it provides financial services to those who are underbanked - that seems like a very real need and that too with an enormous market size. Why didn't it fly? And here is where comes in "How are you going to solve it". As you'd have counted, the BC model has three major stakeholders in its value chain - the Bank, the BC/Agent, and the Customer. Each stakeholder in the BC model faced several challenges, diminishing the model's value proposition across the value chain. Let's see how -

This is a classic example of identifying the right need (financial inclusion for the underbanked), and then implementing it in a way that neither fulfilled the need fundamentally nor bore any semblance of a seamless unencumbered value chain. Consequently, the overall BC model suffered from some broad challenges, making it difficult to scale sustainably beyond the pilot phase as a strategic initiative. Rejigging the stakeholder challenges, we arrive at the three fundamental issues with their approach to "How are you going to solve it?" -

Through this example, my objective is to communicate that identifying the overarching problem correctly is critical, but the flesh and skin you clothe this skeletal problem with plays an equally critical role in determining your success. Keeping all your stakeholders equally vested in the business to do their part is an art, and logic - it's about everyone having skin in the game. So the next time you have a great idea or have identified a potent market niche, think about how you would keep every stakeholder motivated. This is not just true for a new idea, but also a new cross-functional project you've undertaken at work. As a BU/ category owner at both Uber and Curefit, I tried to follow this philosophy when embarking upon any new cross-functional initiative. I always asked myself - "I need them, but that doesn't mean they need my new project. So, how do I get them to?". Has helped me traverse matrixed orgs time and again. Hope this line of thought helps you too!