Stakeholder Analysis

The first step in designing a working business model is to identify the critical stakeholders. These are the constituencies on both sides of the initiative that have a stake in its outcome. National Savings and Investments counted customers, employees, the Treasury, and management as the four key stakeholder groups. For Newport Systems, stakeholders included headquarters management, business unit management, investors, and employees. When NS&I decided to work with a single provider rather than multiple vendors, and when it chose a provider, executives looked at each decision from the point of view of each stakeholder group to arrive at the best overall choice (see Exhibit 5.1).

Exhibit 5.1: Examples of NS&I stakeholder objectives.

However, they went even further. They also considered Newport Systems’s key stakeholders in order to make sure the arrangement their partner had proposed would be sustainable. NS&I recognized that Newport had set itself very aggressive targets and that missing these would under- mine its profits. Peter Bareau and his team reasoned that, with this out- come, they would risk losing the support of headquarters management and investors. To head off this problem, the NS&I team deliberately established a direct relationship with Newport’s corporate leadership to personally secure their support.

When Don Brown of the UK Inland Revenue got involved in the agency’s outsourced information technology systems and processes, he addressed this issue by stating up front that the provider deserved a reasonable profit. Although we would not consider this outsourcing initiative transformational, it illustrates the point. Open-book accounting helped the provider guard against incurring debilitating losses as well as ensuring his own fair share of windfall profits. This kind of forethought makes for a more sustainable relationship.