The Chicken model promises to manage a specific customer problem.
Two dimensions drive this orientation:
Clearly defined customer expectations. The Chicken wants all customer requirements expressly stated and, if possible, written into the performance contract signed by the customer.
A promise of consistent, error-free performance. The Chicken relies upon process execution and standardized internal processes. Chickens embrace quality initiatives like ISO 9000 and Six Sigma.
Hewitt Associates (NYSE: HEW) specializes in benefits outsourcing. The company administers medical, 401K, and pension plans primarily for companies with 15,000 (or more) employees. Clients sign on for contracts that run between three and five years.
Its 2008 10K outlines the essence of a Chicken's value proposition:
If our clients or third parties are not satisfied with our services, we may face damage to our professional reputation or legal liability.
We depend, to a large extent, on our relationships with our clients and our reputation for high-quality outsourcing and consulting services. As a result, if a client is not satisfied with our services, it may be more damaging to our business than to other businesses. Moreover, if we fail to meet our contractual obligations, we could be subject to legal liability or loss of client relationships. (p. 13)
Hewitt's 10K filings illustrate how important customer relationship management is to a Chicken.
An interesting exercise would be to look more closely into customer relationship management (CRM). Keeping Hewitt's emphasis as the reference point, research the following question: Is currently-practiced CRM valuable to all business model types, or have its advocates seen CRM applied in companies like Hewitt and wrongly assumed the approach has potential value to all?
To improve your mastery of the business model template: Chickens and Pigs - The Book
