Agency Problem

The "Agency Problem" is the question of how to persuade an agent — i.e. a service provider — to follow your goals and motivations, rather than their own. The solution is often to make payments in terms of outcomes, rather than activities or processes. Ideally, these outcomes will be interms of value created for the final customer, not just the services delivered to you. However, the agent may not be willing to enter into such a risk sharing arrangement where he has little control over your ability to deliver.


The e3 Value Model representation shows who provides a service (as service-for-service).

However, in some circumstances, although the relationship is between a service consumer and the service supplier, there will still be interactions between the service consumer and an agent working for the service provider — they are "on-stage".

  • Book sourcing service. Consumer / supplier relationship between book buyer and Amazon, but book received from carter.
  • electricity supply service. Comsumer has account with retail supplier, but electricity supplied by Electricity Distribution service provider, who is agent for Retail supplier.

At first reading, e3 value model representation is not able to show this agency relationship. This could be a resonable constraint, as the e3 models value relationships, not service interactions.

Service Blueprints will show the correct relationship, but this is a level down in detail. The higher level service mapping should show the actors "on-stage", without requiring details on their interactions.

Hint: Look at IT patterns for help.

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