Economic Agents in the Locus Model’s Enterprise Barcode

Systems Economics Lexicon · Reading the Enterprise Barcode

Ask a conventional business analyst who a company’s customer is, and the answer is whoever writes the check. The Locus Model asks a narrower, more useful question: who actually uses the product? Those two answers diverge constantly, and the gap between them is exactly what the Enterprise Barcode’s agent fields are built to capture.

The enterprise field: what a company actually does

Every Enterprise Barcode orients around one product, described in the Enterprise Field: a work locus (the Enterprise Locus) plus two markers. The Product Type Marker records whether that product is a resource product or an activity product. The Process Marker records whether the enterprise produces it in-house or outsources it — a distinction that matters because outsourced business models genuinely differ from in-house ones. A smartphone company that owns its intellectual property but contracts out manufacturing is coded differently from one that builds its own phones, even though both might sell an identical product on the shelf. The same logic applies to real estate developers who own and design a building but outsource the physical construction.

If a company sells more than one product, each product line gets its own barcode. There’s no single “barcode” for a diversified company — there’s one barcode per product line.

The customer field: redefining “use”

This is where the Locus Model departs from convention. The Customer Field describes the agent that uses the enterprise’s product — and “use” here means something more specific than “purchases.” For most activity products, the direct purchaser and the end user are the same agent, so the distinction doesn’t bite. But for resource products, the agent that buys directly from the enterprise is frequently not the one who ends up using it.

The book’s own examples make the point cleanly: the end user of a car is the person who drives it, not the dealership that bought it from the manufacturer first. The end user of a steel I-beam in an office building is the business that works in that building — not the construction company that installed the beam, and not the landlord who owns it. Raw materials make the gap even wider: copper headed into a laptop’s semiconductor can change hands dozens of times as it’s refined and shaped, but the barcode is built to capture who ultimately uses it and how — not who happened to hold title to it along the way.

The Customer Field carries its own work locus (the Customer Locus, filled out the same way as the Enterprise Locus) plus the Product Type Marker again and a Customer Type Marker — Consumers, Businesses, Governments, or some combination of the three. The barcode diagram also shows a Temporal Coordinate alongside these; its full role — recording which of two linked agents touches a resource flow first — belongs to the Co-Customer Field mechanics covered in “The Enterprise Barcode’s Nine-Marker System.”

A few of the book’s worked examples show how differently this plays out across industries:

Molycorp mines and processes rare earth materials that end up, as constituent parts of final resources, in consumer electronics, medical devices, and aerospace and military applications — making its customers a diversified mix of businesses, consumers, and governments at once. As the text notes, this is a case where the colloquial and Locus definitions of “customer” genuinely don’t match.

Triumph Group manufactures aerostructures that airplane manufacturers like Boeing incorporate into aircraft — but the customer isn’t Boeing. It’s the airlines that ultimately use the aircraft as a subject resource, since Triumph’s resource product is only used once the final resource it’s built into is used.

J.P. Morgan Chase’s core business is providing ready capital through lending — and since capital can be lent to nearly any kind of agent, the bank’s customers span businesses, consumers, and governments simultaneously.

The other agents: intermediary, co-customer, customer of customer

Beyond enterprise and customer, the barcode accounts for three more agent types.

Intermediary is an agent that acts on the enterprise’s product before the customer — through further manufacturing, distribution, subsidizing the product, or otherwise connecting enterprise to customer — without ever using the product as a subject resource itself. The formal test: an agent counts as an intermediary if it’s a counterparty to the transaction, or if it helps determine the customer, the contract terms, or the transaction environment. Only two intermediaries are recorded per barcode; where more than two exist, the two most economically significant are captured.

Crucially, intermediaries are classified by their main economic function, not by the specific role they happen to play in this particular supply chain. The book’s example: Motorola sells phones primarily through wireless carriers like Verizon. Even though Verizon is performing a specific distribution function with respect to Motorola’s product in that transaction, its Intermediary Locus is coded according to what Verizon actually is as a business — not contextualized to Motorola’s supply chain. That’s a deliberate design choice: it keeps the same agent classified consistently no matter whose barcode it shows up in.

Co-Customer is an agent that uses the enterprise’s product jointly with the customer, recorded in the Co-Customer Locus within the Customer Field.

Customer of Customer is an agent that uses the customer’s product — standing in the same relationship to the customer that the customer stands in to the enterprise. The pattern repeats one level down the chain.

Why this matters beyond bookkeeping

None of this is classification for its own sake. Because every agent is coded by what it actually does — its function — rather than by its label or its position in a particular deal, the same company gets classified the same way whether you’re looking at it as someone’s intermediary, someone else’s customer, or an enterprise in its own right. That consistency is what makes the Enterprise Barcode comparable across completely different industries and supply chains, which is the entire premise the Locus Model is built on.

For the mechanics of how intermediaries specifically get subdivided — into With Inventory, Agent, and Payer types — see The Three Types of Intermediary.

Part of Reading the Enterprise Barcode, course 4 of 7 in the Locus Theory series. For the full term-by-term specification, see the Lexicon.