Businesses and other organizations can be understood in three different types. Facilitated Networking, Value Added, and Solution Shop business models, and combinations thereof, have existed since before Rome ruled. Modern entrepreneurs will benefit as they think of their endeavors in these ways.
By Mark D. Harris
Several women at a baby shower share stories about giving birth, providing tips to an expectant mother on how to make delivery easier and less painful. One older woman provides a beautiful baby dress, while another shares the address of a bargain store.
A farmer plants acres of grain. He and his family labor over their fields for months, watering and weeding while the crop comes in. In due time, they harvest an abundance. They keep some grain for their own consumption and sell the rest.
Two colonels pore over a map on a battlefield, discussing how to defeat the enemy dug in on a ridgeline nearby. They are not sure of their opponent’s strength and disposition, but they are losing the initiative and need to act soon.
These three scenarios have been repeated thousands of times since the dawn of history, and they capture the three basic business models. The first is called Facilitated Networking (FN), in which people and organizations share advice, products, and services. Everyone has a network, but companies build and facilitate the right platform so the right people come together. For example, eBay and craigslist links buyers and sellers for goods and services, Prosper.com brings together loaners and lendees, and Kickstarter links philanthropists. Insurance companies and banks have networked people for centuries. Wikipedia assembles people who want to write articles. FN businesses do not make money through products, because often there is none, but through the platform. Networked organizations typically make money from advertising, for example, based on how many people use their network or platform.
The second business model is the Value-Added Process (VAP). Farmers have been plying their trade since the dawn of civilization, but their essential task is to take soil, seed, sky, and sweat and produce healthy crops to provide food for people and animals. The task is difficult but the processes are fairly well defined. Further, certain inputs can reliably predict certain outputs. For example, a given amount of plowing, weeding, and watering, aside from large, unforeseen events, will produce a given amount of grain. This business model is among the most common in history. Auto manufacturers take parts, adding value in the form of skill and machinery, and make cars. Distributors take products from manufacturers, add value in the form of trucks, ships, and aircraft, and deliver these products to retailers. Doctors encounter people who are sick or injured, add value in the form of skills, knowledge, supplies, and equipment, and make these people, their patients, healthy again. VAP organizations typically make money by calculating what it costs them to add value, adding a competitive profit margin, and selling the good or service.
The third business model is the Solution Shop (SS). The problem seems well defined, but it is not. The issue is complex, and it is not clear which combination of processes will accomplish the goal. Experts in the field are needed to solve these kinds of problems, and the outcomes are not guaranteed. Solution Shops require multidisciplinary teams to accomplish their goals, because no single individual can acquire enough information and experience to handle such complex and poorly defined problems. The US space program (NASA), from the moon landings to the Space Shuttle, is a good example. In modern business, the innovators at Microsoft, Apple, Disney, and a host of others fit well into this category. Law firms and business consultants are usually solution shops. Because outcomes are uncertain, solution shops generally charge a fee for their services, typically a certain cost per hour.
All businesses incorporate some aspects of each business model into their operations. For example, NASA incorporates standard value-added processes and Disney facilitates networks of customers and fans for their mutual benefit. Medical clinics and hospitals are solution shops in addition to being value added.
However, successful organizations have one primary business model. Facebook is primarily a facilitated network. JM Smucker’s makes peanuts into peanut butter (and fruit into jam) and is primarily value added. Research institutions such as the US National Institutes of Health are essentially solution centered. Organizations other than businesses, such as religious or charitable organizations, for example, also fall into these categories.
The Church is unique among organizations. Churches are facilitated networks, but provide countless goods and services to their members and communities.
- Teaching (sermons, small groups, other venues) on a variety of topics (religion, finance, relationships, life skills, social issues)
- Educational opportunities, formal and informal, including scholarships, music training, art training, schools, and home school groups. Early childhood education such as reading is a part.
- Participatory live entertainment including music (vocal and instrumental), art, drama, dance, and others
- Content creation – original songs, books, skits, stories, and art.
- Sports opportunities such as AWANA games, youth exercise, league sports (soccer, basketball, football, baseball, cheerleading), and others.
- Food via a food pantry, individual meals for members in need, and church sponsored events involving food
- Clothing via a clothing closet and individual donations
- Housing (short and intermediate term) for the homeless
- Health care via individual members, clinics, hospitals, and other venues
- Monetary grants and loans or services to members and others in need
- Personal development activities such as youth retreats, senior citizen trips, and marriage or couples’ summits.
- Service activities including missions trips and disaster relief (local, regional, national, and global)
- Counseling (premarital, marital, individual, family)
- Episodic activities for families, children, and childcare
- Employment opportunities at the church and through member networks
- Prison ministries and opportunities for convicts after release
- Addiction ministries opportunities for recovering addicts
- Handyman, auto mechanic, and other training and services
- Home and hospital visitation
- Life ceremonies – marrying, burying, and others
- Provide a philosophical framework for all of life
When one organization tries to operate under two primary business models, confusion and complexity result. Health care includes components from all three primary business models, but the VAP and Solution Shop models predominate. Patients and providers network together in person and virtually via support groups for many disease processes. Hospitals and health care systems often facilitate these networks in their areas.
Many processes in health care, from the doctor’s office to the intensive care unit, are value added. For example, when a child with an ear infection seeks care at an outpatient clinic, the provider can be pretty confident of how to make the right diagnosis and equally confident that the right antibiotics will fix the problem. In an otherwise healthy child, the issue is not highly complex, the course of action is largely standardized, and a good outcome is generally the result.
Other processes in health care, however, follow the Solution Shop business model. A patient with poorly understood complications of diabetes might need the services of an endocrinologist, a vascular surgeon, an ophthalmologist, a nephrologist, and others, all of whom are supported by a cadre of specialized nurses and other support staff in a Diabetes Institute. This confusion of business models is one reason that health care is so expensive and so hard to measure.
In order to discover which type of business model is most appropriate for a company, or any organization, the leadership must decide exactly what they want their company to do; they must clearly understand the problem and decide exactly how they want to address it. Since all organizations want to make money, or at least stay solvent over time, they must decide how they are going to do so. Once leaders understand the problem and know how they want to address it, the type of business model that they should use will become clear.
Conclusion
Solomon said, “There is nothing new under the sun.” This axiom is certainly true for business models. The three types – facilitated networks, value added processes and solution shops – have been around since the dawn of time. They will endure until the end of the world. While all organizations are a mix of these models, most have one predominant model by which to organize themselves and meet the needs and wants of their customers and other stakeholders. Leaders of organizations should exhaustively analyze the problem they wish to address, their mission and vision, and organize themselves into the right business model while also considering cost and differentiation factors (Gamble et al., 2021). Then they will be poised for success.
Not every church does everything listed above, but everything listed, and far more, is done by some part of the Church. Local ministry leaders, like business leaders, will evaluate the needs of those in their areas and the skills and interests of their congregations. They will then immerse themselves in fervent prayer, together determining what their local church should do.
References
- Bean, D. How Facilitated Network Businesses Cure Disease Ease Pain and Disrupt Health Care, https://www.christenseninstitute.org/blog/how-facilitated-network-businesses-cure-disease-ease-pain-and-disrupt-health-care-2/
- Gamble, J., Thompson, A. A., & Margaret Ann Peteraf. (2021). Essentials of strategic management: the quest for Competitive Advantage (7th ed.). McGraw-Hill Education.
