What do we do when we can’t solve a problem with an entrepreneur model?

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Not all problems can be solved entrepreneurially, nor should they be (Get started with this article about Entrepreneur Problem Solving). There are many ways to tackle the infinite number of challenges that make life difficult. In some instances, it is better to look at problems with government models. In other instances, we should be looking at solving problems through charitable, NGO, or philanthropic models. But when do you pick one model over another? What are the primary differences in the way these different models solve problems?

First, we must understand the people, organizations, or things (e.g. animals, environment) that are in need. Each of these groups may have important needs that are best solved by a different type of model. Second, we need to apply models that can best solve these needs. When I talk about models, I am referring to the process organizations (e.g. startups, NGOs, charities, Governments) take to create, build and deliver their solution to meet the specific need. For example, an entrepreneurial model builds and delivers the solution to those in need in a way that sustains itself by extracting resources (i.e. revenue) from those that directly have the problem. The person that has a need pays for a solution to fix it.

However, not all problems have a direct connection between those with a need and their ability to acquire the solution. They may be individuals that have few resources. They may be animals or the environment without any ability to pay to solve the need. In these cases, the entrepreneur model doesn’t work in solving the problem. For example, sometimes we discover a group of people with an important need to solve (e.g. clean drinking water). However, these people may not have the resources to purchase a solution that other, more wealthy, groups can afford to solve. For this group, the entrepreneur's business model makes the solution too costly for those in need to afford it. Unless the entrepreneur can decrease their price by a significant amount, or those in need have a significant increase in their available resources to make the purchase, those in need can’t take advantage of any solutions offered by the entrepreneur. For these types of needs, and if the problem is important enough, we want to look at other models to fix the problems.

An alternative model to consider is those proposed by charities, NGOs or philanthropic organizations. These types of organizations have models that disconnect the revenue or resources needed to build and distribute the solution from those individuals, organizations, or things that have the need. For example, an entrepreneur solution doesn’t seem to be viable when we are talking about saving endangered species. These animals and organisms have no ability to pay for solutions. There is an obvious disconnect between those in need and their ability to directly support the model. For these types of individuals, groups, organizations, and things, the charity type model potentially provides a way to access a solution. In the end, most charities either help make the cost of creating solutions less expensive (e.g. giving grants and subsidies to entrepreneurs) or increase the resources of those in need to help them afford an existing solution.

Government models can sometimes look similar to NGOs with the exception that they typically have much broader solutions than the smaller, more focused, organizations (they also have political motives or create new problems, but I am not going to spend time on those topics). What I mean by their model is that they deploy the mechanism of subsidizing efforts to create solutions and provide resources for those unable to pay (e.g. Medicaid). In some instances, a big government model may be necessary for a large national need. For example, the defense of the country is something a government model works well to solve. The scale of the need typically differentiates government models from other charitable causes. But even in large scale needs, governments sometimes deploy a model that gives the resources to charities to manage.

In summary, we deploy different models because there is a difference in the relationship between those in need and their ability to contribute resources for a solution. In cases, where there is a direct ability to pay by those in need, an entrepreneur (businesses) model may be the best type to deploy. In situations when there is a lack of resources for those in need, other models work best. In instances where scale exceeds the ability for organizations to solve problems, governments are likely to step in.

Follow me to get notified with the next article: How can entrepreneurs, non-profits, and government work together to solve some of the world’s biggest problems.

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Researcher | Entrepreneur | Mentor | Investor | Director CSUSM Innovation Center

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