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To Uproot and Tear Down…To Build and to Plant: Cost Structures

Over the past few months I’ve been working through the various building blocks of the “business model canvass.”  You can read the individual sections by clicking on any of the following: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, and key partnerships. The ninth, and final, building block of the business model canvas is cost structures, which considers the costs needed to operate the business model.

Winebrenner Theological Seminary is a mission-driven organization that focuses upon equipping leaders for service in God’s kingdom. Within our mission and strategy our commitment is to deliver the highest possible value for the lowest possible cost.

It makes sense that personnel costs are the highest single expense at Winebrenner since much of the value for students, donors, and partners is created through interaction with another human being. A second significant cost is the memberships and fees we pay to remain accredited (which vary from year to year depending upon the life cycle of the accrediting relationship). A third expense is found in costs related to our facility lease, utilities, and infrastructure items like IT costs.

Winebrenner has made some significant shifts over the past five years to realign our overall costs with our mission. For example, in 2017 a property in Pennsylvania was sold based upon the belief that online education and regionalized cohorts would replace the need for another facility “anchor” to be dropped in a different location. In 2018, Winebrenner’s Board decided to sell our primary meeting facility to the University of Findlay; this decision was motivated, in part, by the belief that a “brick and mortar” structure would be less and less significant as we move into a future in which education is more distributed and greater context-specific learning models would emerge. We’ve also been very attentive to our employee headcount and have significantly reduced our expenses in terms of employee costs since 2015.

Overall, Winebrenner’s expense budget has decreased by over $1,000,000 since over the past five years.  Each of these shifts provides further evidence that organizations are continually organizing and reorganizing around mission and strategy.

In terms of costs, one way to position ourselves for the future is to emphasize variable expenses over fixed expenses (changes in our building and personnel illustrate this concept).  A second way to position ourselves for the future is through balancing our economies of scale that emerge through the “network effect” of a growing number of collaborative partners.  A third opportunity for the future is found in economies of scope in which something as simple as managing student headcount in individual courses can lead to lower costs.

When all nine elements of the business model canvas are combined, one begins to see how an organization can be built and rebuilt to navigate an unknown and rapidly changing future.

– Dr. Brent Sleasman, President
– Image from Pexels, accessed on Adobe Spark