Business Strategy and Automation in Senior Care Franchising

Introduction

As the baby boomers are aging, there is a growing senior care market demand for serving them. According to United States Census Bureau’s projections of the senior population, there were over 80 million people between the ages of 45 and 64; and over 54 million seniors over the age of 65, by the year 2020. Thus, it was estimated that there were a combined senior population of over 130 million in 2020 in U.S. Indeed, senior care is a tremendously large market that no business can ignore. Franchising is a consensus established through cooperative arrangements among entrepreneurs (Baucus, Baucus & Human, 1996) in executing the business rights (Mumdžiev and Windsperger, 2011) and building relationships (Badrinarayanan, Suh & Kim, 2016) with trust and compliance (Davies, et al., 2011). Franchising is increasingly used in senior care for improving the quality and accessibility of serving patients (Mumtaz, 2018), providing health professionals with a turnkey practice environment (Liebler & McConnell, 2020), and enhancing the competitiveness and efficiency of the healthcare companies (Nijmeijer, Huijsman & Fabbricotti, 2014).

The senior care franchising industry, however, has four major challenges. First, the size distribution of the senior care franchising firms exhibits a highly skew phenomenon of market concentration. For example, consider Entrepreneur.com – well known for its Franchise 500 listing. It lists 78 senior care franchising companies on its website (Entrepreneur, 2022). When one examines the numbers of company sizes, 5 companies (Home Instead Senior Care, Comfort Keepers, Right at Home, Interim HealthCare, and Synergy HomeCare) produced roughly 50% of the total units of 7177 in the industry in 2021. Second, building a high-quality relationship between the franchisor and the franchisees is the most significant factor for the success of a franchise (Adeiza, Ismail & Malek, 2017) as a dissatisfied event occurred at one franchised unit could turn into unexpected system-wise crises (Ben-David, 2018). Third, building a good franchisor-franchisee relationship to grow in a highly competitive market requires smart business strategy with wise resource allocation for strategic action. The challenge is how to do that? Fourth, in his best seller, Business @ the Speed of Thought, Bill Gates (1999) wrote: “Information Technology and business are becoming inextricably interwoven. I don’t think anybody can talk meaningfully about one without talking about the other.” Thus, for the alignment of automation to strategic action to be meaningful in senior care franchising, one needs to know how senior care franchising, automation, and automation in senior care franchising really work (Guth and Poole, 2015). This is a major challenge indeed.

So, the research question for the paper is: How to design the business strategy of allocating resources wisely with intelligent automation to build up a high-quality franchise relationship for growth in a highly competitive senior care franchising market? The design methodology addressing the research question is based on the theory of the “Sciences of the Artificial” (Simon, 1996, 2019). The design artifact of forming and putting business strategy, as a science of the artificial, into action consists of four components addressing the above-mentioned challenges respectively. First, an evolutionary mechanism of anticipating the future shape of the landscape of the market competition. This mechanism is grounded in the theory of “Skew Distributions and Sizes of Business Firms” (Ijiri & Simon, 1977). Second, an evolutionary mechanism of coordination and identification for building a high-quality franchisor-franchisee relationship. This mechanism is grounded in the theory of docility (Simon, 1993a, 1993b, 1997) and distributed cognition (Secchi, 2010). Third, an evolutionary mechanism of wise resource allocation for strategic action. This mechanism is grounded in the input-process-output model of strategic entrepreneurship (Hitt et al., 2011; Sirmon et al., 2011), a resource-based view of the firm (Barney, 1991). Fourth, an evolutionary mechanism of aligning automation to strategic action. This mechanism is grounded in the theory of digital nervous systems (Gates, 1999).