US Church Markets and "The Rule of Three" Part I: Past and Present

Don't you just hate it when blog posts tell you to go read or look at an entirely different article, and then come back to relate it to the current one?

Sometimes I do.

Well, this is another one of those posts.

And what I'm going to ask you to go read may seem like a really odd thing when what I'm talking about is churches.

It's a technology article on ZDNet. And worse, it's a technology article that's about applying the insights of yet another resource (in this case a global market analysis book) to describe what has happened, is happening, and likely will happen in the smartphone industry.

So what can an article smartphones based on a book about status in global markets possibly have to say to us in the church?

Well-- go read it. And especially pay attention to the big graph near the middle. And then leave that window open-- because you'll want to refer to that article as I'm trying to see how it might apply to vital congregations and other kinds of ministries (including missional groups and discipling groups) in local areas.

The Rule of Three

Jagdish Sheth and Raj Sisodia describe how a wide variety of competitors within about 200 different markets, globally, have typically sorted themselves out in terms of market share in their book, The Rule of Three. They also have placed an much briefer article describing these processes on Dr. Sheth's website (pdf). Pages 7-9 of that article will give you their basic summary, and another graphic for picturing this.

In even simpler form than they have put it, all kinds of markets first tend to divide between what they call "generalists" and "specialists." On the "generalist" side, in any given market, exactly three companies will tend to dominate over time. Dominate means to have at least a 10% market share. Specialists who can last (if they capitalize on their specialist status, and don't try to play as if they were generalists) have 1-5% market share. Those with a share between 5% and 10% tend to fall into what Sheth and Sisodia call "the ditch." They flounder unless they can find some way to move or move back into either the top 3 or rebrand themselves as specialists. This is because in this range they tend lack both the scale of generalists and the unique and loyal (or locked-in) customer base of specialists. It's in this range they're in greatest danger of going out of business entirely.

The Rise of United Methodists and The Rule of Three
From roughly the mid-19th century until through WW I, Methodists, Baptists (the previous two when you combine northern and southern branches) and Roman Catholics constituted the "big three" on the US religious landscape. There were lots of other specialists, but these three continued to capture at least 10% market share (assuming Roman Catholic and Protestant markets did not cross over substantially), nationwide, while others did not. To be sure, there were strong regional variations. Lutherans were the dominant Protestant bodies in much of the upper Midwest (Iowa, Wisconsin, Minnesota) where large numbers of German and Scandinavian immigrants had settled. Congregationalists remained potent in the Northeast. And in places with large Dutch, Swiss or Scottish immigrant populations, a variety of Calvinist groups could easily dominate, and did. There are always variations on smaller scales. But on the macro scale, the nation as a whole, it was clearly Methodists, Baptists and Roman Catholics.

Methodists in the US, however, had begun a significant slide out of the top three at least by the end of WW II, and in effect were teetering with if not actually yet "in the ditch" by that time, despite the mergers of Northern, Southern and Methodist Protestant churches in the 1930s. The creation of The United Methodist Church by the union of The Methodist Church and The Evangelical United Brethren in 1968, effectively reversed that outcome, putting us just back over the between ditch and generalists, and making The UMC the largest Protestant denomination with the greatest scale and the biggest potential Protestant market share at the time.

Where We Are Now

We all know what's happened to nearly all religious groups in the US, and especially Christian groups, since that time. Today, among Christians in the US at least, only Roman Catholics as a coherent group remain clearly in the top three (a 10 % market share or more). Non-denominational megachurches might be #2, if that can be said to be a group as such. Southern Baptists (though not the larger evangelical movement of which they are the largest single group) have slipped into the ditch (current market share just over 5%) and may be slowly heading toward specialist status. United Methodists, if we take 7.5 million as accurate for the US have moved through the ditch and are firmly ensconced on the "specialist" side, with a relative market share around 2%.

Now, I'm not making any value judgments at all about why these declines have occurred. From an organizational perspective, focusing a lot of energy, and especially blame, on how or why these shifts occurred diverts energy and attention from where it could be far more fruitfully focused-- leveraging the position we now have to remain competitive in the marketplace in which we now find ourselves.

That position is as a mid-sized specialist, not as a generalist.

Our perhaps unique challenge, one Southern Baptists are on the brink of facing, is that our basic structures for "doing church" and our basic attitudes about "being church," endemic in most of our current top level leaders, were formed at a time when United Methodists were generalists. We quit being generalists, in fact, at least by the 1980s. And we took neither of the hard paths at that time Sheth and Sisodia recommend to regain generalist status (either grow rapidly by conversions or through mergers and acquisitions, or divest massively in our generalist structures and assumptions and focus on recreating ourselves organizationally, behaviorally and attitudinally in a clear specialist role).

So this is where we are. We are, in actual terms, a specialist Christian denomination in the US that continues to be structured, behave, and believe itself to be a generalist one.

Stay tuned for part 2-- Possible Futures