Golden's Rules for Associations

Making innovation a habit

To be real, innovation needs to be a habit, not a standalone project. And habits are learned through constant practice – doing something consistently and constantly until it becomes an ingrained feature of everyday activity. Something that is constantly happening, almost without conscious effort or thought.

Part of that is systems and environment. Apple is often and rightly cited as a model innovative organization. A major element in their success as innovators is that every aspect of operations, from the design of work spaces to management and reward systems, is calibrated to create an environment and culture that maximizes the potential for innovation to occur.

But perhaps a bigger element is the established habit of trial and error: Try things, even if they don’t pan out. Constantly.  And learn from both what worked and what didn’t.

The first woman to make the top tier of Forbe’s gallery of the richest people on the planet list is Sara Blakely, the founder and CEO of Spanx.  In the inevitable round of interviews that followed being named to this list last month, she frequently related the following item from her personal history. As a child, the conversations around the family dinner table were a little different than most.  Her father didn’t ask “What did you learn in school today?” Instead he asked “What did you fail at this week?” It instilled in her, from an early age, that constant habit of trying new and different things.  Just to see what works.  And what didn’t.

Of course there is a balance that needs to be struck. As our associations strive to reinvent and re-engineer core products and services to keep them relevant and effective  in a rapidly changing world, we have to risk trying and failing. But we dare not risk a total and catastrophic failure when this year’s annual meeting or this month’s certification and testing dates come round. There are too many members whose personal and professional success, as the world is now,  today, are dependent upon those services.  The association’s long-term need to innovate, evolve and grow cannot come at their expense.

But establishing a culture of innovation begins by establishing a habit of trial.  And a tolerance for failure.

Associations don’t have long tails

For a while there, Chris Anderson’s book, The Long Tail: Why the Future of Business is Selling Less of More, seemed to dominate the association consulting/seminar/blogging space.  Now that its currency has dimmed a little, I have a confession to make.  I struggled for a long time trying to like this book¹.  But in the end, I came to the conclusion that its relevance to associations is, well, short.

Not that Anderson’s thesis isn’t sound.  The “long tail” he describes has to do with a retail strategy executed with enormous success by Amazon and Netflix, among others.  The traditional retailing approach is to reserve your limited shelf space (whether in a brick and mortar store or a virtual space) for large quantities of whatever is currently hot.  Profitability is achieved by selling lots of copies of a relatively few, in-demand items.  By contrast, in a long tail strategy, you focus on stocking a few copies of a large variety of items.  Your inventory is shallow but wide, as opposed to deep but narrow.  It is a strategy based on having enough different things on hand that you will undoubtedly have something that will be of interest to whoever comes shopping, rather than successfully predicting the few things that lots of people will want to buy.

As the graphic indicates, you end up with the same volume of sales.  (The area in yellow is equal to the area in green.)  You aggregate a large number of small, specialty markets into a sustainable customer base.

Fair enough.  And as a consumer with tastes in music, literature and movies that are decidedly not in the bestseller/widely popular category (five hour long, expressionistic productions of German opera, anyone?), an appreciation of the value of niche markets works to my advantage.

But associations are the antithesis of the retail model that Anderson is focusing on.  They aren’t predicated on defining a product or service mix attractive enough to build a large enough customer base from the general population to achieve profitable economies of scale.  Associations start with a potential customer base already defined by narrow and more limited interests:  a specific trade, profession or cause.  The populations that we, as association professionals, are trying to make into an economically sustainable market for products and services are already a subset, and sometimes a very narrowly defined subset, of the general population to begin with.  Within that already narrow segment along the power curve, can we possibly hope to build a sustainable model predicated on offering whatever any member might want, even if no other member does?  We enter the game far to the right of that power curve (in the yellow area): how long a tail can we hope to build from there?

Anderson’s Long Tail was a healthy antidote to the reductive nature of mass market retail thinking, which is all about getting to the lowest common denominator.  Mass market retail isn’t about giving the customer what he or she wants – it’s about diluting the offering until it gives just enough of something that a large number of people will want it.  No one gets exactly what he or she was actually looking for; everyone gets just enough to make the sale.

And that is a lesson that associations would do well to take seriously.  We can’t build successful organizations with offerings that excite and delight no one but are mildly interesting to all.

But associations are not mass markets to begin with.  We exist to serve unique, niche markets.  And that raises the stakes on getting the product and service mix, the value proposition, exactly right.  We don’t have the luxury of a long tail.

¹ I liked Anderson’s next book, Free, much better, and in fact did a presentation on it which can be found here: http://markjgolden.files.wordpress.com/2012/01/free.pdf.

Stop competing

That somewhat startling and counterintuitive piece of advice comes from futurist Dan Burrus.  “No matter what your angle for competing – whether you are competing on price, service, quality, time, design, or anything else – the unfortunate outcome is you’re making yourself too much like everyone else.  So even when you are in the lead, someone else eventually matches you. ¹”

A lot of what he has to say resonates with the world of associations.  Yes, the days when everyone automatically joined their association because “that’s just what people in the profession do” are long gone.  Members are more demanding and insist on demonstrable and tangible returns on their investment before they will offer you not only their dollars, but their volunteer time and even their attention.  Associations are being driven to be more efficient and productive — to run more like a business.  After all, “not-for-profit is a tax status, not a business philosophy” and “no means, no mission!”

But in our quest to become more businesslike, or put another way, more competitive with for-profit vendors of services, information and product, are associations voluntarily sacrificing the very thing that makes them uniquely competitive in a world of expanding options for consumers?

Association journals, newsletters and magazines face competition from unaffiliated information and content providers (online and in print) who often have superior advertising or other financial resources to draw upon, enabling them to beat the association on price.  Association meetings and conventions face competition from unaffiliated education and networking opportunity vendors who have the luxury of focusing only on what’s hot and leaving the less glamorous, basic education to others.  And I could go on.

Let me be clear: being slow, out of date, locked into fixed and unchanging models, inefficient, irrelevant or costly are never excusable faults for an association. They are fatal. Associations can learn from our competitors how to be better and adopt their successful tactics in the market spaces we share.

But compete purely on their terms — as if you were just another periodical in the publications market space, or just another conference provider, or just another social networking venue — and chances are they will beat you.  They don’t carry all the baggage that an association does and will always be nimbler and more ruthless in jettisoning “unproductive” segments of their customer base.

A better way, according to Burrus, is to constantly find and promote new and different things you can do that defy any comparison to the alternatives. 

For associations, that means never losing sight of, and never failing to push and promote what it is that makes the association enterprise different from a department store or online retailer.  Some of the baggage associations carry, that same stuff that can sometimes make us less competitive than we otherwise would be in specific product or service lines, is the most unique, valuable and important thing we have to offer.  The thing that would be missed most if we disappeared.

As associations, we dare not delude ourselves with high sounding but empty rationalizations of our self-importance.  We need to be brutally spin-free in defining that unique value we offer that commercial vendors do not and in assessing our performance in delivering it to members.  But we also need to herald the difference, not jettison it.  We lose as competitors if associations allow themselves to become just another in the plethora of indistinguishable sources of information, meetings, education, etc.

¹ Techno Trends, September 2010 (Volume XXVI, No. 9)

The Loyalty Factor

As consumers, there are some products, brands, or stores we frequent out of habit. And in stable, calm and good times that’s enough. Trouble is, all it takes is the slightest little disruption to make “because I have always shopped here” an insufficient excuse for me not to take my business elsewhere. Associations are even more likely to get complacent and assume that membership loyalty runs deep, when it may just be a fragile habit.

The current economic downturn is testing the limits of member/customer loyalty severely. As budgets get tighter and every penny spent gets heightened scrutiny, even the most engaged members are taking a hard look at the relationship. Not too long ago, I had the opportunity to spend some time with marketing expert Jim Kane, author of Virtually Loyal and The Loyalty Switch. He draws a distinction between customer satisfaction and customer loyalty. Satisfaction is a reaction to a client’s past experience with you. Customer loyalty is about future behavior.

Economic security depends on converting your satisfied customer/member into a loyal customer/member.  And that is all about establishing a relationship … something associations are ostensibly good at.  But do we actually deliver on that feature of our association brand promise?

Customer relationships can range from antagonistic to loyal. When you have an antagonistic client relationship, the client is basically forced to do business with you. From the provider’s side of the relationship, this can be quite satisfying. You’re guaranteed the business regardless, so you can operate in a manner that suits you.  (Associations offering mandatory licensing or certification programs or who have unique access to critical industry data or analysis take note.)   The danger, Kane points out, is that whatever factor is compelling the client to use you can change. Certification rules might be eliminated or a new research source might emerge.

One step above an antagonistic relationship is the purely transactional relationship. You offer a satisfactory service at a fair price that meets the member’s needs. An equal exchange. Neither side has any complaints, but no further sense of ongoing relationships exists.

Meet that standard consistently and it might grow to what Kane calls the predisposed relationship. The client is basically content. All things being equal, they will keep coming back. Most employment and client relationships, he contends, stop at this level. Its fine when times are stable and the economy is good. But that solid ground turns to quicksand the minute times get tough.

Which brings us to the highest level of the client/provider relationship: loyalty. Kane contends that these relationships are nearly unbreakable. They are based on more than price, quality or ability. Loyalty means there is an emotional bond: the member finds what you do indispensable, and they will fight to preserve the relationship, even when external factors try to break the bond.

So what characterizes this highest level of loyalty? Kane identifies seven factors:

1. Competency: you are able do what you claim you can do.

2. Integrity: the member knows they can count on you to actually do it.

Kane calls these first two factors the ante you pay just to get into the game. You don’t get any credit for them.

3. Recognition: the member knows they aren’t your only member, but they don’t feel like just a number to the association.

4. Savvy: most marketing messages are about what we do. But do we demonstrate an equal appreciation of what the member cares about? [I think a better word for this factor might be demonstrated empathy.]

5. Proactivity: Do we anticipate what the member needs, even before they recognize that need themselves?

6. Chemistry: Remember, we are talking about a relationship that extends beyond any single transaction. Do your members enjoy the experience of working with you?

7. Purpose: Do your members feel like the association stands for something bigger than your needs as a provider and their needs as a user?