“Change is inevitable, growth is optional”; John Maxwell. As a leader, our most important job is to sift through the maze of options and make decisions about how to address the inevitable change facing the organizations we serve, support and lead. If we aren’t choosing growth, we are defaulting to the alternatives of either stasis or decline. All organizations, just like humans have a lifespan. Cities, businesses, ideas, philosophies and yes…associations all follow a pattern of growth, equilibrium and eventually decline or extinction. Let’s look at the subject of growth and what you can do as a board member to evaluate the options for what is sure to be a dynamic period for the association that you serve.
Let’s start with a brief level-set.
In his groundbreaking book Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies, Geoffrey West explains that all mammals have about 1.5 billion heartbeats over their lifetime. A shrew, the smallest mammal has a heart rate of about 1,000 beats/minute and lives about 3 years. A blue whale, our largest mammal lives to be almost 120 years thanks to a slow heart beat of about 25 pumps per minutes. Basically there is less wear and tear on the body as an mammal gets bigger allowing the organs and core physiology to work more efficiently. Less friction allows mammals to live longer as they get larger. This phenomenon is known as sub-linear scaling, also known as an economy of scale.
With this basic understanding of sub-linear scaling, let’s move on to the opposite which is super-linear scaling which applies to non-organic systems such a business or an association.
In his summary of the book Scale, Thomas Dorfer says “ Studies of 28,000+ S&P 500 companies that were traded on US markets between 1950 and 2009, show that the half-life of a company is roughly 10.5 years, meaning that 50% of companies die after only 10.5 years. Only very few make it over 100 years, with even fewer making it over 200 years. Out of all these companies, 22,469 (78%) had died by 2009. Others were acquired by or merged with other companies, some went bankrupt or were liquidated, others were privatized, underwent leveraged buyouts, or went through reverse acquisitions. Here, companies seem to have survived through diversification and innovation. When the number of companies is plotted logarithmically as a function of life span exponential decay and a constant mortality rate can be revealed. The longest surviving companies are relatively modest in size and are highly specialized, operating in niche markets such as ancient inns, wineries, breweries, confectioners, restaurants, and the like. These seem to have survived by continuing to produce a perceived high-quality product for a small, dedicated clientele. Interestingly, most of them are Japanese.”
Lifespan
So, with that under our belt, let’s move from for-profit businesses to non-profits. While I’m not aware of any such study on the lifespan of the non-profit association sector, it stands to reason they too have a lifespan that is not infinite. I’ve always said most associations have a low metabolism and thus progress through a long, slow moving and stable existence. And as so many associations have crossed the 100 year mark, that hypothesis would seem to be accurate. There is of course an obvious downside to a low metabolism; risk aversion, lack of innovation, regression towards the mean of older members needs, and little to no investment in R&D and new technology. All of which conspire to position boards to be less demanding and at times allergic to growth and the change required to modernize the association.
More importantly than the ultimate lifespan of an association is the degree to which associations can adapt for continued viability and relevance. It’s hard to argue that the fast eat the slow, the agile win out over the rigid and the ambitious prevail over the timid. So how well prepared are associations in 2022 to adapt and serve the needs and expectations of their current members and equally important a new cohort of digital natives that have well embedded networks, communities and alternatives to what associations have long offered?
Association prosperity requires a new level of adaptability that hinges on 3 core factors; a highly qualified board with accountability and consequences for success or failure; an ambitious, visionary and risk oriented leader; and, access to the best resources and competencies inside and outside of the organization.
Just like the longest surviving businesses mentioned above, associations with highly specialized services, relevant communities and the focused delivery of value are what win the long-game. Ask yourself, what is your association better at than any other organization that your members have access to? Are you better at education than the Khan Academy or a great technical institute? Are your events better than the most exciting technology user conferences such as the annual Salesforce.com known as Dreamforce, or the globally renown U.S. event, the Consumer Electronics Show or the mega experience held in Barcelona, Mobile World Congress? Is your community better organized and connected than LinkedIn or Facebook?
Unfair comparisons you say? No! Aren’t all of your members accustomed to the quality, convenience, service and value that the commercial marketplace offers? You are not being compared to a local chapter or an adjacent or competitive association. Your competitive set is any alternative to what you provide to your members through your website, events, communities, certifications, professional development and training. Reframing the competition to a bundled set of commercial alternatives helps you see your organization through a new lens.
Growth is imperative
Which leads us back to the central issue, the imperative to grow. Growth of your membership, revenue, relevance, reputation, retention rate and operating income is 100% correlated to the value you deliver in what is now a new environment dominated by Google, Apple, Amazon, Facebook, Uber and every new app that competes for your members time and attention. We live in the attention economy. And if you want the attention of your community and to attract new members you must be attentive and attractive, in ways that may take some new thinking.
The best path I know of is to focus on what you do well and to be hyper-invested in doing what you already do better than anyone else, and ideally even better. This is only possible by devoting your scarce resources of time, staff and capital to your “One Thing” Just like getting your blood pressure or resting heart rate to the right levels is the best ways to measure good cardiac health, the same is true for your organization. If your Net Promoter Score is high or your operating income is growing by 10% or more, you are probably working on your One Thing and doing the right things to grow your organization .
Don Neal is the Chief Strategy Officer for Smithbucklin. Smithbucklin is the leading professional services organization for associations that are seeking accelerated growth, professional management and best in class outsourced services. Don is the founder of 360 Live Media, now a part of the Smithbucklin family of companies. Don served as Chief Marketing Officer; Consumer & Commercial Division of the risk strategy and insurance firm Marsh McLennan, an advertising executive at Omnicom and was the cofounder of the Hallmark Loyalty Group. Don resides in Washington, D.C. where he was an adjunct professor of marketing at Georgetown University.
So how do you identify and reallocate resources to the highest value, your One Thing? The option that many best practices organizations adopt is to free up staff and capital by outsourcing the functions and responsibilities that can be executed better, faster, and often less expensively than you are currently achieving. It all comes down to knowing what your core competencies are and what your true value is as perceived by the marketplace.
Here are a few questions to think about as you consider how to adapt to the new realities of an uncertain but very high potential future.
- Is our new member acquisition marketing best in class applying the most effective data analysis, audience segmentation and media modeling tools to identify and attract the right new members?
- Are we making the best use of state of the art financial planning, cash management and investment strategies?
- Is our website modern, mobile optimized, customized to each users preferences and creatively engaging to maximize time spent on your site exploring fresh new content?
- Is our event portfolio tailored to the right blend of in-person and digital delivery based on the new expectations of what your audience expects from each format? Do we have the best omnichannel technology to support a great user experience regardless of how our live and digital audience wants to experience your event?
- Does our association brand reflect the values, personality and visual identity that magnetizes our desired audiences to be part of our community?
We are entering a renaissance of association success, prosperity, demand and value. Social, political, economic and cultural disruption have resulted in all of us seeking institutions that we trust, depend on, whose motives are transparent, who have a track record of serving the greater good and who are above all else mission-driven. Bringing together people with intense mutual self interest in pursuit of community, career advancement, professional development and technical expertise has never been more important.
If we change the way we look at things, the things we look at change. How do you look at your association? Your members? Your value proposition? Your brand? The ecosystem you serve?
If you’re ready to look through a new lens, a lens of growth, greater effectiveness and new ways to differentiate your organization, there has never been a better time for like-minded leaders to come together and partner to serve the greater good. Let me hear from you, I’d like to know what you think.