Building sustainable business models depends on association leaders adopting a 21st-century sensibility as they imagine and co-create new forms of value in collaboration with their stakeholder networks.
In Part I of this series earlier this month, I identified the association value gap as an underlying structural problem within membership-centric business models. Put simply, associations are unable to drive profitability solely by delivering on the membership value proposition and must find alternative ways to monetize membership to maintain their existing business models. Unfortunately, since membership-centric business models wrap all value into membership, associations typically have few options for filling the gap that do not depend on membership.
In designing 21st-century business models, association leaders need to pay much closer attention to the kind of people their current and future stakeholders wish to become and what they want to achieve in their lives.
Even so-called non-dues revenue streams are not the answer, as they too rely almost entirely on buyers from within “the member market.” The problem for associations is that the member market does not really exist. It is an invention designed to create artificial predictability and a sense of security for risk-averse organizations. Overcoming the value gap, then, will challenge associations to play outside their existing comfort zones to identify emerging opportunities for radical new value creation. To make this happen, boards, CEOs, C-suite executives, and other contributors need to think beyond orthodoxy and embrace a 21st-century sensibility in their pursuit of business model innovation.
Here are three suggested approaches association leaders can adopt immediately:
Pursue value conversations: In designing 21st-century business models, association leaders need to pay much closer attention to the kind of people their current and future stakeholders wish to become and what they want to achieve in their lives. Instead of formulating value propositions based on what insiders believe about the value their organization should create for stakeholders, associations need to pursue ongoing “value conversations” by asking more powerful and generative questions about the kinds of value they can co-create with their stakeholders and their extended networks. As part of these conversations, associations must consider three overlapping time horizons: They must seek to solve short-term problems, provide for intermediate-term needs, and, most of all, support stakeholders as they strive to realize their most important long-term outcomes.
Negotiate value relationships: Despite decades of evidence demonstrating that membership simply isn’t a good fit for many potential stakeholders, associations continue to make essentially the same pitch to everyone. This enduring commitment to the membership paradigm reflects the triumph of hope over hard-earned experience. We want everyone (or at least everyone who is eligible) to want membership in our organizations, even when membership benefits us more than them, which is almost always. What stakeholders really need is not more one-size-fits-all offers but an expansive view of the power of associating as an open and inclusive experience, without mandatory financial transactions or tests of fidelity. By lowering barriers to participation and developing trusted stakeholder relationships that are mutually beneficial, associations can co-create meaningful and purposeful value that helps stakeholders answer a critical question: Why do I need this relationship?
Identify value flows: Membership-centric business models typically produce a predetermined bundle of mostly standardized products and services that are pushed out to all stakeholders according to work practices and schedules that best serve the association’s interests. This quasi-industrial method of value creation and delivery is no longer a good fit with the real-time demands facing the stakeholders of the future. By working through value conversations with stakeholders involved in more meaningful relationships, associations can co-create new tangible and intangible value flows and receive flows of value in return from their collaborators. This approach affords associations the opportunity to discover and surface hidden assets from within stakeholder networks, including previously untapped knowledge, expertise, connections, or even financial resources that would not be otherwise accessible.
These are not conventional times, and association leaders must stop thinking about the future of their organizations in conventional terms. Accelerating and intensifying societal transformation will continue to expose and exacerbate the structural limitations of membership-centric business models. To overcome the value gap, we must question our most deep-seated assumptions and embrace our responsibility to imagine, design, and develop the adaptive and resilient business models that will give our organizations the best chance to thrive over the next decade and beyond.
This is most important conversation your association will have. Are you ready to get started?