How to Manage Risk When Going Global
There's no escaping it: Expanding internationally makes demands of an association's resources. But smart planning can help you manage the investment.
Association leaders aren’t very concerned about global trends. But should they be?
According to Association Laboratory’s annual “Looking Forward” [PDF] survey, 45 percent of respondents say that there are no global factors that affect their members, the same proportion that said so a year ago.
A closer look at the numbers, though, suggests a little more movement on this front. For instance, 20 percent of respondents report that they see more members increasing their international activity—up from 16 percent last year. And more professional association chief executives are concerned about changing market-access regulations—30 percent, up from 22 percent.
None of this represents a spike that should prompt association CEOs to rush to open a Beijing office or start booking flights to Frankfurt. But the small but noticeable shift that the “Looking Forward” survey shows echoes many associations’ path to going global: growing activity among members (or customers) around the world, a concern about how that might affect the organization financially. And then, too often, an unfortunately timid move into going global that doesn’t quite pan out.
One thing that became clear while I was working on last fall’s ASAE Foundation report, Global Growth Strategies, is that investment levels into going global can often be overly conservative. Going global is not a task that requires profligate spending, but nor is it one that can be handled by phone and email by a part-time staffer. “No money, no mission,” as the line goes, and the associations that have enjoyed the most success are the ones that made an explicit decision to go global, developed a rationale and business plan that made sense to the organization, and followed through on it.
As the report puts it:
Any global effort will make demands on an association’s time, staff, and budget resources, especially early on. Shortcuts are in short supply, particularly since the goal in an effort’s early states is to acquire understanding of a region where market behaviors may be subtle. Expect travel and research costs to be high in the early phases, and prepare stakeholders for those expenses by clarifying the long-term value of the effort.
That bit about preparing stakeholders, interviews suggested to me, can be the prickliest and most difficult ones leaders have when it comes to going global. If board members aren’t balking at the high travel costs (and low early revenue projections), members at associations that are mainly active in North America are worried about their dues dollars being spent overseas—that “we’re taking money from our Peoria member and allocating it to Pretoria,” as one executive put it.
There are multiple responses to those concerns, which Global Growth Strategies lays out. But they largely boil down to two key points: First, that not going global also qualifies as a decision, with its own set of consequences, and that risk can be managed with effective research and good planning.
To that first point: Associations that don’t look overseas are often missing an opportunity to promote their mission, standards, and credentials to communities that are hungry for it. And if they’re not communicated to by you, they’ll find it from a related group. As for the second, one association executive delivered some tough love on this point: “If you don’t have a tolerance for risk, then don’t go global.” But the expense of research and travel can also help you identify partners that can help you launch the kinds of activities—meetings, education, credentialing—that can make the effort financially worthwhile.
In a recent report, Globalstrat’s Terrance Barkan, CAE, also pointed out a few common-sense guidelines for managing risk during the opening stages of going global. Perhaps the most important among them is knowing when you’re going to cut bait, and put it in writing: “For associations that use discretionary funding for member programs that are not expected to provide any returns, the policy might state: ‘No more than 20 percent of all discretionary funds in a calendar year may be applied to programs that do not provide or are not expected to provide any financial return.’”
Put even more simply: Have a plan. You may laugh at the simplicity of that, but there are plenty who tried to go global without one and paid the price for it. I’m not sure, though, they had it any worse than those who didn’t bother trying at all.
If you want to hear more on this, subject, I’ll be moderating a panel on Monday, March 14, at the ASAE Great Ideas Conference called “Global Growth Strategies,” joined by a number of leading thinkers at successful global associations. I hope you’ll be able to join us. If not, please speak up in the comments and let us know what concerns and success stories you have to share from your own global efforts.