First Cuban Business Association Signals Potential Opportunities
The fact that a small business association has formed in Cuba might bode well for American associations looking to collaborate with Cubans.
The Associated Press reported recently that entrepreneurs in Cuba have formed the country’s first small business organization, called the Association of Businessmen, and about 90 entrepreneurs have joined. The group applied for government recognition in February but has not yet received it.
This development is “a very good sign,” said Rick O’Sullivan, principal of Change Management Solutions and an expert in building associations in developing countries. “I think it speaks to a recognition that the government is failing and there is a need for businesses to look out for themselves.”
Associations self-govern and set standards, and this is one of their most important functions, especially in post-Communist situations, said O’Sullivan, who has worked with associations in post-Communist environments in Eastern Europe, the former Soviet Union, and Central Asia. “It’s not because we’re an advanced economy that we have self-regulation. It’s because we have self-regulation that we are an advanced economy,” he said.
“The majority of regulations in the United States are actually being managed by civil society and by associations, not by the government,” O’Sullivan explained. “Look at our entire healthcare system, for example. The licenses are issued by state governments, but it is the associations that determine whether or not someone is qualified to practice medicine.”
So there is potential for associations to spring up in Cuba—but there is also potential for American associations to step in and help during the transition. American associations can consider opening up their membership to Cubans, and they can work with Cubans to translate their model into something that will work in their country.
Getting involved in Cuba can benefit American associations, O’Sullivan said. If American associations bring their concept of standard-setting to Cuba, “then what’s going to be adopted are American standards and norms, or at least the same process of achieving them,” which means that American businesses will have a competitive advantage.
By becoming members of American associations, Cubans reduce their risk, but it also increases U.S. businesses’ investment opportunities, O’Sullivan said. For example, as tourism opens up, associations that “help introduce the concept of nongovernmental standards and certifications would help to promote American standards and brands,” and it brings Cubans into the process.
Cubans are likely to be receptive to outreach from American associations, because they will “want to know what they need to do to sell to American markets,” O’Sullivan said. “We would be their biggest market.” Adhering to U.S. standards can also give Cuban businesses a competitive edge in their domestic market, he added.
American associations can’t simply translate their materials into Spanish. It requires stepping back and considering why your association’s self-regulation is important, O’Sullivan suggested. “Why do you do things this way in the first place? Why are you doing this, and not the government?” Associations need to be able to explain that to Cubans.
With an educational organization, for example, “What they need to know is not how to manage a PTA, but why you need one and how you form one. What does it do?” O’Sullivan said.
Some cultural awareness is needed as well. “U.S. association practices and products are, in part, based on U.S. nonprofit law and the result of the role nonprofit organizations play in business and society here. We assume transparency, pluralism, and rule of law, none of which exist in Cuba now,” O’Sullivan said. “A Cuban entry strategy would have to include consumer education on these ideas and practices and assessing which existing products can be localized to do so and which would need to be developed from scratch.”
O’Sullivan cautioned that, at first, American associations should focus on building customers rather than members. “Because of the different roles of American and communist associations, in which the term ‘association’ had been tied to failed central planning, American associations should first focus on a customer-based strategy and develop membership down the road,” he said.