The Changing eStrategy Context for Associations

Introduction

Today, more than ever before, Associations are under pressure to deliver value to members. Funders, partners, and members all need to see this value reflected in each interaction with the association. Many groups have invested heavily in technology with the hopes that a website will help deliver this value. However, most associations are missing the real opportunity to create entirely new sources of value for their members with an effective and considered eBusiness strategy.

Creating Value

Associations have traditionally delivered value to members by advocating and communicating on their behalf, and by servicing common organizational needs, such as insurance or networking opportunities. Today, however, associations are being viewed more and more as stewards of both the knowledge and economic prosperity of their members. This shift has put associations under pressure to deliver new services like training, professional development, and common procurement solutions. It seems that the traditional value strategy is under severe stress and may in fact be unsustainable.

So, if associations need to deliver more in order to stay relevant how do they do it? Fortunately, web technologies offer enormous transformative power at relatively low cost. But harnessing this power is not as simple as implementing software or launching a website. In order to reap real value associations must stop spending money on technology they cannot directly relate to their business strategy. Real technological value comes from aligning your strategy with a clear knowledge of the new opportunities eBusiness presents.

The Value Chain

For many years Michael Porter’s value chain model has been the standard for helping organizations articulate their competitive position and ability to deliver value. For associations, this value chain might be illustrated thus:

While this model has served strategic planners well for several decades, the time has come for it to evolve. Whereas this approach suggests that eBusiness can only deliver cost savings via operations, current thinking contends that it can help create entirely new value opportunities. In fact, eBusiness can fundamentally redefine the value and benefits associations deliver to their members.

The Value Network

A growing host of writers, including renowned business and technology commentator Don Tapscott, have begun to advocate a reconsideration of the eBusiness impact on the value chain. Tapscott contends that eBusiness allows for a complete uncoupling of the nodes in the value chain by reconfiguring them into a Value Network. This network approach unveils opportunities for organizations to realize benefits in all areas, from inbound logistics to customer service. For associations this means multiple new ways to expand service, save money, and deliver member advantages.

This new view says that each organization has a strategic center – a hub where strategic choices about its purpose and function originate. For associations, there are three primary strategic centres: customer relationship management, infrastructure management, or innovation.

Customer Relationship Management means the organization is interested in serving all of the needs of its members by redesigning itself to serve their changing needs. This kind of organization is interested in economies of scope.

Infrastructure Management means the organization is focused on operational excellence by driving costs from all aspect of the supply chain (e.g., a public utility).

Innovation centred organizations want to solve the same problem faster and cheaper with better technology or service (e.g., a software company).

Every organization comprises each of these principles, but just one establishes the primary organizing principle. The strategic centre for associations is most often customer relationship management. In order to maximize the value of eBusiness in this strategic centre you need to deploy technology in the parts of your organization that add the most value to members or that create unbreakable relationships with them. For customer relationship centred organizations, doing this requires employing two key eBusiness strategies: orchestration and modularization.

Unleashing value for members

Successful eBusiness strategies are focused and organized around critical business processes. This approach maximizes an organization’s ability to respond to changes in strategy or technology. It also makes it easier to identify opportunities for technology to evolve your business model and create more value for members.

Orchestration strategy

An orchestration strategy rewires an organization’s value network by connecting islands of intelligence via a common information backbone. An example of this kind of strategy might be online renewal of membership through a third party vendor, with key member data and payment information remitted to the association. In a case like this, the association orchestrates the flow of information, but doesn’t have to develop the entire required infrastructure.

Another example would be outsourcing newsletters or publications to third party publishers who manage both print and electronic formats. Mailing costs are minimized by distributing electronic information, while the association manages the editorial content.

The key benefit of an orchestration strategy is that it allows you to reallocate scarce human resources to high touch interactions with members.

Modularization strategy

A modularization strategy involves reassembling the business model to substitute or swap nodes of the value network based on cost and need. An example of this might be brokering professional development courses to members by tapping into existing offerings from educational institutions. This approach would allow the organization to partner with multiple institutions offering a variety of courses, thereby reducing members’ cost of training.

Similarly, if an association were to outsource conference management, it could utilize different conference management solutions depending on the size and type of event.

The principal benefit of a modularity strategy is providing members with choice and flexibility while minimizing cost and staffing requirements. This approach can also see the sharing of infrastructure between multiple associations.

The Right eBusiness Strategy

Whatever an association does with its business strategy and technology, it is important to remember that e-only association models are rare and mostly impractical. However, associations can use eBusiness models to serve geographically dispersed members, provide robust services at lower initial costs, and deliver more interactions, transactions and communications with less expense. These methods will help you to free up staff for high value interactions with members by identifying alternate strategies for delivering everything else. eBusiness strategies like those described above, provide some new tools to ensure technology spending creates the most value for members and contributes to the long-term sustainability of an association.

Tom Ogaranko is CEO and co-founder of Redengine Inc., a leading technology firm developing ebusiness solutions for associations and businesses.
 

OUR MISSION

To build better
associations and non-profits by 
delivering unique
and unparalleled expertise, programs
and services
to their staff and
volunteers.