Strategic Thinking Articles

Preparing for an Open-Range Future


Blurring of professional and industry boundaries creates new sources of competition for associations. See how The Forbes Group's modified organizational model based on self-forming groups rises to the challenge.

The world used to be so neat and tidy. The lines of demarcation were clearly drawn between business sectors, between professions, between for-profit and nonprofit organizations. Now the rules have changed and the future is open-range, not fenced farms. People want to be free to roam.

Associations have lost their information franchise because of technology and the economics of competition. Armed with vast resources and unencumbered by hierarchical decisionmaking, for-profit companies can nimbly challenge associations and their members' enterprises, often using the World Wide Web to their competitive advantage. For example, Microsoft's creation of the Expedia online travel site has eroded the travel agent's business, clearly giving companies and the trade associations with which they are aligned cause for concern. Even scientific and medical organizations are discovering that they are not immune to the new competition as for-profit organizations and universities move into the lucrative field of adult continuing education, one of their mainstays. A world of blurring boundaries calls for a new organizational model that allows for much more rapid response.

Work we've done at The Forbes Group with associations is demonstrating that those who adopt an organizational model that facilitates self-forming groups and encourages them to communicate freely can retain competitive advantage. But this is not a well-worn path. Those that are trying it are poised at the edge of the jungle with a machete.

Open season in the professions

Once professionals (doctors, dentists, lawyers) and paraprofessionals (nurses, dental hygienists, tax preparers) agreed on the boundaries of their practices. Now paraprofessionals are moving into territory once the exclusive terrain of the professionals for whom they work. For example, dental hygienists want independent practices free of oversight by dentists. Nurse practitioners want to perform procedures that have been reserved for doctors. Pharmacists want authority to prescribe. Their arguments are economic: They are well qualified to do the work and they can save patients and insurers money-a desirable social benefit.

The fences between professional specialties are breaking down, too. Oral surgeons, who are dentists, are doing facial plastic surgery to the chagrin of plastic surgeons, who are doctors and claim that this constitutes practicing medicine without a license. Big accounting firms are buying law firms, including small and medium-sized practices, to the horror of lawyers who believe that accountants and tax preparers are giving legal advice in areas for which they are not sufficiently trained. Architects insist that they should oversee interior designers because they are more highly trained, while designers believe that this is simply economic hijacking.

Even within associations, borders are under stress. The Reserve Officers Association, Washington, D.C., is organized vertically by service branches (Army, Air Force, Sea Services). Yet, it is finding that there is an emerging need and demand to allow horizontal interaction. For example, helicopter pilots want to communicate about common concerns regardless of whether they fly for the Army, Air Force, or Navy.

Finding the competitive edge

In this barrierless, borderless world, how can associations succeed when their traditional constituencies are being challenged or are undergoing change? As lines blur, what is an association's constituency? At the summer 1999 meeting of the National Association of Bar Executives, Chicago, legal associations agonized about whether they could or should accept as members employees of accounting firms who buy law practices. Conversely, should the American Institute of Certified Public Accountants, New York City, accept lawyers who work for accounting firms? Is there a need for associations formed around disciplines (law, accountancy) or is the new need for associations formed around outcomes (estate planning)?

Within this shifting landscape, associations do have some sharp competitive edges.

*Content. Associations have traditionally been unique repositories for information and knowledge about their economic sectors.

*Credibility. Many associations have established brands that mean something in an environment where veracity is in doubt, especially on the Web.

*Community. For-profit organizations desperately want-but find difficult to replicate-the ability associations have demonstrated to coalesce constituencies.

*Commerce. Associations have developed ready markets that can be geometrically broadened by understanding and using the power and imperative of online channels.

While these characteristics can provide some inherent power, associations will have to look at a new organizational model to exploit such advantages.

Looking beyond the traditional model

The traditional association model is based on exclusivity (cadres called members), subsidization (bundling and offering products and services at below-market rates because of dues), and structure (boards, committees, special interest groups, regional groups, and chapters, all of which can be hierarchical and hidebound). This model often lacks the agility to respond with the necessary immediacy to tough, fast-moving competitors.

Complexity theory points the way to a new model, one that promotes a more fluid, responsive organization. This theory was developed by scientists at the Santa Fe Institute, New Mexico, a think tank founded in the mid-1980s to study complex adaptive systems to explain the behavior of dynamic systems, such as biological and artificial life (computer-created organisms).

Boiled down to its essence, complexity theory posits that all dynamic systems, whether organic or inorganic, thrive and grow only on the thin skin of surface tension between order and chaos. If they are too ordered, they stagnate; if they are too chaotic, they fly apart. In either case, the end point is the same-oblivion.

What does this mean to associations? The current organizational model risks stagnation. It doesn't allow for fast response to needs and demands that don't fit into hierarchical decision making. The problem lies in the practice of overstructuring in an increasingly unstructured world. A typical association organizational model looks like a hub-and-spoke system (figure below). 

The parent association has components (special interest groups, chapters, regional organizations, committees, and task forces) tethered to it by structure. Sometimes that structure is as complex as that of the parent (which often has its own numerous bylaws, officers, dues structures, etc.).

This doesn't mean that the current model is bad. It is very appropriate to have special interest groups, chapters, and the like. But there must be other opportunities to interact that are user-driven. People want to associate around four basic areas-location (where you are), discipline (what you do), interest (what you care about), and issue (what confronts you). But they increasingly need to associate on the fly, and structures don't allow them to do that easily. America Online (AOL), Dulles, Virginia, recognized this and early on developed software that allows people to create their own chat rooms easily on any subject. Some of those chat areas last a long time; some disappear in a few hours. What they share is that their existence is determined by the participants, not by AOL. The participants are at once the creators, the end users, and the content providers.

Becoming a catalyst for community

An association model based on this kind of participant-determined world (figure below) is like a molecular structure. There is a catalyst (the association) that attracts molecules (self-forming groups) that create substances (content). Within the structure, people coalesce around location, discipline, interest, and issue. The association, however, is the facilitator of conversation-supplying ways in which members can communicate among themselves and among other constituents-not the provider of it. The conversation continues as long as the participants wish it to. As in the complex organic world, these coalitions shift and change in real time depending on participant need. The broader the conversation, the richer the knowledge it generates, so it shouldn't be limited just to members.  

The following example demonstrates how the use of a self-forming group model can exploit an association's competitive advantages. During the World Trade Organization meeting protests in Seattle last December, the Building Owners and Managers Association (BOMA), Washington, D.C., set up a listserver at the request of its local members. Members wanted to be able to track the progress of the demonstrations, as well as the community responses and member tactics activated to prevent damage and to share and implement clean-up ideas. Once the crisis ended, the need for the group evaporated, but during its short existence, it was self-created and self-sustaining with BOMA International acting only as the facilitator.

Exploiting other competitive advantages

How else could this work? In a world where identities and images can be manipulated, veracity is increasingly important. Credibility in their professions and industries-another traditional competitive advantage of associations-brings safety and assurance to self-forming groups and their continuous conversation. While there are plenty of Web sites offering thousands of virtual communities, to the potential participant they are considered Brand X. Therefore, in the uncertainty of cyberspace, an association's familiar and trusted name has value. It is unlikely that BOMA International's members would have conducted their sensitive conversations on an anonymous listserver.

The same holds true for e-commerce. Associations can provide a safe place for people to conduct business. But, of course, there are many competitors. VerticalNet.com, launched with only one community just five years ago by a former executive of AOL, has grown to more than 50 online marketplaces where buyers and sellers meet. Originally, VerticalNet focused on trade groups, but now it is branching out into the professions, such as nursing. Its communities offer a panoply of services from editorial content to discussion forums. However, their real reason for being is as a meeting place for commerce. VerticalNet's world is a fairly structured one, but associations could expand on the model by creating the mechanism for buyers and sellers in their sectors to quickly find one another without the structure. Priceline.com and eBay.com demonstrate the looser structure associations might adopt. Buyers post their needs and sellers bid on filling them. Again, the association can act as facilitator or broker and nothing else. The participants pay the broker for creating the place for the exchange.

It's all about community

In the end, associations are all about community. And the self-forming-group model, coupled with rapid advances in technology, can vastly expand the reach of that community. For example, while an association conference provides venues where people can meet face-to-face to discuss topics that interest them, their conversations shouldn't stop at the end of a meeting or session. NACORE International, West Palm Beach, Florida, the organization of corporate real estate executives, offers traditional meeting venues at its annual conference. In addition, it also provides space in which meeting goers are encouraged to gather spontaneously and informally to discuss other topics or perhaps to continue a discussion growing out of one of the formal sessions. Some associations are beginning to take this a step beyond by offering after the meeting or convention online opportunities to continue discussions through their Web sites, listservers, and e-mail.

New research by The Forbes Group on the future of meetings, completed for the Professional Convention Management Association, Birmingham, Alabama, underscores the value of-and the imperative for-facilitating self-forming groups. As a result of the research, The Forbes Group concluded, "The increased globalization of the world's markets has allowed new technologies, new products, and new business practices to leap from one region of the world to another at an unprecedented pace. With this acceleration in information sharing, the competitive disadvantages and risks of not being current are becoming even greater."

"In this environment, once-a-year updates on industry and professional changes are not enough. Although the benefits of personal networks that can only be achieved through face-to-face contact gain in importance, they must be supplemented by ongoing information sharing. Conference and convention managers need to leverage emerging technologies to keep the discussion going from one conference to the next. Such a capability will not only help to keep the organizers engaged with their potential attendees on a continuum, but also provide an early warning system for changes in the profile of potential attendees. The successful industry convention of the future is more likely to be a venue in which providers of very different products to the same targeted market can build alliances rather than [a venue] in which similar kinds of businesses compare notes."

And, in the next few years, as technology moves us from text to voice and video and from personal computers to handheld ones, there will be an escalation of the immediacy and richness of the dialogue. These continuing conversations can spawn new virtual and face-to-face groups, perhaps around entirely different subjects.

Associations can, and should, monitor these conversations to glean new knowledge or early warnings of trends and issues that they can share or sell. Both the physical and virtual discussions give associations the opportunity to turn networking from a byproduct (chatting over drinks in the bar after the conference program) into a product in its own right that has value and can generate income.

The Young Entrepreneurs Organization, Alexandria, Virginia, for example, provides small online and face-to-face forums of 10-12 members that meet monthly in a confidential environment to share business and personal experiences. Members say this service is their principal benefit.

The bottom line is that self-forming groups are being created in vast numbers, especially on the Web. Any search using the terms online and communities will yield thousands of hits. A scan of them reveals that few are being created by associations. That may be because associations traditionally have tended to structure and limit access to dialogue. Complexity theory and its implications for self-forming dynamic systems would strongly suggest that this is a mistake. With their rich history of community, credibility, content, and commerce, who better to get others associating freely than associations? 



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