What is “New” In Adopting New Membership or Business Models?

We’re very pleased to introduce our newest regular columnist here on SocialFishing:  Anna Caraveli, of the Demand Perspective. You may recognize her name from several outstanding articles she  wrote for Associations Now. (Read more about her here.) Her monthly column for us will focus on what Anna calls “the building blocks for constructing new membership and business models” for associations. She will explain and explore for us how “demand-centered models require a re-orientation of an organization from products and policies to people—customers, members, stakeholders” — and these are ideas which clearly relate very directly to the themes we’ve been exploring both in Open Community and in Humanize. 

I have been preaching model change for years. Don’t just play on the periphery; transform your entire organizational model. I thought I sounded pretty cool until calls for new membership and business models became ubiquitous.  Now what? It seems to be time to begin asking new questions; like what we mean by a “new model” after all.  What results do we expect? One question, in particular, dogged me: How do we envision our associations to look and behave like after a model change? Not very different, it turns out, judging from conversations with association executives and articles on the topic.

For many, a “new model” is a new “thing”–new program, format, structure, delivery vehicle—that you can just plug in somewhere and bring about magical results.  This line of old thinking cancels out the “new.”  It assumes that the basics—the elements that maintain “the association as we know it”—remain intact.  It looks for solutions within the same categories of tactical and programmatic “plug-ins,” but somehow expects different results; results that will never materialize.  Perhaps there will be modest or temporary improvements but not a new level of performance, value and market positioning.

What I list below are lessons learned from years of practice and recent research squeezed into 5 building blocks for achieving deep, systems based innovation that substantially re-shapes the way your organization thinks, does business and achieves bottom line results.

•  Aim at new business concepts rather than new “models.”  You don’t simply pull a model out of thin air and then click “insert.”   Arrive at the decision for what model to select organically; on the basis of what best supports your strategy, the way you define your business and view the world.

•  Understand that systems-based innovation is different from launching an innovative program, product, delivery vehicle or process.  Unlike a single program or product, a business model is embedded in all dimensions of your organization. This is how New Market Advisors, an innovative consulting firm, defines “business model:”

The business model of a company – its formula for sustained success – becomes deeply ingrained. It is reflected in who the firm hires, how it measures performance, who it targets as customers, the standards it creates for budgets, and how it views competitors. Indeed, the business model must permeate the firm in this way if the company is to become better at executing this formula than its competition. When a company is well-aligned around a business model, it repeatedly wins battles fought on that turf.

•  Build real, deep, tangible foundations for executing and not just conceptualizing sustainable innovation. While alignment must occur on all fronts, culture, daily practice and orientation are perhaps the most significant domains in which to anchor a new architecture.  Demand-centered models are executed by a re-orientating every aspect of an organization from a focus on products and policies to one on people—customers, members, stakeholders—and the solution of problems that prevent success.   This means that metrics, criteria of success, economic models, priorities for budget and resource allocations, staff recruitment and promotion must all contribute to the same goal:  customer and stakeholder success.

•  Re-orient leadership and the management of people around the competency needs of the new market orientation.  A focus on the human side of your business requires a people-focused organization both internally and externally if your innovation is to move past “messaging” clichés into execution and, ultimately, better business results. This implies different roles for, and criteria of evaluation for, staff; different culture, environment, relationships.  And to link the pieces together and drive concept to execution new competencies and models of leadership are needed.

Leadership is not a technical discipline to be mastered and then applied. It is the ability to enable people and organizations to realize their potential.  And what it takes depends on time and context.  Noted leadership author and consultant, Michael Maccoby, argues that models of effective leadership for our era – which he calls “the knowledge-service age”—differ substantially from those that were effective in previous eras because “the tools we’re using —the computers, the Internet and so on, are very different types of tools [than those used in previous eras.] The relationships are different. The customer/producer relationships are different. The meaning of what creates productivity is different and what creates quality is different.”

 What does this mean? Maccoby argues the leadership needed today is collaborative rather that authoritarian; enabling rather than prescriptive:

 You’re dealing much more with empowered people who are dealing as free agents and co-producing with each other in teams and with  customers. Leadership has the task of getting people to share.” 

 Moreover, by leadership, Maccoby refers to a system that permeates an organization rather than individuals or positions.

This framework for leading organizations and managing people is needed for the execution of new association models that are in sync with today’s demand for knowledge service.  If the world of orderly “products, services and benefits” required efficient management of events and processes, demand-oriented knowledge service requires leadership competencies throughout the organization; entrepreneurship and innovation; the ability to piece together disparate bits and pieces from multiple sources to craft innovative solutions for customer problems.

 The role of today’s leader is to nurture the continuous building of new competencies and empower individuals with the authority, leeway, environment and access they need to execute this model successfully.

• Above all else, the “new” in effective model change is not the specific model itself but the capacity to constantly innovate on the basis of entire models and systems.

Gary Hamel nails it in his book “Leading the Revolution:”

 “Industry revolutionaries don’t tinker at the margins; they blow up old business models and create new ones… Business concept innovation will be the defining competitive advantage in the age of revolution. Business concept innovation is the capacity to reconceive existing business models in ways that create new value fir customers, rude surprises for competitors and new wealth for investors.”

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Interested in this subject? Read more at Anna’s blog, the Demand Perspective.