How Entrepreneurial Savvy Is Your Association?
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Having reviewed a large number of association strategic and
business/tactical plans, I can safely say that most contain new
initiatives that require some form of entrepreneurship competencies
to achieve expected revenue outcomes. There is often a poor link
between some strategies and business plans. A poor link creates
a gap, and the larger the gap the less chance strategy will be
successfully implemented. I have noted that strategic initiatives
to implement new products and services often stall or do not
reach their potential. In many cases, I suspect this may be due
to limited resources, excessive workload and/or lack of staff
entrepreneurial capacity.
It is not unusual to find a Chief Staff Officer with entrepreneurial
spirit wanting to move forward with new initiatives but unable
to do so as the risk of failure is considered to be too high.
The risk is often too high because the board is unprepared to
abandon some existing marginal products and services, or it is
unrealistic about the real investment required. Often the board
wants new initiatives developed from existing resources.
On the other hand, I have seen some entrepreneurial board members
become frustrated because things don’t happen as quickly
as they think they should, or the outcomes are never achieved
because staff doesn’t possess the required entrepreneurial
competencies.
Should boards and staff have an entrepreneurial attitude?
Strategic plans that call for new initiatives requiring entrepreneurial
competencies seem to move not-for-profits out of a rut, and overall
performance improves, as does the level of membership satisfaction.
This would suggest that one or more directors on the board should
have an entrepreneurial attitude and one or more staff or engaged
contractors should also have this attitude, and be able to perform
as entrepreneurs.
I recall working with a task force charged with the responsibility
of providing recommendations on how to grow its membership and
put in place some new revenue generating products and services.
The group was very entrepreneurial. It was dynamic, and discussions
were exciting. Whether by accident or strategically placed, one
member of the group was not entrepreneurial and would not be
described as a “change agent”. This person often
helped to bring the group back down to earth and provided some
balance to the discussion. The task force’s final recommendations,
while accepted, did not look as though they were going to be
acted upon in a timely manner. This group of entrepreneurs eventually
joined the board and became the new leaders. They removed some
staff and other road blocks in order to get their recommendations
implemented. Entrepreneurs are passionate and driven. Understanding
their characteristics and competencies is important if you wish
to engage them in growth strategies.
Entrepreneurial competencies call for people who are able to
start a new business venture and have knowledge, skills and an
attitude that will seek out the opportunities for the new business
venture and take calculated risks. Are entrepreneurs born this
way or are they made? I think the jury is still out on this question.
However, some people are naturally more entrepreneurial than
others. It is possible to acquire knowledge and skills to support
entrepreneurial activity. However, those who are extremely entrepreneurial
seem to share a constellation of personality traits. If you want
to have entrepreneurial competencies on your board and staff,
some of the characteristics that should be looked for as part
of the recruitment process follows:
Entrepreneur Characteristics
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Tend to see a bigger picture
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Are not afraid to do new things and bring resources together
to make things happen
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Are able to make deals, work relationships, and build
organizations
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Have a strong drive and high energy level and work hours
beyond the norm
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Believe in themselves and their ability to achieve goals
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Are able to set clear goals and objectives that are challenging,
yet realistic and feasible, and will result in rewards
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Are persistent
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Are flexibile
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Want to control their own destiny
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Are able to solve problems to make things move forward
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Are not scared of risks and failure, and tend to take
calculated risks
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Look for input on performance to make corrections and
build on lessons learned
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Are able to assume the responsibility for success or failure
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Use experts or others to help support organization and
operating details
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Measure progress and compete with themselves
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Love their dreams and move forward with great enthusiasm
and commitment
These individuals embrace innovation and renovation of activities
as potential for doing something new, but doing it to generate
new revenue. They see the whole picture, not only designing,
developing and implementing but also longer term sustainability.
Should your association have a specific entrepreneurship
strategy or just assume it is inherent in all other strategies?
If there is limited entrepreneurial activity going on and it
is imperative that non-dues revenue be increased, an entrepreneurship
strategy is a must. The strategy will identify the human capital
required and will establish policy and processes to support entrepreneurial
activity. If the entrepreneurial attitude and competencies exist
in board and staff, then an entrepreneurship strategy will not
be necessary because entreprenurism is most likely embedded in
all of the organizations activities.
There are a lot of “wannabe” entrepreneurial not-for
profits without the volunteer or staff innovators. As a result,
the entrepreneur’s new initiatives may never be discussed
or started. If these types of people and skills are not in the
organization, then the options are to obtain this type of support
or do nothing.
How many entrepreneurs are on your board or staff?
Associations looking to implement entrepreneurship strategies
need to ensure their processes are solid. They will need to engage
in assessments in terms of strategic intent, resources and the
market, and conduct critical analysis, determine feasibility,
secure the investment required, have measurable strategic and
business plans for the initiative, and evaluate on a regular
basis.
The not-for-profit sector has traditionally generated revenue
from individual membership dues, or donations, sponsorships,
voluntarism, and government support. In not-for-profits where
membership dues apply, revenue beyond dues is often referred
to as non-dues revenue. In not-for-profits without dues, revenue
beyond the traditional sources is being referred to as earned
income. Social entrepreneurship is growing rapidly as organizations
are looking for more sustainability. Traditional sources are
not always reliable – the drive to do more to achieve the
mission is causing a major shift in revenue generation efforts.
In membership dues-funded associations there has been a shift
from dues funding most services to partial user pay services.
Another trend is been seen where user pay fees or product and
service pricing is more aggressive and covers all direct and
indirect costs.
Expanding existing products and services, or introducing new
ones, is generating new revenue. Some associations are well established
in developing traditional non-dues revenue and are now looking
at initiatives beyond events, education and affinity programs.
The new initiatives are looking for mission related opportunities
to save members money and supply knowledge rather than just information.
The generation of non dues revenue is primarily from members.
Some associations have moved their dues from 75 percent of overall
revenue to 50 percent. Successful growth strategies are the result
of policy decisions and new initiatives. Some policy decisions
and initiatives to generate significant non dues revenue are:
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Implementing a user pay policy that includes all direct
and indirect costs. It is possible to have exceptions to
the policy based on a political or strategic reason.
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Increasing non member fees to 30 or 40 percent of the
product or service cost.
-
Having a policy with criteria for new product and service
approval, or product and service adjustment or abandonment.
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Using technology to reduce cycle times and enhance awareness
and access.
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Determining which services members need to support their
decision making processes and get their jobs done to move
forward with the most feasible new initiatives.
New initiatives could range from developing new or repackaging
products and services to increasing market share both in the
existing market and expanding into new markets. Whatever mix
of initiatives is chosen, entrepreneurial support is required
to make things happen.
Some initiatives are a significant business opportunity and
organizations may choose to set up a separate organization to
manage the business. These situations are rare, but when they
do occur they often require a high degree of entrepreneurial
support. Most initiatives are kept within the organization and
do not stray too far from the mission.
New initiatives require the organization and its entrepreneurs
to be aware of not-for-profit requirements established by the
Revenue Canada Agency. Due diligence is required, especially
if there is limited expertise with the initiative, or it is unrelated
to the mission, or it may result in competition with its own
members or other not-for-profits.
Getting something started does not usually result in immediate
payback. Most non-dues initiatives that are expected to provide
a significant return will take time and investment. This can
be a significant change for not-for-profits that are cost focused.
A new initiative will also need support from the right people.
Dreamers or innovators flush out the concept. Then there are
the entrepreneurs who build the concept. Last and equally important
are the professionals who will manage ongoing operations.
Questions about associations and entrepreneurial activity were
raised with students in the CAE Program. Responses suggest that
associations, by their nature, are entrepreneurial, and boards
provide staff with opportunities to test abilities, take risks,
work creatively and think critically. It was suggested by one
student that not accepting the status quo will create an environment
where innovation and entrepreneurial spirit will flourish.
Should association managers have competency in entrepreneurship?
Yes,however, they need not be solid entrepreneurs, but must
understand its role and attract staff and volunteers with an
entrepreneurial spirit.
Students in the CAE Program tackle new product and service assignments
that allow them to explore their entrepreneurial knowledge and
skills. In reviewing these assignments, I am of the opinion that
a large number of association managers are extremely entrepreneurial.
Are you an entrepreneur? To find out, search the Internet. Try
several of the entrepreneur tests and see just how entrepreneurial
you are.
This column features innovation and practical solutions
applied to trends, issues, challenges and opportunities for
the association community. Column editor Jim Pealow, MBA, CMA,
CAE is a consultant www.amces.com and
the CAE Education Program Lead Instructor/Coach for CSAE. He
can be reached at jim@amces.com.
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