Associations as Businesses

12 Sep
Over the past few days, there has been quite a bit of conversation on Twitter amongst myself, Tom Morrison (@tommorrison), Jeff De Cagna (@pinnovation), and several others about the extent to which associations should be run like businesses.

In that Twitter conversation, I may have come across as arguing that associations are not businesses and I wanted to provide a more complete sense of my thoughts on this. And just to establish some context, I should say that I am not, nor have ever been an association executive. I have been heavily involved as a “senior” volunteer at a couple of associations over the past decade or so. But mostly I am a software developer who has helped co-found a couple of companies, and has had senior roles in a few others.

I think the main idea I wanted to get across is that I don’t think associations and companies are exactly the same thing. There are things that successful companies do well which would help associations provide more value to their members, but there are significant differences as well.

First, a typical company exists only to satisfy one function: monetary return on investment to its shareholders. Most associations I am familiar with are non-profits and their primary function is much more broadly defined: to  provide value to their members.

Interestingly, those members are also usually responsible for electing the governing board for the association, which is itself in many ways similar to the board of directors of a typical for-profit company. And the board of directors is elected by the shareholders. This reveals another interesting difference between associations and companies. The association’s set of customers is identical to its set of shareholders (i.e. members), but in a typical company the overlap between customers and shareholders is usually quite small. So, associations have one constituency where companies generally have two. This means that in an association the shareholders (members) have a much greater vested interest in the products/value that the association creates.

Related to this, the membership of an association is usually a group of people bound together by some common interest and often some significant fraction of the membership have significant experience in that area of knowledge and are willing to share it. That willingness to share experience/expertise is not as common amongst the customers of a company. The extent to which an association is concerned with capturing, aggregating, filtering, and distributing that experience/expertise is yet another difference from companies.

Being bound together by common interests also means that the members of an association are essentially a natural community much more so than is typical for the customers of a given company. That sense of community is what leads to things like statements of ethics, and a greater concern for how that community can contribute to the overall development and welfare of society as a whole. I believe that this aspect of being a community is a significant difference from just having a set of customers.

As I mentioned above though, there are lots of things that associations can learn from businesses. My sample set is not gigantic, but my sense is that many associations don’t think of themselves as delivering products, and so they lack some of the infrastructure that is typical in companies to ensure that they are delivering value to their customers: product managers, brand managers, customer personas, requirements capture and analysis, quantified customer feedback loops, etc. These are the areas in which I think associations really should behave like companies and which will help them become more successful.

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