Why All Associations Need a Business Model
Creating Value for Communities Hungry for Connection
Summary
“The biggest obstacle is failing to change our thinking from traditional and linear to holistic and systemic.”
Jeaninne Horowitz Gassol
Business models are purpose-driven. They are tools of focus to help us understand who we are and what we do.
I argue that all associations need one. Yes, we have a mission, vision, and values; we also have a semi-regularly updated strategic plan.
A business model focuses on how we create and deliver value. It is a blueprint for how we operate. In contrast, a strategy is a longer-term plan (3-5 years) that outlines how we will achieve our goals and objectives; it guides our direction and how we allocate resources.
This article also lays out the importance of having a strongly aligned value chain: mission, vision, values, strategy, and business model. Because most associations have the first four, we will focus on the value and functional use of the business model.
Again, properly designed, implemented, aligned, and socialized, business models deepen association purpose. Married to strategy, a business model helps us focus on (and achieve) our most important outcomes.
The Product Community is a product development learning community designed specifically for associations.
The Importance of a Business Model
“Entrepreneurship and innovation can be achieved by any organization.”
Peter Drucker
I have written articles on how to design a winning business model and five common association business models (see Five Business Models: A Strong Business Model is the Bedrock of Success). I’ve also written a lot about developing and implementing a strategy (see: Playing to Win: A Guide to Strategic Advantage for Associations).
In these, I sing the same three-refrain song. To thrive all associations need:
Deep Connection. A vibrant community with a focused and exciting value proposition to keep them engaged.
Exciting Direction. An achievable strategy in which we deliver on a cohesive set of choices about who we are, where we’re going, and how we’re going to get there.
Value Creation. A culture of innovation in which member-centric value creation (offerings, programs, product, etc.) is at the heart of everything we do.
According to Alexander Osterwalder and Yves Pigneur, the authors of Business Model Generation, a business model “describes the rationale of how an organization creates, delivers and captures value.” I walk through their model in my article, How to Design a Winning Business Model.
Associations are purpose-driven. This doesn’t mean we can’t be strategic nor does it mean we can’t or shouldn’t make money. The distinct difference between 501c3 and 501c6 organizations is in their underlying purpose. The goal of most 501c3 organizations is charitable, while 501c6 organizations are mainly business or membership nonprofits.
Adopting a business model deepens our commitment to purpose. It helps us consistently demonstrate relevance and unique value. It is as vital as mission, vision, values, and our strategic plan. Once adopted, aligned, and socialized, it becomes a vital driver of priorities and actions. It is how we grow our communities and demonstrate impact.
Why Associations Need a Business Model
“If solving humanity’s problems requires rethinking how value is generated, then business model innovation is the premier tool to organize, communicate, and implement that new thinking.”
Nabil Harfoush
Associations share a lot of traits. We are volunteer-led, membership-driven communities of engagement. We are practical and service-oriented. We convene, engage, unite, publish, and facilitate. Ideally, we move the needle on important problems.
We love purpose, but we like purposeful action even more.
We like associations because we want to be connected. We want to build community and meaningfully network with like-minded people.
I argue that we can do all of this better if we use design and successfully implement a business model. Here are some reasons why:
Unique Identity. A good business model pushes us to define and communicate a differentiated and focused identity.
Clarity of Purpose. A business model provides a clear and concise understanding of our purpose and how we deliver value to our community.
Member-Centric. Adopting a business model helps us empathize and define our core market so we can tailor our operations to meet their needs and expectations.
Resource Optimization. A well-defined business model facilitates efficient use of resources and focused allocation of time, money, and effort.
Strategic Decision-Making. A business model guides strategic decision-making by outlining the key activities that contribute to member satisfaction.
Value Communication. A clearly articulated business model enables us to effectively communicate the value we provide, strengthening connection and reinforcing the reasons for membership.
Adaptability to Change. A business model allows us to more readily adapt to changing circumstances while ensuring resilience and relevance over time.
Innovation and Growth. Business models encourage us to explore innovative ways of creating and delivering value, fostering continuous membership engagement.
Financial Sustainability. By outlining how value is captured, a business model contributes to our financial sustainability, ensuring we can continue to invest in services and programs that benefit our community.
Put another way, when combined with our mission, vision, values, and strategic plan, a business model helps us create a value chain that will force us to focus on what matters most. I recommend combining the business model canvas and the integrated cascade of choices from the book Playing to Win: How Strategy Really Works by Roger Martin and A.G. Lafley
Associations need business models because they provide a clear and practical plan for how we create, deliver, and capture value. They act as a blueprint for action. Having a well-defined business model allows us to operate efficiently, allocate resources effectively, and achieve our objectives sustainably.
The Importance of Focus
“Omit needless activities.”
Richard Rumelt
Associations are in the value creation business. Ideally, we operate as a robust community of practice; short of this high bar, we convene and deliver benefits to people of similar interest.
Unless we operate with deliberate focus and make coherent choices – about who we serve, what we do, and how we win – we run the risk of running ‘all things to all people’ hamster wheel associations.
I empathize with associations who struggle with stretched resources. I often hear: “we can’t afford to be strategic.” My response (with empathetic candor) is that we can’t afford not to build a business model or to make strategic choices about how to best navigate our shared future.
It isn’t easy but, if anything, we need to leverage our best minds, start small, and grow together as a community.
Remember, product-led growth fuels connection. Join the product community and flip your destiny.
About the Author
James Young is founder and chief learning officer of the product community®. Jim is an engaging trainer and leading thinker in the worlds of associations, learning communities, and product development. Prior to starting the product community®, Jim served as Chief Learning Officer at both the American College of Chest Physicians and the Society of College and University Planning. Please contact me for a conversation: james@productcommunity.us.