Principled Innovation LLC

Growth, risk and ungovernance

September 27th, 2007

Earlier this month, Scott Briscoe started a very compelling conversation around whether growth should be important to associations. Many other bloggers have posted on this issue in the last few weeks, and these posts have generated quite a few valuable comments. It’s been a busy September for me, so I’m a little bit late to the party, but since the issue of growth is such a critical part of the message I deliver to associations, I just wanted to add three key points to the mix:

1. Growth is a strategic imperative–In the title of his original post, Scott asks “why does growth always seem to be a strategy?” With all due respect, that isn’t the right question. Growth isn’t a strategy. Growth is an outcome of a clear, simple and focused strategy and an effective business model that together create value for members and customers. For associations, growth is a strategic imperative because it is the primary way for all stakeholders to evaluate an organization’s health and vitality. Jamie makes a convincing argument on behalf of growth, so I won’t repeat or belabor his points here. I wholeheartedly agree with Scott that participation growth is a crucial metric for associations, especially in a Web-enabled world. Unfortunately, as Scott points out, current participation metrics are largely blunt tools that don’t offer any useful insights into the value created for participants or by participants for the organization and other members, a deficiency in our management approaches that we should act swiftly to correct. For the foreseeable future, then, participation measures simply cannot be credibly viewed as substitutes for relevant metrics pegged directly to the strategic financial performance of the organization. Whether we like it or not, revenue growth does and should matter, in particular to any leader who is ever frustrated by the lack of available resources within his or her association.

2. Growth involves risk–Meaningful growth depends on innovation, and innovation involves risk. All association boards hate red ink, but most remain unwilling to make necessary investments in future growth by funding innovation today, because boards hate risk even more. What boards and CEOs must recognize is that just as growth is an essential element of success, so is the need to take risks. The risks of innovation can be managed intelligently through a combination of clear purpose with properly calibrated expectations, and an effective innovation process that balances freedom and discipline. What cannot be managed nearly as well is the inevitable impact of risk avoidance and the failure to pursue innovation. It may take some time, but eventually organizations that do not choose to innovate to create new value and growth will have to confront certain consequences of their leaders’ myopia and denial.

3. Growth is a matter of responsible stewardship–Fundamentally, the task of building a vibrant association that is capable of pursuing its mission or purpose is placed in the hands of its stewards. It is the stewards–the board and staff–who must exercise consistently sound judgment to help the association survive and thrive, and the question of growth must be a central focus of their efforts to build toward a better future. It’s worth remembering, for example, that not all growth is created equal. Some growth opportunities look attractive at first glance, but then later prove to be unworkable because the organization lacks the necessary operational capabilities to create and deliver value profitably. Other growth opportunities start out well, but ultimately reveal themselves to be unmanageable over the long term. This kind of genuine business model innovation demands a careful blend of patience, trust, foresight and insight on the part of those who have association stewardship responsibilities. It also requires a shared effort to prevent governance from being an obstacle to growth and progress. The ungovernance doctrine challenges boards and CEOs to make a connection between business model innovation and governance innovation. When responsible stewards embrace this need for innovation, achieving growth becomes a top priority for the enterprise as a whole.

My thanks to Scott for sparking a great exchange of views on this topic. From my perspective, however, we need to change the terms of our community’s debate about growth. Instead of questioning its necessity or importance, we should be talking about how associations can benefit from the pursuit of meaningful and sustainable growth through innovation. Any association that wants to be a long-term impact player in the profession or industry it serves definitely will be interested in that conversation.

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