Bloomberg Government regularly publishes insights, opinions and best practices from our community of senior leaders and decision makers. This column is written by Robert Hay Jr., an account executive with PAI Management.
Disruption is the hot word in the association community. If you attend any conference or meeting where multiple association executives are in a room, the word inevitably gets thrown around as a solution to remaining relevant in the marketplace. Associations are constantly being told to think like Uber or Tesla, to not accept the norm but to find the gaps in group think and exploit those gaps to create a business advantage. Association people rack their brains to be the most innovative and create new opportunities for their more established associations.
We like to think this way because it’s a cool way to think. We want (and want our associations to be) innovative and disruptive. Keeping the status quo and keeping an aging brand doesn’t get you a prime speaking slot at industry conferences or covered by news outlets. Modern association leaders are being told to shake things up and be different for the sake of being a good leader, and find that idea/product/service that is a “game changer” in their field.
But what if this thinking is actually backwards? What if the key for association success is a business model not based on disruption, but on maintaining business priorities consistent with current trends? What if the key to success is to be – gasp – boring?
FiveThirtyEight published an article recently on the potentially unexpected economic impact of the proposed AT&T/Time Warner merger. If the merger goes through, it will continue a trend where most Americans work for massive, established companies. Per the piece and U.S. Census Bureau data, about 46% of Americans worked for a company with over 1,000 employees in 2014 (the last year this data was available). In addition, the number of companies with over 1,000 employees has doubled since 1977.
In addition, most Americans work not for start-ups or tech darlings, but for those old staid companies we have known throughout the years. The article cites data from the Brookings Institute showing that about 68% of U.S. employees work for a company that has been in business for 20 years or more. While companies like Lyft and Google may be praised as the future of business and drivers (no pun intended) of the American economy, the fact is they are more like shiny-object outliers than actual models to emulate.
Two examples of the type of disruption praised in recent years drives home this point. In just the past month, DraftKings and FanDuel announced their intent to merge. A year ago, when commercials for both companies blanketed the airwaves, the idea that they would need to merge to survive seemed preposterous. They had disrupted the growing fantasy sports world by skirting state gambling laws to combine the risk of fantasy sports with the allure of a financial payout. Yet a backlash to the constant advertising, scandals involving employees allegedly benefiting from insider knowledge, and increased attention to their disruption from state government officials has driven them to need to merge in order to survive.
Closer to DC is the sad story of Living Social. The start-up aimed to disrupt the food economy and the retail economy by negotiating discounts with different vendors and marketing these benefits to young professionals looking for newer, cheaper experiences. The company grew so quickly based on their quick success that the DC government offered a generous tax benefit to have the company relocate its growing headquarters to the city. Competition and an improving economy, as well as an unsustainable business model, has now driven Living Social to near extinction. It is now seeking a merger with a competitor just to survive, and the once posh headquarters are in danger of being sold off.
What does this mean for associations and their business innovation? Maybe the focus should be on remaining relevant rather than trying to find the next new, innovative idea. Take AT&T. The business behemoth has undergone a few iterations in its long life, but AT&T still in many ways means phones. It just no longer means phones wired to a desk with a human operator connecting your call. The AT&T brand has survived not only the years but mergers, technology changes and new business principles not by being disruptive but by accommodating. This does not mean it has never innovated, it just means that it is existing in a changing business structure rather than trying to destroy that structure. It doesn’t sound sexy, but ask Kodak or Blackberry if the alternative is better.
The truth is surviving in business is hard, and the seemingly right decision can quickly become a wrong decision. For associations, playing it safe seems too safe. There is so much rapid change happening around us that the association executive cannot be faulted for thinking, “we have to change, or else”. When that change turns into a disruption – turning a current business model on its head to change the game – is when an association is most at risk. While it may be boring turn down becoming the Uber of associations, many times just being a better run cab company is the right choice.