Blog #1: Analyzing the External Strategic Environment and Evaluating Industry Dynamics

For the last 15 years I have worked for professional associations and non-profits. The words "strategic plan" are thrown around with almost reckless abandon whenever committees, working groups, and board members get together. Despite the familiarity with the term, very few of these professionals seem to understand the purpose and driving force of developing a strategic plan.

In most cases, association strategic plans consist of a few key elements that are strategy adjacent - mission statement, vision statement, list of far-reaching goals, etc. However, the strategy aspects of the plan often fall short.

As associations live and die by membership, their strategic plans likely center around operational aspirations to indefinitely expand membership reach or somehow diversify membership. Very few strategic plans I have seen over my time has ever dealt with the ideas of competition from other associations or services. Even fewer address aspects of leveraging customers (members being a form of customer). The result is often a strategic plan that contains no driving force to push for a better association, nor does it prepare for the possibility of weakening relevance within their specific field.

Michael Porter’s The Five Competitive Forces that Shape Strategy not only identifies the key elements that most associations do not focus on (New Entrants, Buyer Power, Supplier Power, Substitute Services, and Existing Competitors), but really identifies one key aspect that I feel is missing from association planning – Industry Analysis. As associations intrinsically serve a specific audience that is often so narrowly focused as to prevent competitors (for example, I strongly doubt there is much competition to the Association for Pet Loss and Bereavement or the Association of Camp Nurses). As result of this narrow focus from the start, competition and an understanding of the supporting industry is often overlooked or made secondary to strategic goals of expanding reach.

Without true industry analysis, many of these associations lack an understanding of the scale and depth of the audience they look to serve. Porter talks about a few specific steps to industry analysis that I think are key for all associations:

·        Understanding the appropriate time horizon for an industry. An understanding of long-term trends vs cyclical changes is paramount to determining if the demand to start an association is even warranted.

·        Understand the underpinnings of competition and root cause of profitability. Again, this basic understanding is key to determining that overall scale the association could ever expect to reach. If a professional only has 2,000 people in the United States that practice that specific career, a strategic plan to grow membership beyond that number would require an understanding of draw to alternative careers or professionals.

·        Understand the available money within the industry. Making a strategic plan that focuses on products and services is beneficial, but if the customer base that it would serve is known to be cash limited or traditionally frugal, the association is setting themselves up for failure.

·        Understand the entire industry. This last point is likely the most relevant to my concerns with association strategy. As stated, associations focus narrowly to identify niche areas of support. However, there is often very little focus on the broader associations that also serve their members and may offer similar or supporting services and products in a better or more inclusive manner.

Both associations and non-profits tend to promote strategic plans as far-reaching and unattainable plans. If, however there was some underlying analysis of the supported/supporting industries, the result would be a more useful roadmap and attainable future.

Industry Analysis information summarized from "The Five Competitive Forces That Shape Strategy," by Michael E. Porter, published in 2007 by Harvard Business School Publishing Corporation.