• NOV 08, 2019

    Hamburger Economics and Professional Associations

    Kevin Fitzpatrick

    As I suggested in an earlier essay (“A Time of Uncertainty for professional associations in Health Care”) professional associations are facing an existential crisis. This time of uncertainty is driven by the “relevance gap” that exists between the traditional association value proposition and the realities of the professional workplace. As a result, the classic economic pillars of annual meetings, member dues, journal subscriptions and industry support, are imperiled. Never have these organizations faced such persistent economic headwinds. In order for professional associations to reclaim member affinity and reignite growth, consider taking inspiration from some non-traditional sources.

    At first glance, McDonald’s business innovation strategy would seem to have very little relevance to the rarified world of professional associations. However, on closer examination, there’s a lot that associations can learn from this $159 billion fast food behemoth.

    McDonald’s faces numerous challenges that are remarkably similar to that of many professional associations. McDonald’s is a mature business with an aging core of loyal customers. It is beset by more innovative, nimbler competitors; has struggled to keep up technologically, has not innovated their core product offerings and have not fully utilized their proprietary data to drive business strategy. During a period of revenue shortfalls, former McDonald’s CEO, Don Thompson, once observed that the company had failed to “evolve at the same rate as our customers’ expectations….”. This evolutionary mismatch sounds a lot like the current state of many professional associations.

    As reported recently in Business Week McDonald’s most recent CEO, Steve Easterbrook, had initiated an ambitious strategy to breathe new life into this global giant. McDonald’s strategy is to view each store as an enormous data resource. It now working to aggregate and mine that data to enhance the customer experience. To achieve those new insights, McDonald’s is relying on advanced analytics including artificial intelligence and machine learning as well as voice and mobile technologies.

    To power this commitment to innovation, McDonald’s most recent investment did not involve new menu items, cooking technologies or real estate but rather it was a $300 million acquisition of an AI start-up. McDonald’s is investing in technologies that not only serve the customer more efficiently but also help to anticipate their “intent”. Advanced data analytics will also help McDonald’s to segment its customers with greater precision, making loyalty and marketing programs more relevant and effective. And like many major retail enterprises, McDonald’s has made major investments in voice recognition systems to further improve the customer experience.

    As we think about the customer experience, it’s not just about data, it’s also about the human encounter with your products and services. Toward that end, McDonald’s has launched the “Experience of the Future”. In this learning laboratory, McDonald’s experiments with design strategies, seeking to achieve more convenient and enjoyable experiences for their customers.

    Given the critical importance of member meetings, professional associations would do well to consider their own, “Experience of the Future”. In a world where all meeting content is available online, what motivates the member to invest the time and costs of physically attending the meeting? The associations that continually reinvent the meeting experience will have a considerable advantage over those that cut and paste the same tired formulas.

    Professional associations, like many mature enterprises, face a time of uncertainty. With a few exceptions, such as in oncology and immunology, traditional revenue streams are flat to declining. The pressures of modern practice are an impediment to active association engagement. Early career professionals seem less convinced the association membership is an essential element of their professional identity. Thus associations, like other mature businesses, must evolve their traditional value proposition and product offerings if they hope to retain member affinity and nurture new growth.

    In subsequent essays, I’ll take a closer look at the steps professional associations can take to reignite growth and enhance member value. In the end, it comes down to committed members, courageous leadership and dedicated staff willing to evolve at the same rate as their members’ expectations.

    As Easterbrook says, “In old-school business logic, the big eats the small. In the modern-day, the fast eats the slow.”