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Idiot’s Guide to Compelling Value Propositions

May 20, 2012 by Anna Caraveli

 By Anna Caraveli

Just three years ago, I became a reluctant late-comer to the world of physical exercise. My criterion for evaluating gyms was simple: making it easy for me to get up from my chair on a regular basis. My measures of success were equally low–being more active than just sitting in front of my computer: only 10-minute weight-bearing exercises? Hey, it beats NOT doing them at all; never increasing the weights on the machines? Check! Only 20-minutes on the treadmill on a busy day? Check, check, check!  So what was the ideal gym that would meet my low standards and weariness to commit? I decided on Planet Fitness, one of the fastest growing franchises in this sector.  This is why:

Their value proposition cut to the core:

We at Planet Fitness are here to provide a unique environment in which anyone – and we mean anyone – can be comfortable. A diverse, Judgment- Free Zone® where a lasting, active lifestyle can be built!

The company seemed to “get” the hurdles that kept me away from “serious-looking” gyms and had a strategy for addressing them:

Expense? It only costs something like $20 a month. And this is for their elite, “black card” membership.

Embarrassment? “I am not a “gym” type person?  Its tagline is “Judgment Free Zone®“and its clientele represents all ages, styles and body types.

Hassle?  This gym is simplicity itself.  No pools, saunas, aerobic classes and tons of choices to make me feel guilty when all I need and have time for is just a few machines.   (Because of lack of pressure or expectations, I actually developed a semi decent workout over time).

Someone took the trouble to understand my thinking, practical and psychological needs in designing this service. The gym states its value in terms of its ability to address my concerns rather than extolling its products or achievements:  I am reluctant to make a big investment but also loath to settle for substandard service:

 Our product is a tool, a means to an end; not a brand name or a mold-maker, but a tool that can be used by anyone. In the end, it’s all about you. As we evolve and educate ourselves, we will seek to perfect this safe, energetic environment, where everyone feels accepted and respected. We are not here to kiss your butt, only to kick it if that’s what you need. We need you, because face it, our planet wouldn’t be the same without you. You belong!

  This, in a nutshell, is what I consider a compelling and powerful value proposition.  And here are my five principles and guiding questions by which anybody in the world –human or animal–can construct compelling value propositions. 

  • What is your customers’ perception of  your organization’s value to them and how do they experience it? (And by ”customers” I mean members, stakeholders, consumers, purchasers of goods, etc.) Value propositions are NOT about you but but about your customers’ experience.   Your organization’s opinion or committee’s conclusions about your value do not count as value propositions.  

 

  • Why should your ideal customer purchase from you rather than anybody else?  Your answer to this is your value proposition, as long it represents your customers’ assessment rather than your opinion. 

 

  • What outcomes do your customers derive from your services?  Value proposition is not about what you have but about the outcomes you enable.  This requires a huge shift of mindset and focus from products to solutions and from your organization to its customers.

Instead of (listing your products and point of view)

 Focus on (outcomes for the customers from their perspective)
We sell fine coffee We give you a unique experience when you drink our great coffee. “We want you to enjoy your trip to Starbucks every time you visit the store.”
We have the best technology services and expertise Our products have helped our clients use the Internet strategically to triple their market reach and cut marketing costs
  • What is your primary source of value—the basis of your competitive advantage?  Value propositions imply committing to your greatest sources of value and differentiation, rather than trying to be all things to all people.  Note, however, that your greatest value may not be experienced through your own products and services.   Below are seven sources of value on which successful service providers have built powerful value propositions:

 

    1. Quality:  today, with the plethora of products and choices in the market and their short shelf lives, it is difficult to create and sustain competitive advantage on the basis of quality alone, unless quality is a rare commodity in your market and what your customers value the most.
    2. Economics:  everyone seems to be looking for a bargain in this economy but competing primarily on the basis of price requires high volume and is vulnerable to competition. Bargains coupled with innovation in customer experience (e.g. Southwest Airlines) can be a powerful value proposition in the right markets.
    3.  Access: with porous boundaries and distributed knowledge, integrating and providing access to diverse content sources or professional colleagues are increasingly powerful bases for constructing value propositions and business models.  (See, for example, Amazon.com; Priceline; Facebook, or the Veterinary Information Network that provides its members with instantaneous access to up-to-the minute research from thousands of data bases around the world).
    4. Exclusivity and Luxury:  a promise that plays to people’s dreams and aspirations rather than only their practical needs, for example dreams of a wealthy life style (e.g. Rolex, jaguar or Hermes); or belonging to an exclusive club of like-minded elite (e.g. a high-end leadership retreat only for CEO’s of top companies). 
    5. A better method, mode of delivery or process:  a product or service that offers a better or faster way to get to results. Speed is increasingly becoming a competitive advantage among similar services.  Convenience and customization are additional examples of value and differentiation on the basis of process.
    6. Indispensability:  This category includes basic goods that are “must-haves” and, most importantly, services and resources without which customers could not do their job successfully.  Increasingly successful service providers become “indispensible” through flexible service bundles that allow customization and address a wide range of needs, preferences and career stages. For example, independent veterinarians claim they couldn’t practice successfully if the Veterinary Information Network (VIN), had not gathered all the resources, professional contacts, conversations, training etc. they needed in one platform, and made them easily and economically accessible to them.    Independent pilots and aircraft owners do not feel that they can plan trips and fly safely without the state-of-the-art online tools and forecasts AOPA (Aircraft Owners and Pilots Association) has developed and gathered on its website.
    7. Uniqueness and Relevance:  To be sure, innovation is a necessity for achieving competitive advantage today, but is it enough?  Andrew Razeghi in his remarkable article “In Search of Competitive Relevance” does not think so. He believes that to achieve Competitive Relevance you must “create a customer value proposition that is beyond compelling — it must be both unique and relevant.”  He reasons:

If you are unique and irrelevant, your members or customers could live without you…If, on the other hand, you are relevant but not unique, you face margin squeeze. Think of your local florist that competes for the attention of an infinitely large customer base served by an infinitely large number of competitors.

If you can attain both uniqueness and relevance — now you’re a significant player on a grand scale. Think Starbucks.

  • How well is your value proposition aligned with your business model and the way you do business?   Here is a simple rule of thumb that any “idiot” can memorize: your value proposition is not a marketing slogan, but a promise delivered.  Take my neighborhood gym, Planet Fitness. How does it deliver on its promise of low cost, hassle and judgment-free fitness solution? It explains it to customers on its website like a badge of honor:

Extras like juice bars and childcare that drive up costs and can make a gym membership seem more like a car payment. Instead, we’ve boiled our business down to the things that you really want in a health club – clean, stylish, hassle-free facilities that are filled with tons of brand-name cardio and strength equipment, and a lot of happy people.

They are describing the business model, culture, values and operations that deliver on their promise. Articulating a brilliant value proposition is not enough for your organization to succeed if it does not drive every aspect of your business, both strategy and operations.

Identifying a compelling value proposition does not mean gathering your team or forming a committee to determine what your value is, but uncovering how your customers experience the world and where you organization places within their value compass. 

Posted in Growth in an Age of Disruption, Membership Engagement & Growth, Weekly Thoughts | Leave a Comment »

Can Strategic Planning Cripple Innovation?

May 14, 2012 by Anna Caraveli

 

By Anna Caraveli

 

“As ‘strategy’ has blossomed, the competitiveness of Western companies has withered.” This is what Gary Hamel and C.K. Prahalad claim in their booklet Strategic Intent (Harvard Business Review 2010).   As provocative as this observation sounds, Hamel and Prahalad don’t back down. They believe that this is not a mere coincidence.  They see the practice of strategic planning as limiting companies to what there is rather than what might be; tactics rather than reinvention.

To be clear, no one, even the authors, would advocate that the concept of thinking and planning strategically is a detriment to business. They refer to the evolution of strategic planning as a narrowly defined process for setting direction for an organization. The problem with the process is that it imposes a mechanistic framework on the present and future. It makes assumptions that are not in accord with the intangibles of how people and communities actually think and behave or the pace in which they move.

Take one of the staples of strategic planning as an example: competitor analysis.  Hamel and Prahalad remind us that in the 1970’s no one predicted that Japanese companies like Honda or Komatsu could ever pose a serious threat to companies like General Motors or Caterpillar on the basis of conventional standards such as  “resource base, manufacturing volume and technical prowess.”  In 2012 we all know how this story turns out. What we should have learned, the authors conclude, is that typical competitive analysis that focuses on the existing resources (human, technical and financial) of present competitors is like taking “a snapshot of a moving car. “ It will tell us nothing about the intangibles that are often the difference makers: “the resolution, stamina, and inventiveness of potential competitors.”

Hamel and Prahalad also point to other conventional concepts such as “strategic fit” (between resources and opportunity); “strategic hierarchy” (goals strategies and tactics) as having frequently “abetted the process of competitive decline.”

“As tests of strategic fit become more stringent, goals that cannot be planned for, fall by the wayside…  As valuable as strategic planning is, global leadership is an objective that lies outside the range of planning.  Yet companies that are afraid to commit to goals that lie outside the range of planning are unlikely to become global leaders.”

For most mature organizations in my experience, “strategic planning” is a necessary process you have to undergo for your health, sort of like your annual physical. With minor variations, the steps and stakeholders involved remain unchanged. The framework within which the expected lists of strengths, weaknesses, goals and objectives are developed is the current range of products, practices and assumptions.  Strategic planning is usually immune to the pace of the market and the problems members may be struggling with. There is rarely a sense of urgency.

It is not like such exercise is not valuable.  It brings together people to think more strategically, organizes and focuses scattered ideas and actions and produced new products or initiatives.  But one cannot plan for intuitive readings of a market; resiliency, foresight, the ability to decipher and capitalize on opportunities and similar competencies that are the engines of market leadership. Can the level of strategic innovation that reinvents or turns around a business stem from formal strategic planning. I cannot think of many such instances.  Instead of the colossal and rigid annual strategic planning exercises, I have seen several organic and developmental strategies and approaches work.

  • Develop strategic innovation as a core competency;–“a fundamental re-conceptualization of what the business is all about that, in turn, leads to a dramatically different way of playing the game in an existing business. (Constandinos Markides, the London Business School)
  • Assemble small teams around the solution of specific challenges
  • Give teams responsibility and authority for coming up with actionable solutions rather than just simply writing reports
  • Replace formal planning for new products and solutions with continuous co-development with members, customers and other stakeholders.
  • Do not expect your organization’s direction to emerge from a formal process all at once.  Instead, develop capabilities for systems-wide innovation, reinvention, reconfiguration, openness and flexibility through which your association will be constantly renewed and re-aligned with the market
  • Solving members’ strategic problems in ways they could not accomplish on their own or through competitors is the catapult of innovation and direction- setting. If you have become truly customer centric, the quest for solutions will be more important than preserving the status quo of your own products and practices, and propel you to new levels of innovation and competitiveness.

 

Posted in Growth in an Age of Disruption | Tagged , , , , | 6 Comments »

Lessons from the Washington Capitals: Put Mental Toughness in your Leadership & Organization

May 7, 2012 by Anna Caraveli

 By Anna Caraveli

Have you ever felt deflated because you were overlooked for promotion or lost a highly respected position?  Does sitting next to a peer whose credentials or size of portfolio are superior to yours ever make you feel like a failure?

This is probably how hockey star and team captain of the Washington Capitals, Alexander Ovechkin, felt last week in a game against the New York Rangers in the second round of playoffs.  Ovi (fans’ nickname for him) was MVP in the National Hockey League for two consecutive years and had ben pronounced one of the greatest hockey players in the world. The team had been built around his explosive, free-wheeling and risk-taking style of play.  But then it turned out that the undisciplined, high risk and star-oriented style of play was at a disadvantage during playoffs where restraint and good defense were the difference makers.  A new and tougher coach was brought in by the name of Dale Hunter and the team switched to a less glamorous but more reliable defensive style; one that no longer depended on the scoring abilities of its 2-3 star players.  This was why, in last week’s game against the Rangers, Ovi’s ice time was cut to a humiliating 13 minutes—less than the workhorse,  ”blue-liners” who had srved as background for Ovi and his fellow stars to shine against.

I imagined Ovechkin overcome by shame and embarrassment.  I pictured him muttering between his teeth things like:  “who cares whether my team wins. In fact I hope they lose to teach them that they cannot win by sidelining me…[or] I must be a complete failure; I might as well face it. I don’t even want to play anymore.”  But when I looked up at him on my television screen he looked nothing like the dejected, humiliated player I had expected.  He looked energized. He looked, in fact, like a leader.

It seems that, instead of questioning or withdrawing his leadership as team captain to make a statement, Ovechkin found a different way to lead. He rejoiced in every teammate’s success; supported, encouraged, advised and set the right tone. When on the ice, he used his paltry 13 minutes to play with more focus, effectiveness and laser like precision than ever before, scoring the winning goal.  Ovi had exercised what in sports is known as “mental toughness,” keeping his focus on the prize—winning the championship, the revered Stanley Cup– rather than on his own status.

Mental toughness is the most valued attribute of an athlete.  Without the ability to stop your thoughts from straying beyond the present moment, for example, worrying about maintaining status, falling into self-pity, imagining others’ impressions of you etc., you simply cannot develop into a champion regardless of your talent.

When our mental compass is thrown off its course by fears of loss of prestige, perceived offenses or injustices, the root cause isn’t so much in factual events but our own interpretations of them and the value we attribute to external validation of our worth. The discipline of mental toughness focuses on the reality of the present moment rather than mental and emotional projections on it, hence freeing team members from pre-occupation with self and enabling attentiveness to each other.   The new Capitals’ coach did not only improve the players’ technique but developed their capacity for mental toughness.  He shifted their focus from personal to team success and led by example.  He also got the players to buy into his system and philosophy by demonstrating through outcomes that their personal success could only be achieved through sacrificing personal needs for stardom and prestige and doing whatever it took for the team to succeed.

Renowned leadership expert, Michael Maccoby, tells us that leading by motivating and empowering others is in sync with the knowledge age. In his book: The Leaders We Need: and What Makes Us Follow (Harvard Business Review Press, 2007), he demonstrates that the social character of knowledge workers has changed and they respond to leaders who are what he calls “interactive” rather than the authoritative, bureaucratic leadership of the industrial model.  The new leadership characteristics include “personality Intelligence,” collaboration and teamwork.

In the industrial bureaucracies Maccoby researched and advised, like AT&T, though command and control type bureaucrats were promoted to senior leadership positions, these were not the leaders people wanted to follow. The latter were “those exceptional managers who listened to employees’ ideas, allowed them to experiment with how to perform and coached them.”   These are the kind of leaders who are needed today. They understand how to mobilize human intelligence, energy and motivation to solve problems and drive to success. A key ingredient in becoming a “leader we need today” is a much deeper level of understanding of the human components of business; and sensitivity to how a group’s collective psychology and social context shape its leadership needs.

Maccoby analyzes the leadership style of icons such as Stephen Jobs and Bill Gates and concludes that “power and glory are not the motives of the leaders we need…To be sure even the best of business leaders want wealth and recognition….But what most inspires them is the “vision of furthering the common good” and empowering people.”  Such focus on the benefit of others shifts mindset and culture from the pull of personal agendas, thin skin and easily bruised egos to a focus on the team; from an internal to an external, customer-driven orientation.

An association executive in our research changed the culture of his association from competing silos to collaborative teams, by changing the criteria of success and terms of the conversation. No personal agendas, emotional sabotages, political agendas or logical arguments for one’s point of view swayed any decisions in the organization.  Instead, this CEO mobilized staff to define and commit to what was beneficial for the organization.  Decisions were made on the basis of such agreed upon criteria, eradicating the need for control, manipulation, potection of personal turf and status.

The Washington Capitals, under Dale Hunter, have been transformed from a loose aggregate of individual, skilled players whose need to improve their stats and maintain their reputation inadvertently hurt their ability to cohere as a team, into mentally tough, selfless athletes focused on the shared goal of winning the Stanley Cup for the first time. And with the exception of a deep playoff run in 1998, the team is experiencing more success in the playoffs so far than ever before in the franchise’s history.   These transformations require leaders who in themselves have clarity of thinking, mental toughness and focus on the success of their staff, colleagues and customers rather than their own.

Posted in Growth in an Age of Disruption | Tagged , , , , | 4 Comments »

Mission Driven or People Driven?

May 2, 2012 by Anna Caraveli

[From the SocialFish blog]

Is your organization mission or people driven? Are the two mutually exclusive or can they co-exist? I am confused. The claim of being “mission-driven” has been increasingly cropping up in our conversations with association executives lately. “Everything in our strategic plan is guided by our mission,” I am often told. There is a definite sense of pride in this claim. I am not sure what it means but I am beginning to suspect that some of these executives derive more pride in showcasing mission-related initiatives than in solving practical member problems. In practice, “mission-driven” seems to be more than a reference to an organizational model. For many, it embodies a core identity; a raison d’être for associations. It represents all that differentiates them from mere “commerce.” I wonder if this mentality is hindering many associations from open exploration, adaptability, reinvention and competitiveness—let alone value to members. For example, paralyzing tensions stem from arbitrary divisions between “mission” and “profit,” and often result in incoherent systems that both need and disparage revenue. There seems to be a fundamental confusion about identity and role. (Read full article).

Posted in Growth in an Age of Disruption, Membership Engagement & Growth, Weekly Thoughts | Tagged , , , | Leave a Comment »

Value is Communicated Many to Many

April 30, 2012 by Craig Honick

Associations, unlike manufacturers or service companies in the for-profit sector, were since their beginnings marketed on a many-to-many model.  That is, while for-profit companies spent most of the 20th and early 21st century marketing their brands and products via advertising in traditional media channels (one to many), professional and trade associations reached critical mass as members learned of and promoted the association through their colleagues (many to many).

This natural tendency of associations to grow via word of mouth and exposure through professional interaction suggests that it is inherently attractive to become a member of an association – still to this day the most commonly cited reasons for joining associations is to learn (keep up on the latest) and to make professional contacts.  In some cases, joining a “cause,” is paramount, where advocacy is a primary driver for affiliation. In all cases, though, it is what the group — the critical mass — can ultimately do for the individual that forms a natural lure to join and contribute.

We read a lot lately that associations are in a panic.  The economy has made it harder for individuals to pay dues or get their companies to pay their dues for them.  Exhibitors are cutting back on floor space; attendees are deciding they can only afford to every few years to the annual meeting.  Social media provides a means for professionals to interact and coordinate with one another, to exchange information and collaborate, once the sole domain of the professional association.

Associations have to ask themselves why these factors are threats to their organizations.  What models have associations built that make them vulnerable?  If there is inherent value for individuals to join colleagues in groups, shouldn’t associations, the most experienced purveyors of the professional collective experience, be as valuable and compelling today as they ever have been?  Hasn’t the ability to facilitate interaction among professionals only gotten less expensive and more easily achieved?

The answer is that associations are organizations.  And, as most organizations, they are susceptible to goal displacement.  Goal displacement occurs when the organization’s focus strays from delivering on its original promise and instead becomes focused on perpetuating the organization.  CEO’s have comfortable salaries, staff members have good jobs where they can exercise their talents and be recognized; volunteers relish in the status and recognition afforded them by their contributions, as well as the ability to have influence on the direction of their fields.  The organization takes on a life of its own; long live the organization.

There is nothing inherently wrong with a focus on perpetuating an organization.  Growing the power and capacity of an organization can often benefit all of the organization’s members.  But the associations that are vulnerable today are likely vulnerable for one of two reasons: 1) they are no longer necessary in which case they probably should fold; or 2) they are no longer focused on delivering on their original promise and have therefore diluted value to the member.  Ultimately, if the association is no longer growing or maintaining its prestige and allure many to many, something’s wrong.

In 2006, Fred Reichheld, a consultant with Bain & Company, popularized the Net Promoter Score (NPS) in his book The Ultimate Question: Driving Good Profits and True Growth. The “ultimate question” that underpins the NPS is “how likely are you to recommend ____ to a colleague or friend.”  This NPS question has now found its way onto many a member survey, and is used in a variety of industries to measure customer satisfaction.  Some believe it’s the only question that needs to be on a survey.  While the value and validity of the NPS as an indicator of customer or member satisfaction is debated (and some feel debunked), the popularity of the measure is a commentary not only on how managers are attracted to simple, efficient solutions to large problems (the “silver bullet question” as it were), but more importantly about how “value” is communicated:  not by the organization (one to many) but by the organization’s members (many to many).

As an association leader, you need to have the courage to ask yourself and your leadership team constantly why anyone would want to join your association today and, more to the point, should you exist.  Might even be a good idea to ask your members.  Why?  Why join?  Why contribute?  Can we help you transition out of our organization or to another one you are drawn to?

While this may sound flippant, it is not intended to be. Rather, it’s intended to bring the focus of your organization back to its original promise – to provide value to individuals by way of the group.  Either this is inherently valuable to them, or it is not.  You need only look to your members and what they are telling, or not telling, their colleagues, to find out.  In this conversation, you will also find out what the kernel of the value is – why the group is providing value, or why it is not.

Be brave.  Be a slave to value that is worthy of communicating many to many. Your association will either disappear or will be stronger and more compelling than ever.

Posted in Getting to Why, Weekly Thoughts | Tagged , , , | Leave a Comment »

The Demand-Driven CEO Network: Leading for Growth through Collaborative, Strategic Innovation

April 25, 2012 by Anna Caraveli

How can association leaders help each other solve the challenges that keep them up at night?  How can they resist the pull of the often hidden obstacles of habit and entrenched assumptions that throttle strategic innovation in order to open the door to different possibilities and results?   We believe it is through collaborative discovery and development and a different process for thinking and planning outside the “mental sacred cows.”   And we will be finding out more about enabling new outcomes through strategic innovation soon.

We are excited to announce that we will be pilot-testing a new R&D leadership community The Demand-Driven CEO Network that we are about to launch shortly.  The Network will bring together change-oriented, strategic-minded CEOs, who are interested in breaking out of “business as usual” to lead their organizations to new levels of relevance and growth.  Eight well respective and innovative CEO’s have registered already.  There may still be a couple of available slots for executives who enjoy collaborative discovery and are interested in contributing to and executing new types of solutions to their real challenges.

Unlike conventional CEO forums The Demand-Driven CEO Network is a combination of living laboratory, workshop, and think-tank and will incorporate some of the decisive factors of success among the market innovators in our research. Network members will participate for a period of ten months and engage in 1-2 face-to-face sessions and monthly virtual discussions and brainstorming.

Participants will:

  •  Bring to the table a challenge that “keeps them up at night” and co-develop actionable solutions with the help of the group.
  • Experience the freedom of experimenting, airing deep concerns and testing new options in a safe, confidential, supportive environment with the help of a small group of carefully vetted peers, experienced consultants, and a broad spectrum of new tools and resources from our portfolio of breakthrough cases of market leadership and innovation.
  • Reframe big challenges into actionable and manageable small steps that lead to execution and deliver different outcomes.
  • Pilot test steps to solutions
  • Explore and apply elements of “best practice” cases from market leaders and innovators who turned around declining organizations and achieved great success in spite of economic recessions and market instability.
  • Identify key information and answers to strategic questions they need in order to make informed choices, for our team to carry out
  • Strengthen their capacity for leading in an environment in which disruption and unpredictability are the “new normal.”

We welcome questions about participation, feedback and comments on the CEO community concept.  Contact us at anna@connectionstrategists.com

Posted in Growth in an Age of Disruption | Tagged , , , | Leave a Comment »

Want to Make a Difference to your Members’ Success? Get off “Auto Pilot Think”

April 23, 2012 by Anna Caraveli

By Anna Caraveli

Wouldn’t you know it! I was struggling to figure out how I could brilliantly sum up what I learned from our interviews with Dr. Doug Henley, CEO of the American Academy of Family Physicians (AAFP);  and that is, how a fairly traditional association could unleash radical innovations that made a difference for their members and healthcare when most others are satisfied to just talk about them.  Then I happened to glance at today’s paper and my eyes fell on the horoscope column.  I read:

There is a lot of good that can be said for being on autopilot. It gets you to a destination with little effort. The problems arise when you want to go somewhere other than where you are programmed to go.”

That was it! It described in a nutshell the stalemate most associations (and no doubt organizations across sectors) are in, better than any of my “witty” metaphors could have.  

The log jam lies in the habitual assumptions and automatic mental associations and paths of action that are hard to acknowledge because they have become second nature. Every industry develops its own esoteric jargon, values and belief systems.  For example, the culture and system of meaning I call association autopilot or “association think,” values lofty mission, prestige,   reputation, articulating positions on issues, efficiency and stability over practical solutions for members, co-development, entrepreneurial exploration, risk-taking and innovation.  It also considers narrowly defined processes and committee-driven decision-making as the norm. Conversations among association insiders revolve around topics such as mission, governance, board relationships, policies and processes and reinforce the sense of their importance in their minds.  Unfortunately, these are not the things that keep their members up at night.  Innovations cannot translate into dramatic new outcomes when they take place within the existing assumptions, beliefs, norms and conversations.  In all our case studies of organizations that are thriving in today’s market, we have identified what I will call “disruptive” thinking as a common characteristic: the ability to suspend existing categories, assumptions, values and norms and start with blank slate.

Approximately ten years ago the AAFP was dealing with an unhappy membership, struggling to survive in a fragmented healthcare that was out of sync with healthcare needs; and a broken practice model that frustrated them and became increasingly unsustainable financially. So what were the unspoken cultural tenets and norms that the AAFP ”escaped” from to get different results?

  • Thought big from the start, re-examining and expanding its role in healthcare. The conventional role of professional associations is to serve as gatekeeper and advocate of the profession–“advancing” its prestige and keeping entry requirements high to exclude unqualified candidates. The results of exclusionary values as the basis of strategy are usually self-centered, internally-oriented cultures that are out of sync with the changing boundaries of actual practice.  AAFP went the opposite way, expanding its role from its own discipline to the larger healthcare environment, joining forces with medical associations, business and many others so that it could improve the larger healthcare ecosystem within which its discipline existed.
      • Tenets busted: narrow allegiance to the association’s benefit rather than the health of the larger professional/economic ecosystem; the “lone cowboy” organization that fills all product needs on its own and leads through command and control of its content and customers.
  • Its leadership took risks and made pivotal decisions.  There were two major decisions the AAFP’s leadership made that were turning points in the course of its development:
    • Initiated the seminal Future of Family Medicine project (FFM) that culminated in recommendations for a dramatic practice re-design on the basis of the “Patient-Centered Medical Home.” 
    • Launched TransforMED as a wholly owned subsidiary that was to lead and catalyze the transformations recommended in the FFM report.
      •  Tenets busted: leadership model in which chief executive is merely an operational manager implementing the board’s mandate; grow only through incremental improvements; risk aversion.
  • Chose action vs. talking about action.  Instead of viewing the report as an end in itself, the AAFP embraced practice transformation as the centerpiece of its efforts at healthcare reform and its membership strategy.
      • Tenets busted: talk vs. action; adopt positions about, rather than help solve, problems
  • Completely reinvented planning and new product development:  Henley did not think that the same modes of assessment and planning that they always used—board committees, ineffective methodology and tools—would give him a perspective unencumbered by habitual assumptions and lead to different results. He applied this philosophy to all major initiatives the AAFP undertook in the last few years.  TransforMED, in this case, would learn by doing and co developing with members rather than retreating into a room to design the perfect plan on paper. To this end, in June 2006, TransforMED launched an innovative 24-month National Demonstration Project (NDP)  to pilot test the new model in 36 family medicine practices from all across the United States.
      • Tenets busted: internal, committee-driven planning and product development; planning along existing categories, driven by prescriptive processes and layers of approval
  • Burst open the options for delivering value to members outside conventional “benefit packages.” TransforMED did not have to work hard on designing and marketing new products. Participants in the National Demonstration Project experienced the success of TransforMED’s services, model and products for themselves and wanted more of the same. Co-development with customers, rather than aggressive marketing, created demand. The result was the launching of The Delta Exchange, an online collaborative network that supports “physicians, clinical staff, office staff and primary care-focused residency programs” with achieving and maintaining “Patient-Centered Medical Home (PCMH) transformation.”  Network participants with needs for more focused support, could choose among several custom, consulting services that TransforMED had developed, at additional cost.

 The AAFP as a whole appears to have made a major shift from productized benefits to strategic solutions, offering a wide spectrum of options that include:  practice management support or complete practice transformation through education, peer networks, consulting support and other resources; training and education; coalitions and think tanks that promote practice and health care transformation; experimentation through pilot and demonstration projects, etc.  The AAFP and its subsidiaries, in short, have created a demand-focused enterprise of sophisticated, multi-faceted knowledge service delivery and pilot execution in health care that utilizes new business models and engages the entire spectrum of stakeholders.

      • Tenet busted:  Association creates products on its own and then convinces members of their value through marketing.  Value to members is delivered through productized packages of benefits and other defined “educational programs.”  New programs are designed on the basis of extrapolation from existing programs rather than re-thinking the

The AAFP’s executive vice president and chief executive officer, Dr. Douglas Henley, is quick to point out to us, how a number of external factors converged and several stakeholders pitched in to make these results possible. Yet change does not occur by committee.  It takes strong leadership that can discern the right moments for tough decisions and can suspend autopilot thinking and action.    

 

Posted in Growth in an Age of Disruption, Membership Engagement & Growth | Tagged , , , , | 1 Comment »

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