Part 1: Associations at the Turning Point
Alan Wurtzel was Circuit City’s CEO for 13 years, from 1973-1986 and served on its board until 2001, a period in which the company rose from “good to great” in Jim Collins’ terms, and became one of the best-run, best-managed and most profitable companies in the country. After growing, succeeding and reinventing itself for more than 50 years (and transforming the way we buy consumer electronics, used cars, and more along the way), Circuit City suddenly stumbled and, as Wurtzel says, “subsequently died”—going bankrupt in 2007. As detailed in his new book From Good to Great to Gone, Circuit City’s fall from the height of success to complete collapse took just 12 years.
Although Wurtzel’s story is about a for-profit corporation, there are many similarities—and lessons to be learned—between Circuit City’s story and today’s associations. Like Circuit City (in its first 50 years), associations have enjoyed decades of unprecedented and seemingly unstoppable growth. Like Circuit City, associations as an industry and as individual organizations went from “good to great” in the latter half of the 20th century. And, like Circuit City, many (if not most) association leaders assumed that, with no adjustments on their part, growth trends would always slant upwards—after all, associations were the only in game in town for industry-specific information, education, and networking opportunities.
Associations are Vulnerable
Secure in the nobility of their missions, the loyalty of their members, and the uniqueness of their offerings and organizational models, associations as an industry failed to anticipate, comprehend, or act on the consolidation, globalization, and other storms that have roiled the US and world economies for the past 20 years. As a result, although most associations have at least survived those storms, they are only just beginning to respond to what are now established and maturing economic trends.
And, there’s another sea-change associations are now grappling with: the incredibly rapid and accelerating transition from the Industrial Age to the Knowledge Age.
Although this transition is not yet complete, the lightning-fast rise of the internet has transformed how every organization operates. Associations—with their cumbersome governance models; glacial decision-making processes; hierarchical, rather than skills-based leadership; product-focused organizational structures; and ineffective or non-existent strategic intelligence-gathering capabilities, are at a particularly vulnerable moment in their life-spans.
As Wurtzel says: “In the multi-decade life of any company, indeed any industry, there are turning points at which the company needs to be “reinvented”—moments when the business model needs to be revised to accommodate changes in the competitive landscape, including economy, technology, customer preferences and so forth. The retail scene is littered with examples of companies that … failed to make these necessary transitions.”
A Critical Turning Point
Associations, particularly mature ones, are at what is perhaps the most crucial turning point of their existence. As the transition to the Knowledge Age matures, reinvention is not optional. As key disseminators of information and now global communities of like-minded colleagues and peers, associations must adapt to the Knowledge Age and all it implies, or die, like Circuit City and countless other organizations who failed to understand and keep pace with their changing markets.
We believe associations can and will remain necessary and relevant and can successfully transition to the next phase of their development by turning from top-down, product-driven Industrial Age frameworks and distribution systems to demand-based, co-developed, information-driven models. And, while the research for our upcoming book focuses on the attributes that make an association successful, there is also much to be learned from failure—in both the for-profit and not-for-profit worlds.
In the next few blog posts, I’ll be looking at Circuit City’s story and the lessons associations can learn about reinvention, resilience, and relevance from both Circuit City’s growth and its collapse.
For more on this subject, see our earlier post: Will Associations Go From Good to Great to Gone?