Feb. 8, 2009 - Lessons from NAPA

Washington blogger Chris Dorobek reports today thatThe National Academy of Public Administration’s Collaboration Project has issued a new report titled “Enabling Collaboration: Three Priorities for New Administration.” In it, the NAPA spells out these priorities:
* Create an Open Technology Environment
* Treat Data as a National Asset
* Foster a Culture and Framework of Collaboration

The NAPA report explains that “today, information can be accessed and shared with unprecedented speed and agility. However, government operates according to an industrial era model that is fundamentally out of step with the needs and expectations of modern citizens. This industrial model emphasizes controlling information more than sharing it and avoiding risk more than fostering innovation. Worst of all, this model uses rigid hierarchies as opposed to collaborative communities of practitioners, to create and implement responses to emerging public needs.”

I am currently participating in an email forum that is concerned with the changes in the real estate business environment, and in the Realtor organization which supports the industry practitioners, and because this perspective is foremost in my thoughts, it occurs to me that NAPA offers an object lesson which can be translated as follows:

`*Create an Open Technology Environment. This admonition has been around for a long time, and certainlty Mark Lesswing and the NAR technology initiative have been working on many facets of this puzzle. But, there's lots to be done: many of the obstacles can be laid at the feet of vendors of technology services, but an even more significant impediment is our own organizational structure which is fraught with protectionism and archaic policies.

*Treat Data as a National Asset. Well, there's another one that offers the Realtor organization a real challenge. Not only is the market data traditionally collected by MLSs primitive and often lacking in consistent terminology, it is also protected by some who see losing information control means losing job security.

*Foster a Culture and Framework of Collaboration. When the first and second points are absent, the third cannot succeed. Hence the prolonged Realtor association battle over a national property data base and the elimination of ongoing barriers to association membership by other key stakeholders in the real estate industry.

Imagine the power and credibility of an organization which focused on controlling information with the idea of providing a collaborative professional environment for all the 'players' who need to work together to make a strong industry (bankers, builders, assessors and government officials, and so on), and which worked toward providing meaningful information and data which can only strengthen the real estate environment nationwide.

Feb. 7, 2009 - Building the Foundation, Strategic Planning part 3

In the last blog entry I talked about understanding an association's competitive advantage. For many non-profits, especially in the Realtor group, this perspective is a foreign one: membership organizations often have a state and national hierarchy (the Realtor organization has a strong one) which supports copycat thinking and discourages 'out of the box' strategies, as the current cliché goes. In Realtor-dom we gather together in Board Forums and listen to newly minted association leadership discuss concepts which may have little real history or fact behind them. The listening dewy-eyed association representatives grab the ideas and carefully pack them in their traveling home luggage, regardless of the effectiveness or appropriateness of the purloined strategy.

A coat drive? Mandatory MLS education? A certification program for Green Building? A chili cook-off RPAC fund raiser? Bang! We're ON it!

Take note: this is not strategic thinking. It's adopting someone else's ideas for an easy fix, a quick boost to show that the home association is 'doing something'. Often this approach to leadership results in the expenditure of some hard-earned resources in a program which is inappropriate to the local association, and may not have worked very well in the organization that conceived it.

Ongoing strategic thinking is what needs to replace traditional strategic planning and quick fix programs. Strategic thinking is a frame of mind for an organization, one that asks “does the proposed action fit our mission?” and then translates the positive answer into an action plan. Strategic thinking doesn't wait until the three-year period is up, or until the new leadership is installed, or the new budget adopted, or a glittering idea flies through the air at a state or national meeting. Strategic thinking is like Internet2: it exists in real time, it depends a healthy pre-existing infrastructure, and it involves an action-directed community.

“Well,” you ask, “how do we build THAT kind of organizational identity?” The answer lies in first building a sound business model for an association. Some of the prerequisites for the business model have already been discussed: the organization needs a clear sense of market awareness (Who is our target market,?What do they want? Where are we going next?) and and clearly understands its competitive advantage in providing value to that target market.

The business model for organizations is not unlike those structures common in commercial enterprise. You need a clear understanding of your mission and vision—that's is who you are. Then, you need to define what work you do to advance your mission and vision—that's your programs and services, or your 'scope of work'.

The next part of a business model answers the important question, “How do we do our work?”. This is indeed crucial component of an association business model: it requires the clear understanding that good operations, finances, and resource management are at the very heart of the business model. If you don't have your operational house in order, nothing else will happen with any consistency and movement toward mission.

Here is the departure from traditional thinking. In the traditional model planners thought up the plan and usually skated over the operational component. Even when they embarked on the familiar SWOT lists (strengths, weaknesses, opportunities, and threats), planning committees usually avoided voicing the organizational issues. Did you ever hear anyone say, “One of our weaknesses is that we have a weak staff? We have a leadership team that couldn't lead us out of a shoe box? We are financial cripples who aren't very good at reading balance sheets and are chained to a single source of income? We have members who are so busy making a living they could care less what we do as an association?” You get the picture.

Indeed, if associations are to succeed in today's world, organizational structure issues are not something that there is time to stop and work on at every juncture. Sound organizational structure—policies, governance, budgets—all must be firmly in place. These things cannot continue to be impediments to action: sound, efficient organizational structure must be a 'given' before effective strategic thinking can take place. I have been working with one association which is currently torn apart by governance issues which they've been trying to solve for three years. They vote, and vote and vote: should the checks have two signatures? Should there be an Executive Committee? How long a term should the Directors have, and how many of them? And while they are voting and debating, their association is gasping for breath—there are no services, there is no money, there is no sense of community. Everything is being spent on controversy, antagonism, and attorneys' opinions. Around them, the real estate world is crashing down, and there's no available association structure to support the strategic thinking which will support to members in need.

Plus, nobody to pay money to support a loser. And right now, this association is losing, big time.

The final part of a good business model is the existence sound financial policy: how does the organization maintain sufficient funds, funds which are adequate and consistent to implement the mission? Does it have adequate reserves? Does it have a diversified income stream? What is the plan for managing sustainability as an association?

As an exercise, try making a list of potential sustainability measures for your association:

• Expanding membership numbers
• Expanding membership types

• Providing goods and services to the public market

• Forming partnerships with revenue sharing potential

• Looking for funding sources such as grants and subsidies

• Marketing assets to other groups (association management services? Trade show management? Lobbying? Statistical data?)

Remember that as your membership count decreases, so does one potential target market. Associations will have to look outside their membership to diversify their income source.

Clearly, the conclusion is that until an association has its organizational basics in place, it isn't really ready to begin strategic thinking, and it certainly isn't ready to implement effective strategic actions.

The first step is to assess the strength of your organizational infrastructure, and shore up any weak areas. There are many ways to do this, the most effective being an organizational assessment or audit.

In the Realtor community there are some tools for analyzing your association yourself, and—more effective--several professional auditors who can lead organizations through what can be a difficult process.

The important point here, though, we must build the stage before we can dance.

Feb. 3, 2009 - Competitive Advantage: Strategic Planning part 2

Based on the observations of my preceding entry, it seems clear to me that we need to substitute the traditional cliches of Strategic Planning with something new, something which better suits the need of associations in rapid transition brought about by the economy and its impact on our members, the changing demographics of our members (younger, have you noticed?), and the impact of a technology-based society.

So what will that new process look like?

I think the first thing we know is that the process can't be periodic, based on a snapshot in time. Three years ago, I worked for an association that needed a plan update....badly. Since I knew I was leaving, I was determined that would of my final projects would be to leave the organization with a healthy strategic plan, thinking that my successor could be relieved of that process for a while, and base his or her management direction on the new plan. We hired a consulting team and conducted a thorough personal interview survey of the membership. After that we began the planning process, again using a facilitator. And finally, we compiled and approved the document.

Then things happened: we lost a large percentage of the membership, to begin with. The housing economy tanked. The economic environment throughout our state became recognizably one of the worst in the country. Tourism, one of our area economic mainstays, wobbled around on shaky legs.

And on. And on. Did the plan work anymore? Hah! Of course not.

Now this story is, I'm sure, replicated throughout the US in Realtor organizations and other non-profits.

And the planning skill set most organizations have to cope with this situation is certainly not relevant to our current situation.

Certainly, some parts of the process are still viable. I think if you were to review your mission and vision statements, you'd find that if they were well constructed in the first place, they probably still hold true. Most Realtor associations have pretty similar statements, which is to be expected: they pretty much all do the same thing. Some state their mission a little more clearly and baldly than others, and some organizations add a lot of fluff and fru-fru which they think OUGHT to be in there, but in a trade association, the mission is to support the professional success of the members. The rest of the stuff (ethics, education, public recognition) is all a part of the core mission, professional success.

In the traditional method of strategic planning, the planners usually at this point move on to Goals and Objectives. Remember those? To have well-educated members? (goal) To have 30% of our members holding NAR real estate designations? (objective) To hold a GRI class every month in the association office? (Strategy)

Well, hang on a moment. I don't think you, as planners, are quite ready to go skipping off to Goals, Objectives, and Strategies just yet. For one thing, as Feldman and Spratt point out in their excellent book on organizations and change, Five Frogs on a Log, thinking about jumping off the log and actually jumping are far from the same thing.

There are still lots of strategic questions to be answered before we can move off this phase of the planning process. We need, first of all, to understand our organizational role a little better as we try to effect our mission. This is, I think, where we have to get a little cold-hearted about looking at our organization. The real estate world is filled with a lot of players who have basically the same mission as trade associations: they want to provide products and services which will enhance the professionalism of the practitioners, and they want to support those efforts through funding, usually commercially based. The difference here is that the association has this income stream called 'dues', which may underwrite the costs of some of the goods and services, but traditionally membership dues are low and don't subsidize many costs. So, these folks out there are our competitors, and the question we must ask is, 'what is our competitive advantage' as an organization?

In the good old days, Realtor associations didn't have to worry: competitive advantage could be spelled with three letters-”MLS”. That meant we didn't have to solicit new members, worry about retaining current ones, or providing other products which might be attractors for new members and/or new sources of funding. We didn't even THINK about competition: it was really kind of a dirty word.

But times have changed, and associations need to understand how large franchises, public listing websites, vendors of various services, and even Realtor brokerages and other associations can attract our members' loyalties and resources. So who is our competition as we plan our programs and services which will help us complete our mission?

The second part of the phrase “Competitive Advantage” is important, too. What advantages, if any, do you have over those others out there walking around in your field? As I said, the MLS is one, though some would have it that the MLS is really an anachronism. NAR has assigned local associations 'jurisdictions' which meant that members had to belong to the association that was geographically positioned—but with board of choice, consolidation of services, and other operational changes, geography is more a thorn in the side than a competitive advantage to many local associations.

Spend some time on this question. Carefully define the competitors, what they do, how they compete, and how successful they are and will become. Don't be a wishful thinker at this point, and don't fool yourself into thinking that the competition will go away. Or that there will be a hoped-for change in the government, the law, or the FTC. If we are committed to running our associations in a business-like manner, as the catchphrase has been for the last decade or so, this activity is certainly a business-like one—as we try to carry out our mission, who is our competition,and what is our advantage over our competitors? Successful strategies must be built on that foundation.

Feb. 1, 2009 - Thoughts on Stratgetic Planning

Recently, I've been thinking about the strategic planning process. There area couple of reasons for that: one is because a friend of mine, a Realtor association executive, said in an email discussion “I'm not adverse to a plan or a strategy. I'm just adverse to the process itself.”

What, I thought, does she mean by that? Then I went to a meeting of a group of non-profit consultants to which I belong, and one of the leaders remarked, “I've almost completely moved away from the traditional strat plan process. I'm not satisfied that I've found an alternative, but what I do know is, the old way doesn't work.”

Those two remarks coalesced into the work I've been doing on a project for one of my clients: in that project I may find myself in a country with an emerging economy, one that really wants training in strategic planning and even more, wants 'train the trainer' seminars for representatives from various organizations withing the country itself.

So, I think, what can I do to better understand the process and how it works (or doesn't work) in what are traditionally slow moving organizations trying to cope with a very fast-changing society?

Let's look first at what doesn't work in the traditional process. In a former life, I once took a course in curriculum design in high schools. The premise for the class was, “The schools have failed. Redesign them so they work.” But in order to do that, we had to find out first why the education system had failed.

There are, I think, valid reasons why traditional strategic planning fails so often (some studies say about 90% of strategic plans don't work). I used to believe that the failure was in the implementation, and in my consulting work I spent a lot of time trying to help organizations understand ways of keep the plan in the forefront, and consistently directing their resources toward implementation. Now I think my friend the AE was right: the failure of traditional planning is in the process—not the plan itself, and not the implementation.

First, let's look at the planners. Someone who is going to think strategically has to be positioned to do so. That means they have to know the history (what's worked, what hasn't, what's changing, what isn't).

The planners have to be unafraid to speak up. Often the planning process is mired in a lack of candor and politically inspired communication. That's particularly true in a trade association such as the Realtor organization, where the collaborators are also avowed competitors, unwilling to jeopardize business relationships. Imagine a conversation with a past-president and a current young leader. The past president says, “We can't do what you're suggesting! When I was president we would have done...” and the young turk says, “Yes, and you were a lousy leader, and our association went backwards under your watch.”

By the way, the lack of controversy is often the unspoken goal in the room. “Let's get the leadership on the same page”, the staff chants. These sessions are characterized by heads nodding in solemn agreement and the unspoken protocol of 'not rocking the boat.'

Secondly, itemize the resources which we seem to think are needed to create a Strategic Plan. First, there's the consultant (think money, lots of it in some cases). Then there's the committee—gathering it, finding a time frame that will work, getting commitments from the participants for their time and expertise. Third, the data collection that will probably need to be gathered as background information for the planning process. Spread all this over the time period of six months or so that it will take to put finalize the plan document (and I'm counting all the background work done by staff, consultants, and other participants), and then presenting the results to the Directors for adoption and the membership for approval.

Are you then successful? Well, yes, in that you have a Document. And a good case of end-stage exhaustion. You breathe a collective sigh of relief and murmur, “Well, we don't have to do THAT for another three to five years.” You put it on the shelf and walk away, ignoring the well-meaning admonitions of your consultant about how to keep it in front of your face. It's over!

I mentioned earlier that good planning depends on data—good data. Unfortunately, that part of the equation is almost always neglected in the process. Sometimes there's some preliminary questionnaire (“Let's find out what the members WANT”), but usually there's not even that. Rigorous and continuous monitoring of trends, economic conditions, business models of the brokers, consumer buying habits, member demographics—not on the agenda of most organizations. What data analysis is done is often based on wishful thinking, not clear-headed understanding of facts.

And finally, after the plan is complete there is the disassociation between the planning and the action. Did I tell you that a traditional strategic planning process takes at least six months, and probably closer to a year or a year and a half, if it's done right? Can you imagine a business taking 6-18 months to build a product strategy? Or put another way, how meaningful is your Realtor association plan that was last reviewed eighteen months ago? Is the strategy still appropriate, or have things changed dramatically? Get real! we have a housing crisis here. What's your current strategy? Is your association addressing it, or are you still having long meetings about whether your financial statements should be available to members on line, or whether you should mandate MLS training?

There are a lot of take-away lessons from our current economic environment. The real estate industry is re-inventing itself suffering (as is much of the world's economy) from dis intermediation and resulting business model changes. Our membership demographics are changing as well—with our middle class members dropping like flies, they being the ones who comprise our traditional pool of leadership material. It seems to me that this is a perfect time for association self-examination and strategic visioning, but with a renewed energy and a vision unclouded by ineffective planning processes.