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June 21, 2011

Doom, gloom, and a dash of hope

Jeff Rubin is a man with a message. For 20 years he was chief economist and managing director for CIBC World Markets. He quit that job, though, to put full-time effort into spreading his message. And his message is somber, downright gloomy even. His message is that triple-digit oil prices are here to stay, and that for at least a generation we will have no viable alternative power options.

And Rubin delivers this message with a very cheery disposition. It's okay, his comments and mannerisms seem to radiate out while he talks, because we'll adapt. Yes, he says, gasoline will be $8 a gallon, but we'll adapt: we'll drive less in less powerful cars. We'll do so, he says cheerily, because we'll have no choice. Get ready to see more bicycles on our streets.

Another important part of his message: all that stuff we used to make but no longer make because it's cheaper to have it made in Asia and shipped back... it will no longer be cheaper to make the stuff there because it will cost too much to ship it back. Get ready manufacturing, there's going to be a new North American industrial boon. Human capital in manufacturing may not be as pricey as it had gotten before we started shifting manufacturing overseas, but it will be a lot more expensive here than there, meaning all those manufactured things we love will have significantly higher price tags. That's ok, Rubin says, we'll make do with less stuff, and like our parents (or grandparents for a lot of readers), we'll fix the things that break rather than throw them out and buy new.

One more thought to really pile on the gloom, because why not? Rubin is happy to share it--and here's a bone for all those who consider China the boogey man. There's a reason China has chosen to purchase so much U.S. debt. As Rubin says, "it's not out of benevolence." They are betting that in any foreseeable future the U.S. economy will still be the dominant economy. The financing of our debt acts as an oil insurance policy. You see, China knows that triple-digit oil is the single greatest threat to its continued economic rise. What Rubin predicts is that at some point in the future, China will allow its currency to float instead of being artificially pegged to the dollar. At nearly the same time, they will begin selling the U.S. Treasuries they own. The result will be a Chinese yuan that increases in value rapidly against the dollar, which will itself decrease in value. And this matters because... the price of oil on international markets is in U.S. dollars. The effect will be even bigger spikes in oil prices, and China will get a steep discount with the increased buying power of its yuan.

At the risk of being a commercial for an ASAE product, I'm going to say this is why I love the Invitational Forum on Leadership & Management, where Rubin spoke. What does any of this have to do with association management? Other than a few affected industries, not much directly. Indirectly? Everything.

Again, to quote Rubin: "There's not an airline operating today that's profitable with $100 oil." You know how you feel when you find a good airfare, say New York to Chicago for $150? What's it going to mean for your conferences, events, and even board or other volunteer group meetings that require travel when you're positively giddy at finding New York to Chicago for $650?

Another example: produce markets and supermarkets are byproducts of the industrial revolution. Still it was only 20 or 30 years ago that you started seeing fruit from halfway around the world showing up in February. Would you pay $10 for a single Chilean orange? Me neither, so we'll likely revert to the way it used to be just a generation ago: your fresh produce is going to mirror your local seasons. Not only did the price tag for getting there get ugly, the cost to feed meeting goers spikes, too. And as a special kick in the teeth, you'll have fewer options for the additional money.

Beyond meetings and capital T travel, it will affect how associations are staffed. Will the trend be more remote work or locating in high population density areas? (Probably both.)

And of course, there is how such changes will affect your members in their industries and professions.

According to Rubin we're facing a new economic reality. It's easy to see the logic. Supply is finite, and production is either topping off, or has already topped off. Demand is also increasing rapidly, and alternatives are expensive or need years of development. What can you do with this information? Admittedly, probably not much right now or in the planning for next year even. What can you do is be wary, keep an eye out, and spend some of whatever thinking time you have thinking about what triple-digit oil will mean for your association.

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June 13, 2011

Are free offerings worth anything?

It was pretty clear from his session at ASAE's Invitational Forum on Leadership & Management, that Rafi Mohammed is not a fan of the price of "free." I'd say hostile even. His point: why do something that you think has such little value that you wouldn't charge anything for it?

I disagree with him on this one. I think there is value in things other than money. When someone is willing to pay attention to your organization when faced with so many other things that are screaming for their attention it means something. When someone interacts with your organization, that has real value, whether they've paid you for that privilege or not. In many cases, adding an extra barrier--such as requiring a monetary exchange--between you and who you want to attract, will limit the success you're able to achieve.

Here was the issue debated at the forum, and I'd love any readers' takes. One association executive talked about sending a couple of his staff to a conference for professional development. The staff came back raving about the experience, and the executive said he was excited by the feedback. And then the conference organizer followed up with a couple of free webinars that extended the learning and sharing from the conference. It probably wasn't necessary, but that was the deal cincher -- the association would be patronizing that conference in the future.

Mohammed thinks the conference organizer was leaving money on the table. They could have either offered a premium for the conference plus webinars or charged for the webinars themselves. He says the webinars did not actually add value to the conference because in all likelihood, they had already made the sale for the next conference -- that is, they're not getting anything additional by providing the webinars. Participants who commented, in general disagreed, saying the free webinars solidified the future sale, and could have been the deciding, impactful idea that spurred other, less raving, attendees to come back.

Would love others thoughts on the value of offering free products/services in general, and especially where you come down on the postconference webinar example.

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June 10, 2011

Decisions: The cheapo or luxury bus line?

Rafi Mohammed wrote the book on pricing--literally, The Art of Pricing. His two main points are to price in terms of value to the customer and to give options for different value levels. As he spoke yesterday, he used the example of the city-to-city bus lines that run along the East Coast. For a little less than a thousand bucks, you get luxury seats, a full bar, and all the bells and whistles. For $25 or so, you can go from DC to New York City in a crowded, no frills ride that ranks in the bottom five percent of mass transportation safety.

Mohammed's point was that the bus line pricing options are not good or bad, they're priced for the value they provide. Here's where my mind wanders to one of my favorite topics: focus. I've talked about it plenty on Acronym, here's an example, and another. A lot of associations try to be all over the spectrum. In effect, they try to be the cheapo line and the luxury line. An organization trying to be both is just asking for disaster. This might fly in the face of Mohammed's options idea, but I don't think that's exactly what he had in mind. Think more like a premium than an option; a luxury service may differentiate itself (and Mohammed would add charge me) to pick you up at our door rather than a centralized location. To me there's an important nexus of pricing and focus: know your niche, and price and serve accordingly, no apologies for what you're not.

Another quick thought, most organizations aren't on the luxury side or the cheapo side. We're stuck in the messy middle. I think a good thought exercise for groups would be to explore the bus line question: if we aspired to be the cheapo line, that's where we can do the most good and grow the largest business, what would the organization look like? Now contrast that with the opposite: What would be different about your organization if your only focus was luxury and being the primo offering in the market.

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June 9, 2011

Why?

One of the most infuriating and enlightening one-word question that comes up at your organization's meetings: Why?

Jennifer Riel is the Associate Director at the University of Toronto's Desautels Centre and was a key researcher developing the ideas that lead to the book, Opposable Mind by Roger Martin. Her presentation this morning at ASAE's Invitational Forum on Leadership & Management in Toronto is the inspiration for this post. The comment that popped the idea was this: "If you have a fundamental assumption, question it."

Jennifer RIel Leads Discussion.jpg

It's a nice sound bite, one of many. And when I look at some of the others I thought were meaningful, they, too circle back to this simple little question: "Why?" Such as these:

"Surrounding ourselves with people not like us will help us make better decisions."

"The best decision makers add complexity early on in process."

"Someone who disagrees with you is a gift."

The question "Why?" is infuriating because we have a set course of action in mind. It's infuriating because it challenges us, our ideas, our authority, etc. It gets in the way and stalls things.

It's enlightening because it forces us to think about the reasons we have the assumptions we have. It opens doors to new thoughts and ideas. It gets in the way and helps us make things better.

So when somebody asks the question, you do have a choice of how to react, and likely as not, it's ingrained in your organization's culture. And if no one questions why, that too is likely part of your culture.

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