Steve Rosenbaum's Blog

How Trade Associations Facilitate Innovation

Steve Rosenbaum — Sun, 13 Apr 2008 21:00:00 GMT

There was a great article called "Innovating Through Design" in the Dec. 2006 issue of Harvard Business Review. The article explored how informal collaboration amongst design professionals in Lombardy, Italy, produces incredible innovation in product design.

The Lombardy firms' R&D operation, for the most part, can be found neither inside the companies nor in interactions among them. Rather, it comprises a free-floating community of architects, suppliers, photographers, critics, curators, publishers, and craftsmen, among many other categories of professionals, as well as the expected artists and designers. The members of the community are prized as much for their immersion in a discourse as for their originality.

A takeaway from the HBR article is that strong industry clusters and business communities emerge, not only as byproduct of large universities, but by a willingness of firms and individuals in a region to engage in discourse and collaboration.

Trade Associations as Connectors

From Pop Art's experiences, we have found that trade associations play a huge role in facilitating discourse and collaboration. It is a myth that trade associations are primarily about promoting an industry through activities such as public relations. On the contrary, most trade associations devote most their resources to topics such as "industry standards," "education" and "workforce development."

They connect CEOs with CEOs, engineers with engineers, designers with designers. They build social networks (both online and offline) and hold formal educational seminars.

When I have a business problem, I can share it in confidence with other trade association executives who I have grown to know over the years. When I need to find a new supplier or key employee, I can tap into my trade association contacts. Often, I attend a trade association event where I hear about a new concept, technology or story. The concept may not directly apply to my firm, but I am able to synthesize the ideas and gain valuable takeaways.

The ROI of Building a Strong Community

It may be easy for a company like Intel to justify belonging to a trade association of semiconductor manufactures. But why should Intel support the local software association or advertising federation? Certainly Intel executives already have plenty of peer groups and collaboration partners. And why should a company like Pop Art support a trade association of start-ups, if our company is no longer a start-up and very rarely has a client that is one?

The reason is that companies like Intel and Pop Art benefit enormously from the strong companies that trade associations help foster. It's a low-cost way to build a strong community that benefits the broader industry. For example, a great start-up might attract a stellar engineer to our region, and that engineer might lead a speaking panel that larger companies learn from. Or even better, that engineer (or a friend of the engineer) might later go work for Pop Art or Intel.

When Intel sponsors a trade association event, it builds tremendous goodwill and mindshare. Because Intel is so supportive of trade associations to which I belong, not only am I more likely to buy Intel's products, but I am much more likely to recommend Intel when my friends in New York, Los Angeles or Portland are seeking a job.

And on a political note, when large companies support the community, they are much more likely to receive essential political support from small companies when the large companies really need it. The Small companies will not blindly follow the lead of the large companies; but at the very least the small companies will listen and discuss the needs of the large companies who form the anchor support of trade associations. Simply put, when you get to know somebody, you are more likely to empathize with them.

Trade Associations and Politics

Trade associations are often poorly portrayed by Hollywood, the media and politicians. The "Trade Federation" in the Star Wars films and the "Spacing Guild" in the Dune novels are antagonistic forces that seek to maintain monopolies on trade. Politicians and the media portray trade association lobbying as representing "special interests," often working against the common good.

Some trade associations devote a small portion of their dues to "lobbying and advocacy" activities. Trade associations may also maintain political action committees (PACs) to engage in lobbying. Other trade associations do not engage in any political activities.

I have spoken with CEOs who get nervous about participating in a trade association's political activities. Reasons are cited such as:

"I am not sure that I support their political agenda."
"I don't want my business engaged in politics."
"I don't want to offend our customers or employees."
"I don't want to be a political pawn of big industry."

As far as politics are concerned, I believe that trade associations do far more good than harm. Trade associations play a huge role in educating elected officials regarding topics like: the need for skilled workers, long-term macroeconomic trends and how various legislation will affect businesses. I think it's safe to say that not every legislator understands business and economics. And certainly, not every business executive understands legislative political.

The majority of lobbying that I see from Pop Art's trade associations is lobbying for increased education funding in the arts and sciences. Most CEOs don't earn huge salaries. Most CEOs want livable communities, clean and safe environments and opportunity for all. The political needs of metropolitan CEOs and their owners is most often in-synch with the needs of labor and the community at-large. And when it isn't, there are plenty of voices representing the other side so that politicians can listen to effective discourse.

In general, trade associations won't advocate a policy position unless the vast majority of its membership is in agreement. I believe in change from within the system, and I would rather have my voice heard than sit on the sidelines. Our involvement in trade associations offers us a window into issues and perspectives that we might not have know about otherwise. Our firm benefits from our ability to influence political discourse within trade organizations, and from the power we have to rally other companies to our causes as well as our potential to block the trade association from taking policy positions to which we wholeheartedly object.

Challenges faced by Trade Associations

Trade associations face numerous challenges, including: maintaining membership in light of M&A activity, finding sponsors and putting on events. The bottom line is that there are more and more trade associations, probably too many of them. New trade associations pop-up frequently, but trade associations fade away slowly, and rarely burn-out. Keeping their mission and their content relevant is perhaps the biggest challenge.

Working in a trade association is a tough job. Many trade association employees work 12-hour days, with little job security or financial up-side. They must balance lots of politics and the egos of CEOs who make up their constantly changing executive boards.

The best trade associations have low staff turn-over; this helps their employees to best serve as connectors and helps advance the interest of their members.

The best trade associations also have very dedicated volunteer boards who are passionate and generous in making the association relevant and viable. The best board members are inclusive. They do not promote the "Old Boy's Network" with cliquish and controlling behavior; rather, they are very open and inclusive in welcoming new members and ideas.

Conclusion

The ROI of trade association membership is largely intangible; however, it is outstanding nonetheless. It is in your self-interest to liberally join, sponsor and participate in numerous trade associations. If you are a good member, the trade association staff and board members will go out of their way to help you.

If you are open-minded to talking with other firms, both your competitors and firms not directly in your field, you might stumble upon some new innovations. Successful industry clusters, business communities and ideas will emerge; this is essential to your firm's long-term success and the growth of a prosperous society.

Why Clients and Agencies Need to Take a Holistic Approach to E-Business

Steve Rosenbaum — Mon, 11 Feb 2008 00:52:00 GMT

The most successful e-business implementations excel, not just by being great in one area, but by being good in all areas and great in some areas.

Critical E-Business Success Factors

Clear business vision and measurable goals
A marketing plan that drives your campaigns and programs
Scalable and diversified advertising channels
A technology framework that is secure, reliable, extensible and agile
Brand growth, management and evolution
Customer support
Alignment of enterprise activities with vision and strategy

On the Front-lines of Business Development in an Interactive Agency

In the past 30 days, I received the following calls from prospective Pop Art clients:

            Company 1 asks: We need you to “redesign” our front-end graphics.
            Company 2 asks: We need you to “rebuild” our e-commerce back-end.
            Company 3 asks: We need you to do some “online advertising” for us.

The problem with all three of these examples is that the customer is seeking a specific service rather than a holistic solution.

Risks of Point Solutions to Both the Client and the Agency

The agency delivers a great service, but it is optimized for the point solution the client has requested rather than the customer’s holistic needs.
It is difficult and expensive for the agency to get up to speed on the company’s holistic needs if the agency is working in only one functional area. Success in a given functional area will be limited if silos prevent collaboration with other functional areas.
The client is unbundling the agency’s overall solution into specific services. This disrupts the agency’s methodology and erodes its value proposition. This also draws a lopsided use of resources from the agency, increasing project costs.
The client is taking total responsibility for strategy, and relegating the agency to a tactical implementation role. This makes the projects less rewarding for agency team members and doesn’t give the agency a chance to show its business smarts.

There are times when it might make sense for both the client and the agency to engage in a purely tactical project designed for a point solution. However, in those situations, the client and agency should be conscious of the above risks and take specific steps to mitigate them.

Tips for Successful Relationships with an Interactive Solutions Agency

E-business projects are not primarily about graphic design or software development or advertising. While all of those are critical disciplines, they are the last factors to which you need to pay attention!

First think Strategy, then think Planning, then think Implementation. If you want to be agile, the agency working on implementation must also be involved with business strategy and planning; otherwise, it becomes too hard to switch directions. Furthermore, you don’t want to play the game of “Telephone” whereby strategic intent is watered down and misconstrued because the people implementing the strategy weren’t able to interact directly with the strategic leaders.

E-business is incredibly cross-disciplinary. The key to success is culture more than technology. The job of the client executive is creating stakeholder alignment and a culture where people working on the project are working together effectively and feeling that they are having a meaningful impact on the business.
Understand what motivates your agency and the people who work there. Make sure your agency understands your company and your motivations. Be willing to compromise to establish a partnership that maximizes the total rewards of the relationship.
Very few agencies are good at everything. Understand what services your agency wants to provide and what additional services they are willing to provide. Understand your agencies strengths and weaknesses. If you have multiple agencies, make sure that they know their roles, and that they are collaborating and playing well together.

Pop Art’s Holistic Approach to E-Business:

1) We start with a broad assessment. We love reading business plans and marketing plans; we also love helping customers to create those documents if they don’t already exist.

2) We explore and document internal stakeholder needs. What is the sales team seeking from the e-commerce solution? What do the product managers want? What does IT want? What does Operations want? After a couple group sessions, we typically design a survey and do brief 1:1 interviews with at least the top 10 stakeholders. Often this produces unique insights into the business. For example, the operations team may be aware of a valuable new market opportunity that was not previously presented to us. We then share our findings with our key stakeholders, and they have us present them back to their broader teams where appropriate.

3) We explore and document the needs of our customer’s customers. Through segmented focus groups, surveys and 1:1 interviews with customers we are able to validate the business case and gain valuable insight into the psychology and demographics of the target audience. This also helps us produce meaningful customer interactions when we implement the e-business system.

4) We examine research, competitive analysis, 3^rd party solutions and industry trends and best practices to present our clients with knowledge and to help them finalize their goals and implementation plans. This allows us to sign-up for strategies and goals where we feel ownership and ability to guarantee our client’s success.

5) Armed with proper information about the business case, we adapt Pop Art process to the client’s needs and present the client with implementation plans and choices so that the client can make optimal decisions for their business based upon their preferences for balancing costs, assurance, time-to-market and total return.

Taking a holistic approach requires extra effort at the start of the project. However, once you try it, you’ll never go back. Point solutions are simply too risky, too expensive and not very fun. Holistic approaches will lead to better alignment within your organization and its markets while producing maximum ROI and smooth sailing for all of those involved.

Feel encouraged to post comments regarding challenges and successes you have experienced when taking a holistic approach.

10 Years Ago

Steve Rosenbaum — Mon, 01 Oct 2007 18:04:00 GMT

Ever since Pop Art’s first year in business (1997-1998), I have held onto a magazine advertising insert published in the March, 1998 version of Wired Magazine.

The piece is the “Encyclopedia of the New Economy” written by Browning and Reiss and published by Wired and Andersen Consulting (now Accenture). The “encyclopedia” is loaded with exuberant consultant-speak, but simultaneously, it’s a prophetic piece about the modern economy and the use of technology an knowledge.

Shortly after its publication, an entire magazine was built around the “New Economy” theme when Business 2.0 launched in July of 1998.

On one hand, Wired and Business 2.0 were prophets of our modern economy. 10 years ago, they were leaders in mass-promoting concepts ranging from “Convergence to E-Commerce to Emissions Trading to Virtual Communities" - concepts that have since skyrocketed in popularity. Much of the enthusiasm of the current Web 2.0 rallies concepts from the New Economy.

And now 10 years later, Business 2.0 will publish its final issue in October of 2007.

So, what has the business community learned about knowledge and technology in the past 10 years? If you could send a message to yourself 10 years ago, what would it be? What were the biggest surprises in business, marketing and technology?

Here is my list:

Global free trade is changing the world more rapidly than most people imagined; we all need to invest internationally. We also need to acknowledge the unprecedented risks and capital investments required to bring an idea to market, and we must allow the market to work its magic by rewarding smart risks and punishing bad ones. The amazing growth of the private equity industry and the hedgefund industry during the past decade may have been a result of the market’s need for more smart risk-taking.
Managing risk and government regulation is more important than ever. The Enron debacle and subsequent Sarbanes Oxley regulations have increased the importance of CFOs and CIOs.
E-commerce transaction volume has exceeded even the rosiest projections of 1997.
Sites like Google and Wikipedia are having a huge impact on the growth of human knowledge and access to information.
Programs like Google AdSense makes it possible for any web site to monetize traffic.
People will pay for certain types of digital content (like iTunes and ringtones).
3G wireless networks have been slow to develop in the USA. Weren’t we suppose to be on 5G by now?
In 1997 everyone was talking about virtual communities and user-generated content; however, we missed the brilliance of social networking (think Facebook, LinkedIn, MySpace) and the value of the relationships (the glue) that links content together.
Great ideas aren’t enough; business models, cash flows and market planning really count!
Making technology easy-to-use is still one of the biggest challenges!

As we say in business today, “You must grow, or you will die”. So, what can we learn? Above all, we must continue to respect all of our stakeholders:

Capitalists must be rewarded for smart risks (and held accountable for bad ones).
Companies must support Workers through constant learning and growth while rewarding workers for taking on increasing risks and responsibilities.
Customers must be respected as the driving force of a market economy.
Communities are the sustenance of any corporation. Companies must invest in their communities to nurture current and future generations of stakeholders.

Computers have done little to help us communicate complex thoughts that we can’t articulate to begin with. The glue of a firm is its ability to facilitate dialog and interaction amongst its stakeholders. Investments in communication and design will lead to stakeholder alignment and the growth of knowledge capital, producing the “network effects” that Browning and Reiss identified as of one the foremost benefits of the new economy.

What are some of the biggest changes from the past 10 years that surprised you?

Every Blog has a Beginning

Steve Rosenbaum — Wed, 26 Sep 2007 23:46:00 GMT

I run an interactive marketing consultancy. I have advised our clients on their blog strategies – finally, I am heeding my own advice and doing the blog thing.

This blog will house some of my thoughts on business, society, information design and the interactive marketing industry.

Recently, we had some great conversations at Pop Art about what will make our blog useful to both readers and our firm. My takeaway was that a great corporate blog is more than loosely organized thoughts. Here are some essential best practices:

Write for your audience.
Be both edgy and sincere, but stay close to your audience’s comfort zone
Keep your articles focused and on-topic. Corporate blog entries should be thought-out and edited, not mere random thoughts or streams-of-consciousness.
Keep your blog organized. You can do this by adopting an elegant software platform; creating a blog information architecture and tagging your articles with keywords.

In conclusion, blogging is like business. If you are good at running a business, you shouldn’t have any problem blogging. Just respect your stakeholders, take smart risks, stay organized, focused and determined. Keep it simple and have fun.