How can healthcare associations redesign their operating models to achieve non-dues revenue growth?
Previously in our article, reinventing societies, we noted that societies and associations need to reinvent their business models to ensure relevance and sustainability in the future. Here, we dive deeper into operating model considerations for healthcare societies and associations looking to achieve non-dues revenue growth.
Historically, most associations have been functionally oriented and organized around key functions such as membership, education, publication, HR, and finance. The primary business model has been B2C—selling memberships, education and publications to individuals. Yet increasingly the new growth opportunities are B2B—selling new offerings to industry and bundling membership propositions to large group practices. The growth in this trend is occurring as associations need to remain competitive and sustainable in the market.
For most societies, the gradual evolution of new B2B products and services has added significant operational complexity. For example, common symptoms include:
- Multiple customer segments requiring different go-to-market approaches.
- Potential brand dilution due to multiple offerings and differing market positioning.
- Inconsistent customer experience for different products/services.
- Misalignment between operational support processes and the product portfolio. For example, invoice processing for products is not homogenous and customers receive invoices which literally look different due to a lack of a single view of the customer.
- Inconsistent approach to evaluating the organizational effectiveness of non-dues ROI.
- Challenges scaling up successful offerings. For example, ad-hoc processes that worked for 25 customers struggle under the strain of supporting 1,000 customers.
- Different levels of maturity within the product portfolio with no clear mechanism for prioritizing investment and allocating resources.
To remain competitive and sustainable, societies need to address this complexity by re-evaluating their operating models. We recommend better aligning models to the future diversity of their product/service portfolio. In turn, this will focus effort on developing new products and bringing them to market, while ensuring a standardized approach to business operations.
Below we outline three ways that societies can re-design their operating model. By following these steps, they can instill a culture of product development, product lifecycle management and operational standardization.
1. Re-orient the operating model
Products and services are increasingly becoming digital, and societies need to adapt quickly and iterate on product development in an agile manner to stay competitive. In this environment, the operating model has to enable cross-functional teams that can be quickly stood up and scaled. The traditional functional operating model does not provide this flexibility.
We have recently helped multiple societies redesign their operating models, moving away from functionally oriented silos, to models that enable more agile and cross-functional ways of working. This has included working with an association to design an operating model for their education business that focused on growth and innovation for their product portfolio. Key design activities included developing design principles, defining the future capabilities and developing an operating model to deliver their overall vision and strategy. Societies organized in this manner tend to be more nimble and operate effectively in rapidly changing markets where the business can easily scale their operations (e.g. new product line) to support the non-dues product portfolio.
2. Establish a standardized and rigorous product management capability
The introduction of a consistent product management discipline allows Societies to seek new growth and innovation opportunities in the market in addition to clarifying internal roles and accountabilities. We recently worked with a society to redesign their education business operating model which currently generates significant revenue. The scope of work involved supporting them to define their future vision, developing an operating model to deliver this vision and working with key stakeholders to develop the implementation plan. We recognized that the client needed a product management capability, which we made a core part of the new organization design. As a result, the society now has the product management discipline which is standardized and enforced across the business.
3. Focus on standardization and scalability in all back office operations
An association recently engaged us to redesign their sales and marketing function. We identified a number of operational processes (e.g. pipeline management) that were uncoordinated and inconsistent. Standardizing these processes and capabilities will enable the association to scale up their offerings without being hampered by operational complexity. As a result of this work, the association has now identified the operating model foundations (capabilities) required to deliver their vision of non-dues revenue growth.
In conclusion, as societies look to drive greater non-dues revenues, they need to re-align their operating model to avoid unnecessary complexity. Successfully doing this will be key to their long term sustainability and help drive new areas of growth and innovation.