Sustainability Beyond Membership Fees: Align your strategic plan and operating model

Author: Ankur Sadhwani

Evolving industry dynamics are prompting membership-based not-for-profit organisations to redefine their strategic direction and operating models

What we are seeing

Membership-based organisations have recently seen mixed performance trends, influenced by evolving market dynamics and changing member needs. In our experience, these organisations touch one or more of three key service aspects: education; networking; and advocacy.

From an education perspective, the increasing popularity of alternative learning platforms and self-paced online education, alongside a decreasing demand for traditional in-person training and certifications, has contributed to revenue declines across many of these organisations.

As a result, numerous membership-based organisations are diversifying their income streams beyond just membership fees to include government grants, sponsorships, and corporate partnerships. Similarly, these organisations are re-evaluating their strategies concerning the convening and creation of networking communities, as well as advocacy efforts.

The market is becoming increasingly crowded, presenting challenges for organisations to either find or maintain their unique niches. At Spark Strategy, we have assisted hundreds of membership-based organisations in strategic direction and the resultant changes in business and operating model. We have guided numerous organisations to not only define but also capitalise on their unique strengths, helping them to expand their membership base, diversify their revenue streams, and enhance their market positioning.

Based on our recent work with membership-based organisations, some of the emerging trends include:

• Membership organisations are using their inherent knowledge base to diversify revenue: In response to economic fluctuations, membership organisations are diversifying their revenue streams. They are exploring innovative funding sources such as monetising educational content, introducing tiered pricing models, launching exclusive online marketplaces, and using their knowledge and connects to expand into consulting services. These strategies help build economic resilience and reduce dependency on traditional membership fees.
• Re-evaluating the membership structure and strategy: In response to shifting market dynamics, non-profit membership-based organisations are reevaluating their value propositions, membership frameworks, and dues strategies. This process is catalysing the development of innovative membership options designed to cater to diverse member needs.
• Workforce shifts: The challenge of attracting and retaining skilled professionals is more acute as industries experience generational turnover and evolving professional expectations. Organisations are developing compelling employee value propositions and adapting their workforce strategies to attract and retain talent in a competitive market.
• Membership organisations are enhancing engagement through digital transformation: Australian membership organisations are leveraging digital technologies to improve how they connect with members and manage daily operations. This shift towards digital tools is essential for enhancing service delivery and member engagement but also requires robust cybersecurity measures to protect sensitive data and ensure trust.
• Membership organisations are committing to diversity, equity, and inclusion: Reflecting broader societal movements towards inclusivity, Australian membership organisations are intensifying their focus on DEI. This commitment goes beyond revising hiring practices to cultivating an organisational culture that values diversity at all levels, enriching the organisation’s culture and amplifying its community impact.
• Membership organisations are proactively navigating regulatory environments: Membership organisations, particularly those in regulated sectors or reliant on government funding, are actively engaging with legislative bodies. This strategic advocacy ensures that regulatory changes do not adversely affect their operational effectiveness or sectoral impact.

The need for re-evaluation of the stakeholder value proposition and strategy…

Organisations experiencing a growth in membership numbers share common trait – a compelling value proposition. With the increase in service duplication and market crowding, it is crucial for organisations to clarify their unique value propositions. Organisations can use a funnel approach of evaluation to understand their current and future positioning in the industry.

• Industry analysis: Understanding the broader industry landscape and the specific challenges faced by members.
• Organisational understanding: Identifying the organisation’s core competencies and areas outside its scope.
• Stakeholder needs assessment using empathy maps: This technique helps organisations delve deeper into understanding their members’ needs, preferences, and pain points.
• Strategic differentiation: Analysing competitive positioning to identify unique opportunities and niches.
• Altitudes of Play: Strategically deciding which services to handle in-house, how to cater to members through partnerships, and what systemic challenges to address through advocacy.

… and assessing the operating model to align with new strategic goals

Often, a change in strategic direction necessitates a reassessment of the operating model. Customising the operating model to closely match strategic objectives is crucial, ensuring it not only supports but also enhances the organisation’s ability to make key decisions and harness its capabilities effectively. Many membership organisations operate without a well-documented operating model, leading to inconsistencies and duplicated efforts across the organisation.

Without clear direction, resources can be wasted. Redesigning the operating model often involves:

• Strategic Alignment: Aligning the organisational structure and resources with evolving strategic goals.
• Efficiency Optimisation: Streamlining operations to maximise resources and impact.
• Innovation Facilitation: Creating a framework that supports innovation.
• Adaptation to Change: Responding proactively to external changes such as economic shifts and technological advancements.

A tool to help….

Understanding and documenting an effective operating model involves leveraging frameworks like POLISM, which helps ensure processes, organisation, location, information systems, suppliers, and management systems are all aligned with strategic goals.

• Processes: This involves a thorough assessment of existing processes to pinpoint inefficiencies and areas ripe for improvement. It’s about mapping out the essential work steps required to deliver the organisation’s products and services, as outlined by its strategic goals.
• Organisation: The focus here is on ensuring that the organisational structure and the skills within the workforce are in harmony with strategic needs. This covers defining who will perform the work, how they will be structured within the organisation, the support they will require, how they will be recruited, motivated, and the values that will guide their behaviour.
• Location: It entails deciding where the work will be performed and what physical assets, like buildings, are necessary for these locations. This element also considers the logistical setup to optimise the balance between remote and office work.
• Information Systems: It’s crucial that information systems enhance productivity and integrate seamlessly with new workflows. This includes determining the required data and applications, identifying the ‘business owners’ of these systems, and ensuring they support the work efficiently.
• Suppliers: This involves evaluating whether services should be in-house or outsourced to align with strategic goals, along with determining what type of relationships the organisation will maintain with these external suppliers.
• Management Systems: This component assesses the need for processes in planning, budgeting, performance management, people assessment, risk management, and continuous improvement. It also involves setting a calendar of meetings to connect these processes and developing a scorecard to assess organisational progress.

The structured implementation of an operating model using a pragmatic approach like POLISM is not just about alignment—it’s about transformation. By meticulously detailing and refining each component of the operating model, membership-based organisations can turn strategic visions into operational realities. This approach ensures that every element of the organisation—from processes and people to technology and suppliers—is optimised to deliver on the organisation’s mission effectively and efficiently.

By adopting these comprehensive strategies and ensuring every aspect of the operating model is aligned with strategic goals, Australian membership organisations can effectively navigate today’s complex environment. We firmly believe that this proactive approach does more than keep organisations relevant; it equips them to lead and innovate, ensuring they not only adapt to current challenges but are also well-positioned for future success. Through strategic planning and operational alignment, these organisations continue to serve their members effectively, drive community impact, and maintain resilience in a rapidly changing world.

By keeping your strategy front and centre—and paying attention to the data and real-world lessons—you’ll be prepared to transform challenges into opportunities, ensuring the people and communities you serve benefit from every step forward.

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