This article focuses on some of the issues associated with the value creation process.
While the analysis and examples are Ndarala specific, the lessons are of some relevance to a wide range of new organisational types.
Definition of Group as Business: Value Creation
The starting point in looking at answers to the questions posed above lies in the way we define the Group as a business.
We speak of this as the creation of value among members, value that can then be shared between members and the Group. There are many organisational forms seeking to do this. Examples include federations, clusters, service companies, formal and informal networks, COLKENS, incubators, franchises and cooperative marketing operations. Our aspiration is, simply, to be the best in the world at what we do, the value creation process.
We do not pretend that we have yet realised this aspiration. We still have some distance to go. In the meantime, we can say that so long as we do continue to create value, then our members have an incentive to continue to participate and to contribute.
Going on Regardless
Part of the answer lies in the sheer determination of our early members, their willingness to go on despite the absence of immediate returns, to invest time and effort in testing things, in defining policies and procedures, in creating supporting infrastructure. They did so in part because with time they started getting value back, but more importantly because they shared the vision. Many things did not work. But over time we were able to define structures and approaches that did work, that then provided a base for future test and experiment.
Identifying Real Benefits
Perhaps the most important thing we learned during this process was the nature of the benefits themselves.
Unlike a conventional organisation, we cannot order people to do things, we can only persuade. Things will work if and only if they do meet member needs, and in our case that means the needs of independent practices and professionals. These vary enormously between practices and over time. This means that a one-size fits all service and benefits approach will simply not work. so we learned that we had to be very flexible, offering a variety of benefits that change as member needs change.
We also also learned that because member practices and professionals are often isolated and lack the interaction to be found in bigger organisations, friendship, peer group support, information exchange and the sense of belonging to something bigger formed the solid bedrock keeping the Group together.
Independent professional are normally also time poor. This creates very real difficulties in sustaining development projects simply because required resource contributions cannot be guaranteed. At the same time, these projects represent the central R&D function and provide the potential building blocks for future growth among the collective.
Here we learned an important lesson, that while our development project activities generally failed to yield the expected short term benefits, they nearly always had positive longer term paybacks. Our challenge, therefore, was to find a way of sustaining activity until development got to the point that outcomes were of sufficient relevance to members to be taken up and incorporated in their activities. To manage this, we adopted a project approach, focusing available central resources on a limited number of development projects so as to bridge the resource gap.
Oneﾠdifficult trade-off here was to find the right balance between the member support role that provided the Group's glue as compared to the development role providing future returns. If we focused too much on development, then cohesion and involvement suffered. If we focused too much on member support, then development stopped.
We still have difficulties in achieving the right balance here, in part because the balance point shifts all the time as member needs change. However, with experience we have defined a three fold service focus that provides a framework for a wide variety of ever changing member interactions with each other and the Group:
- our member support role - friendship, peer group support, information exchange - helps break the sense of isolation associated with independence and supports individual operations
- our platform role - infrastructure such as this blog, our policies and procedures, our guides and manuals, common marketing and diagnostic tools etc - provides a supporting structure facilitating development and cooperative action.
- our R&D and business development role - industry, market and service analysis, process analysis, cooperative service development, cooperative marketing - assists individual member practices and professionals to improve performance and provides a base for longer term developments.
Members select the elements within this mix that best meet their changing needs.
Contribution/Benefit Ratios - the Reciprocity Principle
Early in the Group's development process we defined what we called the reciprocity principle as a core guiding principle. This stated simply that benefits should follow from and be related to contribution. To this end, we began monitoring both contributions and benefits to try to ensure that this matching actually happened.
The outcomes of this analysis were quite fascinating. Key features included:
- Benefits were indeed related to and followed contribution. Further, the benefit/contribution ratio could be very high. However, the match was not exact in that a particular contribution did not necessarily yield a particular benefit. Rather, benefits flowed over time in often unexpected ways. This meant that a lower level sustained contribution yielded a higher return than a larger but sporadic contribution.
- Both contributions and benefits were directly related to the circumstances and constraints of the individual member practice or professional. Now at one level this appears self-evident. However, there were important elements to this that we had not properly recognised. One was the need for realism in assessing both potential contributions from and benefits to time poor professionals. Attempts to push involvement beyond the limits set by real time constraints simply failed. A second was the very significant difference between those trying to build professional services businesses for whom the business return was central as compared to those for whom their practice was primarily a professional vehicle and who therefore valued personal and professional gains more highly.
- From a collective perspective we found, somewhat unexpectedly, that some of the most valuable contributions came from members with a low level of involvement, members who valued the interaction but participated on an irregular basis. This meant that our growing size and spread, what we call our footprint, had become one of our most valuable assets.
- We also found that we did not have a significant free-rider problem simply because member returns required some contribution even if only the time to read the email traffic!
Ndarala is still very much a work in progress and will remain so because what we do is driven by the changing needs of a changing and growing membership.
Our objective is to create a rich supporting environment offering members a range of choices and options from which they can select those that will best help them meet their personal, business and professional needs.