GOING GLOBAL

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STEVEN WORTHWORTH CONSULTING, LLC

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Agenda2

Challenges of Going Global

Different Perspectives Between Staff & Volunteer Leadership

Globalization and Good Governance

The Challenge of Going Global for Associations

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Presentation Goal and Key Message

Goal: To improve the awareness and understanding of globalization

Message: For those organizations interested in pursuing/expanding globalization, ready and willing partners can be found that will not require unilateral investment by U.S. non-

profits. In fact, unilateral pursuit of globalization may lead to counterproductive

circumstances for U.S. non-profits.

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Going Global55

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U.S. Exports and Imports: Balance of Payments6

Driving Forces:• Technical• Economic• Political• Multilateral trade

agreements

KEY:1960:1970:1980:1990:1999:2009

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*Values in millions of US dollars

From: The US Department of Commerce

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Last Multilateral Agreement – Uruguay Round

• Cut foreign tariffs on manufactured products by over one-third, the largest reduction in history

• Protect the intellectual property (IP) rights of U.S. entrepreneurs in industries such as pharmaceuticals, entertainment, and software from piracy in world markets

• Expand export opportunities for the U.S.• Ensure that developing countries follow the same

trade rules as developed countries• Establish an effective set of rules for the settlement

of disputes• Create the World Trade Organization (WTO)

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Technical Barriers to Trade

• Establishes more defined standards and technical regulations regarding all goods

• Ensures standards, technical regulations and conformity assessment procedures

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Consequences

• Certain industries will fade out

• Protected parts of the economy will have to adapt to the change

• New pressure to compete

• Strategic partnerships within industry

• Growth of ASEAN, EU, and NAFTA

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Key Ingredients to Success

• Determine need: • market driven• member driven

• Defining Value Added

• Financing

• Governance and Operations

• Managing cultural and professional differences

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Globalization: Pros and Cons

Pros:• Global acceptance of products and services• Larger knowledge and networking base• Greater level of prestige• Greater global influence on credentials and standards

Cons:• Decentralization• Dilution of core message and values• Responding to political forces rather than member

needs• Cultural differences leading to professional differences

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Associations and Globalization

• The areas of greatest interest are:• Membership development• Conferences• Trade Shows• Scientific/scholarly publications, research and education,

and information exchange generally• Credentialing/standards setting

• Regions of most active membership presence (outside North America)1) Europe – both east and west2) Asia3) Latin America

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F O U R M O D E L S :

1. N E T W O R K I N G I N T E R N AT I O N A L S U B S I D I A R I E S A N D C H A P T E R S

2. D E V E L O P I N G A G L O B A L F E D E R AT I O N

3. G L O B A L S T R AT E G I C A L L I A N C E S

4. A T E C H N O L O G Y- R E L I A N T G L O B A L N E T W O R K

Managing Global Operations

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Key Questions

• How do you control your liability and protect your brand and IP while encouraging local sustainability and growth?

• How does your international operational structure back at headquarters add value and benefit from this relationship?

• How can the whole be interwoven into operational and governance structures that not only address your current needs but which will meet your needs in possible future markets as well?  

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1. Networking International Subsidiaries and Chapters

• Create a subsidiary or chapter network that serves the local market

• Closely integrated into global operations

• Each local element is a legal and financial entity unto itself- limiting financial and legal exposure to other parts of the firm

• Establishes separate teams to deliver global services wherever customers may be

• Disputes are handled within the hierarchical structure beginning with the regional coordinating body

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Model One16

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American Society of Mechanical Engineers (ASME)

Membership from 1999 to 2003 had declined

Three global trends created opportunity Increased talent in developing economies Promotion of global standards Need to transfer technical knowledge to the least

developed countriesASME capitalized on governmental, policy-based

drivers of growthCredentialing, education, and training programs

aligned with governmental “capacity programs”

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2. Developing a Global Federation

National entities remain primary service providers for national markets

The global federation serves widespread needs such as networking, certification and training, development of standards, etc.

This is similar to structure of subsidiaries or chapters but with fewer direct costs and less central control

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Model Two19

Global Governance and Operations

Regional

National

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Equitable Global Voting

(% Headcount) + (% Financial Contribution)2

= % Voting Share of Global Decisions

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Institute of International Auditors (IIA)

• The IIA had created and helped grow several sister organizations globally over several years

• These sister organizations had joined the U.S.-based IIA causing a problem– differences in prices led U.S. members to complain of unfair burden in payment and the non-U.S. members complained of bias in the governance structure towards U.S. members

• As a solution to these challenges, IIA redefined its governance structure to match the diverse needs of its members- the federated global structure

• To help in the expansion globally, IIA also made use of service contracts through the World Bank and USAID

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3. Global Strategic Alliances

• Organizations which are nationally-rooted but tied to international trends can form strategic alliances with overseas partners

• Partnerships consist of cooperation and joint venture agreements with a wide variety of other types of organizations to host international conferences and other information exchanges

• Revenue-sharing arrangements are worked out on a per-project basis

• Offers maximum flexibility to work with groups that may share some interests but are otherwise different.

• Even cheaper than other models but also least control with less shared sense of purpose for the events

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Model Three23

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American Oil Chemists Society (AOCS) and National Osteoporosis Foundation (NOF)

• Both organizations pride themselves in their national roots, but have widespread global interests

• Networks of overseas partnerships have been developed to accommodate these interests

• Partnerships have effectively allowed both AOCS and NOF to remain tied to international trends and developments without devoting the resources necessary for permanent operations

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4. A Technology-Reliant Global Network

• Many organizations face a conflict between domestic national market interests and the provision of global products and services

• The creation of virtual global organizations, through the Internet, minimizes costs while allowing for communication and service provision

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Model Four26

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Society of Human Resource Management (SHRM)

• Given its domestic focus and interests, SHRM found it difficult to justify the expenditure of time and resources on global markets

• However, sister organizations abroad had a high level of interest in its programs and services

• In return for offering password-protected access to members abroad, SHRM also offered to host or link with Web sites offered by those sister societies in their own languages

• Revenue-sharing arrangements have resulted in modest but positive net contributions to the society’s bottom line

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Making the Choice

• These four structural examples are not mutually exclusive

• Models represent some of the tools available to creative association leaders grappling with the reality of a global economy

• Not every organization has equal access to each of these possible revenue streams, but everyone has potential access to at least one of them

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Motors Driving Growth

• Certification/Accreditation

• Education and training

• Member’s coattails!

• Developing markets programs

• Scientific/scholarly publications and information exchange

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For every US-based Organization there are Two Types of International Market

• First: US-focused markets

• Second: Indigenous markets that recognize local applicability of your products and services

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US-focused Markets31

US

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Costs versus Benefits of Each Model in Four Overseas Market Categories

• Developed Economies• Canada, Western Europe, and Japan

• Big Emerging Economies• China, Russia, India, Brazil and South Africa

• Developing Markets• Mexico, Singapore, South Korea, Taiwan, and Argentina

• Least Developed Markets• Republic of Georgia and Peru

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Some of the Benefits of Partnering

1. Share Resources

2. Expand your network of professional contacts

3. “Do well by doing good”

4. Develop new ways of working

5. Gain additional credibility and influence

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So, What’s Not to Like?

One of every two partnerships fails, according to “When to Ally and When to Acquire,”(Harvard Business Review, July/August 2004)

What is the path to success?

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Seven Steps to Success

1. Understanding what partnership is

2. Readiness: organizational/personal preparation

3. Research: finding the right partner

4. Structure for success

5. Manage dynamically

6. Prepare for failure

7. Personality check

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Different Perspectives Among Staff

& Volunteer Leadership36

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Differences of opinion among your leadership?

Making the case to go global to your US membership—what works and what doesn’t

What is fair and what is effective in structuring a global organization—and by the way, why should an organization seek to be global—isn’t being international enough?

Who is going to pay for this? How do organizations address the cost issues?

The Tower of Babel—yes, language and cultural differences are real and critical—so how do successful organizations deal with this?

BEMs and BRICS—penetrating the largest and fastest growing markets—which are they and why should you care?

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Globalization and Good Governance

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• Defined vision, mission, principles and goals

• Communication between Board Members and Staff

• Members must be l istened to and their problems solved

• Strategic planning sessions conducted regularly

• Focus groups and member interviews are valuable

Common Characteristics of Successful Associations

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Common Characteristics continued

• Understanding the importance of partnership between Board and Staff

• Identify and develop key strategic alliances with other organizations

• Structure associations to meet present and future global needs

• Specific business plan for the future is a necessity

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Responsibilities

Staff’s Role:

• Tactical Implementation

• New Ideas & initiatives

• Quality Control

Board’s Role:

• Strategic Direction

• Sponsorships

• Fiscal Oversight

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Strategic Implementation Cycle

Board

Staff

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The “representative” nature of governance

What does this mean?A) The positive aspects:

- Drawing on member ideas and resources- Transparency- Responsive to market needs and trends

B) The negative:- “us vs. them” divisiveness- Politics/Intrigue- The opposite of “mission-driven” and “fact-based” decision-making

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Research Methods

Quantitative Statistical data analysis

Qualitative Interviews Focus groups benchmarking

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Representation45

Market

Members

Market

Members

Board

Board

This Thatvs.

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Three Areas of Focus:

Relevancy

Insightfulness

Efficiency/Effectiveness

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Relevancy

Are you responding to market need?

If you are a membership organization, are your members representative of the market as a whole?

How have you segmented your markets and do your products and services match the needs of each?

Are your products and services perceived to set the market standard?

Is your revenue generation matching or exceeding market growth rates year to year, and do your prices more than cover your costs?

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Insightfulness

• Are you preparing for where these needs will have moved in 5, 10, and 15 years?

What percentage of your annual resources--as measured in terms of time and money--are spent in new product development, market surveys, benchmarking and trend analysis?

Nonprofit organizations tend to be inward or outward looking--how outward looking is yours?

Do you have high turnover in your volunteer leadership positions—are your leadership positions eagerly sought out by newcomers--or do you typically keep the same volunteer leaders for 6 or 10 years or longer?

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Efficiency/Effectiveness

• Are you operating efficiently?

As fast, as efficiently, and as effectively as the best possible?

Do you have a clear and recognized brand image/reputation that matches your vision?

Do you have a memorable and meaningful purpose as perceived by your stakeholders inside and outside your organization?

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Efficiency/Effectiveness

Do you have the market-focused tools and resources you need to achieve your mission?

Are your operational and governance structures driven by your mission or is your mission driven by your structure?

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A thought on successful global market strategies…

Knowing the difference matters…

International — serving foreigners (us versus them)

Multinational — we are in more than one country (still us vs. them)

Global — we are “them”

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Questions?5252

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