Pawel Podolski

Part 3: Unlocking Innovation: Cross-Sector Lessons for a Business Model Revamp

Setting the scene

In our previous discussions, we explored how the professional services industry and membership bodies can attract and retain customers by developing compelling value propositions. We emphasised the importance of cross-pollinating ideas to effectively address customer needs. However, we also noted that while membership bodies excel at understanding their constituents' needs, they often struggle to monetise their value propositions as effectively as professional services organisations.

Now, we shift our focus to the game-changing potential of innovative business models in driving growth and maintaining a competitive advantage.

Innovation in Professional Services: Adapting to Digital Transformation

The professional services industry is undergoing a transformative shift, focusing on innovative business models that harness digital technologies and new ways of working. This is essential for organisations grappling with macroeconomic and global geopolitical changes, as well as increasingly demanding customers who are pressed for time and have more options to choose from.

Technology has indeed contributed to this change, in a myriad of ways. It has facilitated the global delivery of services, opening opportunities for organisations to expand into international markets. However, it has also disrupted traditional customer relationships, as online sourcing becomes the norm. Even industry giants like DXC and IBM are not immune to these changes. They have adopted pricing models based on customer perceived value rather than the cost-of-service delivery. This approach drives both innovation and a deeper understanding of customers, pushing organisations to continuously enhance their services.

In the small and medium-sized space, we are witnessing a similar trend. Organisations are leveraging technology to innovate how they connect with customers and deliver services more efficiently. The introduction of AI has revolutionised customer engagement and service delivery in professional services.

However, for organisations to truly benefit and secure their sustainability, they must be willing to explore alternative business models. Subscription-based services and marketplace models, for example, offer the potential to not only capture a larger customer base but also provide customised and localised solutions, fostering greater customer loyalty.

The parallels: Membership Bodies are also adapting to change

Now, let's turn our focus towards the membership bodies sector, to understand how it can better harness the power of innovation.

Two simple case studies - the Australian Institute of Company Directors (AICD) and the International Association of Business Communicators (IABC) show how membership bodies are reshaping their business models and changing how they engage with their members digitally.  Recognising that the majority of their members may never attend an in-person meeting, these organisations have shifted their focus to their digital footprint, delivering education and value through online platforms.

These organisations are also seeing the value and commercial potential in providing education as a core service and significant source of revenue. In fact, exploring how educating your customer base can bring significant value to organisations, will be the theme of the next article.

Embracing digitisation of channels: An initial but critical aspect of Innovation

In a world that is becoming more digital in every way, digitisation of the organisation's channels is clearly a very important strategy. The availability of technological solutions, and the lowering of cost barriers to access it even by the smallest of organisations enabled by part, by the mainstream access to AI, has become a game changer that many membership bodies should embrace.

From content curation, through video creation, customisation and localisation, to automating marketing campaign workflows - these are all examples of operational innovation that internal departments should seriously consider as part of their marketing and go-to-market planning.

However, digitisation alone will not be enough to warrant sustainability from a business model innovation perspective. Just like professional services organisations, membership bodies need to also consider alternative pricing models such as subscription-based services, and even productising their value propositions through a marketplace model.

Business Model Innovation led by Professional Services: learnings and inspiration for Membership Bodies

So, what other business model considerations can membership body executives consider, drawing inspiration from their professional services colleagues?

Knowledge as-a-service offered by Membership Bodies

Membership bodies in the professional services arena can explore innovative business models that can enhance their revenue and value. One such model is adopting a 'knowledge-as-a-service' approach, where digital resources and tools are offered to members. These bodies have the advantage of being highly respected within their industries, giving them credibility, that professional services organisations often work hard to establish. This approach not only creates a more reliable revenue stream but also improves member retention rates.

However, in this dynamic landscape, membership bodies are effectively starting to compete with niche professional services players. The success of both sectors will depend on the business acumen of their teams. It's exciting to witness how historically passive membership bodies, are now playing an elevated role in the broader marketplace relevant to their industry.

Membership Bodies starting to launch complementary service subsidiaries

Another fascinating trend is membership bodies launching subsidiaries that cater to markets beyond their traditional industry. For instance, launching a legal or consulting practice under a separate brand can help industry bodies tap into a larger market share. By white labelling their services, membership bodies can also broaden their revenue streams by offering these services to other membership bodies or professional services organisations.

Innovative Pricing: Transforming Competitive Advantage for Membership Bodies

Membership bodies are facing a critical challenge. Many of them rely on legacy pricing models, which don't meet customer expectations in the current environment. These models, based on flat fees and all-inclusive services, are losing relevance with the new generation of members.

But there are different and tested models, which membership bodies can easily draw inspiration from. By looking to successful businesses like Xerox, Netflix, or Dow Corning for example, membership bodies can revolutionise their value proposition and tailor their pricing to individual member needs.

For example, a membership body could adopt Xerox's Pay-Per-Copy model, where members only pay for the resources, they need and actually use. They could also take inspiration from Netflix's Subscription-Based Streaming Model, offering a range of services under a single subscription fee. Alternatively, they could embrace Dow Corning's Cost-Based "No Frills" Model, providing basic services at a lower cost with additional charges for specialised offerings.

These pricing innovations have already been explored in the professional services industry, and membership bodies can benefit from their success. It's time for a paradigm shift in pricing, where innovation becomes the key to achieving competitive advantage. Let's reimagine pricing and empower membership bodies to thrive in the modern era. 

It's a two-way street: Professional Services can also learn from membership bodies' strategies. 

It is clear that many commercial and business model attributes from professional services organisations can benefit membership bodies in order to unlock more potential. Nevertheless, this does not mean that professional services cannot also draw inspiration from membership bodies.

Imagine a professional services firm adopting a 'membership model', akin to AICD and IABC, where they provide ongoing digital services and foster a community for their clients. This approach can amplify their own value proposition and cultivate stronger client relationships - a potential weakness for some professional services organisation, which we previously discussed regarding this segment in general.

Concluding thoughts

Transforming business models goes beyond incorporating new technologies. It involves a complete overhaul of how we provide value to our customers or members. As market dynamics and customer expectations change, so must our business models.

The next (and last) post of this four-part series will delve into how education can play a significant role in attracting and retaining customers and members.