Groups must deliver value; don't be global just for sake of being global

Duffy

Langley

Modine

One of the keys for association success internationally—just as in North America—is to set the standard.

If a group, on behalf of its industry or profession, can set a universal standard, the potential for international growth—and operating surpluses—is immense, as the $238 million-revenue American Petroleum Institute and the $161 million-revenue Project Management Institute have demonstrated with burgeoning certification and training activities.

"You can get a job anywhere in the world if you are a petroleum engineer," Peter Rush, chairman and CEO of association management firm Kellen Company, told CEO Update.

Rush helped the $21 million-revenue Cruise Lines International Association pull off a virtual coup in its international expansion. Even smaller groups, such as the $6 million-revenue GAMA International, which represents executives in insurance and financial services, find themselves on the cusp of big international profits.

But the streets overseas are not paved with gold for all associations. Standards in various countries may not match each other, Rush said.

In such cases, international growth will be more challenging, perhaps confined to certain regions and even unprofitable.

"Being global just for the sake of being global is a very expensive exercise," he warned.

"The reality is you may get a lot of new members but you're not going to make much money," he said. "If you're going to India, China or Brazil, if you break even on your investment, then you're doing very well."

But even U.S. associations that are not global trendsetters might still benefit from international expansion. They may not rake in profits, but they can boost prestige by having foreign experts attend their conferences.

No U.S. takeover

CLIA began its global push shortly after Christine Duffy became president and CEO in early 2011. It saw fragmented industry representation with 11 major national or regional associations dotting the world.

To unite the industry, Duffy would need a strong and careful sales pitch and CLIA would have to create an entirely new organization.

"There was great sensitivity to the existing boards of directors as to wanting to make sure that we are really creating a global organization and that this wasn't a U.S. takeover," Duffy said. "There was some question about that early on. We had to create a global organization separate from North America—that distinction was important."

Part of the old CLIA is now CLIA North America, headquartered in Fort Lauderdale, Fla., representing 26 cruise lines and 35,000 travel agents. The new global organization is called Cruise Lines International Association, with Duffy as CEO, and is headquartered in Arlington, Va.

The global group represents the industry with a unified voice at the International Maritime Organization in London. Units include CLIA Brazil, CLIA Southeast Asia and CLIA Europe. All 11 national and regional associations were brought into the fold, and CLIA has created new organizations in Germany, Spain and Italy.

CLIA hired Rush, CEO of Kellen, as an adviser and also retained law firm Venable to assist the local organizations in matters such as rewriting by-laws.

The associations raised dues to fund the global expansion, increasing revenue to $21 million in 2012 from $14 million in 2011.

"Now that we are a global association, pulling in all those dues around the world, we'll probably be closer to $28 million in 2014," Duffy said.

Prioritize opportunities

PMI promotes the acceptance of project management as a profession and has ridden a global wave. Its operating surplus has quadrupled to $45 million since 2006. The group has 280 chapters in 190 countries.

Anticipating a potential global future, PMI never put "American" in its name when it was founded in 1969.

Newtown Square, Pa.-based PMI formed its first foreign chapters in the 1970s but began building programs, services and support infrastructure in earnest in 2000, CEO Mark Langley said. Langley, CEO since 2010, joined the group in 2002 to facilitate that growth and quickly rose to executive vice president and COO.

"Start at the top with strategy," Langley advised CEOs considering global expansion. "Don't focus on the outcome like growth or number of members. What is your unique value proposition?"

PMI developed a proprietary model to help prioritize overseas opportunities. Langley recommends a similar step for other associations.

"It also helps you defend why you're not in certain parts of the world," he said. "Members and stakeholders can be very vocal even if there isn't a business rationale behind it."

When you decide to start a global initiative, be committed, Langley said.

"Get serious about it. Associations have a history of putting a toe in the water and going slowly," he said. "We learned you have to be deliberate and committed to it. Don't dip a toe in. When you make a decision, own the decision and go after it."

For API, setting the global petroleum industry standard, in both operating procedures and equipment, means more sales opportunities for its U.S. manufacturing and services members, reduced costs for its exploration, production and refining members—and the opportunity to train and certify energy workers around the world.

"We are doing a real good job making sure we stay with one standard," said John Modine, vice president of global industry services. "The least standardized business in the world is the standardization business. Everyone wants to set their own standards," he said.

API's Global Industry Services unit—responsible for activities such as certification and training—earns $100 million a year in revenue, about 60 percent of it from overseas, Modine said.

"Certification is far and away our biggest international program," he said. "Eighty percent of all our customers for certification are outside the United States."

The association's physical presence overseas is confined to a number of small representative offices that primarily maintain relations with regional and national companies.

One of those representative offices is in Beijing, and opening that proved to be a challenge. China welcomes international expertise when it is offered by professional societies. Foreign trade associations are another matter.

"There's no such thing as legal status for a trade association in China," Modine said. "It took me a long time to explain to them what we were trying to do there."