Most of us don’t change unless we are on the brink of calamity or are inspired by and drawn to a new vision for the future. Said another way, most of us change not because we see the light but because we feel the heat.
We also know that any change we make under pressure is often costly, stressful and usually doesn’t stick. So, here’s an idea that can galvanize you and your team to see change in a new light: If you manage a P&L or run a business or operating unit, you are well accustomed to measuring ROI. You calculate the costs relative to the expected return, make smarter decisions and, ultimately, improve outcomes and profitability. But have you considered the COI—the cost of inaction? It’s both a mindset and an actionable metric.
As founder and CEO of a firm that focuses on helping trade associations and professional societies achieve strategic business objectives, our work often uncovers inaction. Many times, these clients don’t know (or want to acknowledge) this exists.
One organization we work with has seen a chronic decline in attendance at their annual meeting. The mindset has been: “Our industry is consolidating, and therefore the decline is to be expected.” But by calculating the continued decline, the organization determined that within as few as seven years, the meeting costs would exceed revenue, and the event would need to be shuttered.
With these forecasts in place, and adopting a cost of inaction mindset, it chose to consider other adjacent market sectors to attract to augment the decline of its core audience. Each segment was evaluated for value and viability, or the greatest potential revenue, and the most likely to be attracted. This evaluation has led to expanding the ecosystem of their entire organization and reversing the decline in attendance revenue as well as sponsor funding.
We all consider the impact of competition, economic fluctuations, staff performance, morale issues, changing customer expectations, changes in regulatory and legislative dynamics, and the implications of Moore’s Law on our technology capacity. But what is the cost of not acting on the leading indicators of change, good competitive intel or feedback from customers on social media?
Here are some good examples:
- What has been the cost of inaction by the U.S. auto industry of not becoming a technology and software industry? Roughly $15 billion, which is the difference in Uber’s market cap versus the combined value of Ford, GM and Chrysler.
- What was the COI for Blockbuster, Timex, Kodak, Sears and Toys R Us? Extinction or bankruptcy. Here are some great examples that illustrate the high COI for these big brands.
The reason why so many of our clients find their annual events, trade shows and conferences suffering due to inaction is that many have long thought of their market sector as fixed and finite—they serve one industry (i.e., realtors, lawyers, HR professionals, etc.). But associations are, in fact, platforms that have the potential to convene a much larger market by opening the aperture of how they see their industry. For example, the aerospace industry has long focused on engineers and technologists. By looking to include and appeal to venture capital players and new space companies, it has broadened its base and expanded its service offering.
So here’s the question: What information do you have today, right now, that you are deliberating, debating, finessing or worried about sharing with your leadership that is costing you? And what is the cost of inaction of that information? What is the COI of delaying, doing nothing or taking too small a step in your course of action?
Reversing the COI decline starts at the top of any organization. First, a recognition of the costs of doing too little or nothing must be calculated. Second, the board of directors must be presented with a plan to reverse the decline and support a new vision that sees a return on the investment of proposed action (too often, inaction in associations results from rigid governance rules, legacy thinking, boards of directors who don’t represent all generations of members and a lack of an investment mindset). And finally, the internal team must be trusted to implement the plans that for so long have been stymied due to acceptance of “better sameness” outcomes.
COI isn’t easy to measure, but it’s a great metric—a future-focused metric—and one that, even if you can’t quantify to the seventh decimal point of accuracy, may be among the best and most strategic questions and measures you can focus on.
What do you have to lose? Just ask any political candidate who didn’t act quickly enough, any patient who waited too long to get the test, any parent who neglected the early warning signs of a wayward teenager or any CEO who lingered too long in the zone of better sameness, status quo, hope and indecisiveness. Don’t let that be you. Don’t fall for the Parmenides Fallacy and assume your present situation will remain the same. Knowing and acting on the COI can be a game-changer for you, your business and your life.