Bankable brainstorming: bring nondues revenue ideas to life with strategic brainstorming sessions.

FISH SWIM IN SCHOOLS AND BIRDS FLY IN FLOCKS. THERE IS SAFETY IN numbers. The theory for investment portfolios is the more diversified the portfolio, the safer, since some things will go up as others go down.

The concepts of safety in numbers and diversification hold especially true for associations and their revenue streams. An association with one major revenue stream is like a stool with only one leg. A single revenue stream--even a strong one--is unstable. Two, frankly, aren't much better. Three revenue streams achieve some stability for an organization; four or more would be considerably more stable.

The ideal situation is a wide variety of revenue streams, all of which produce income. Some will provide income in good times and bad; some will flow less strongly in hard times and more strongly in good. The problem most associations have in fulfilling this ideal situation is not one of opportunities; invariably there are many. The problem derives much more from the inability to see new opportunities and identify those that will be most beneficial to the organization.

A variety of methods can help organizations identify additional revenue streams. Effective brainstorming is a tried and true method that has helped associations under substantial pressure to identify and implement new revenue-raising ideas.

Successful brainstorming sessions to identify valuable new revenue streams involves three steps: First, set the correct stage. Bring together the right people in the right situation to get the best new ideas. Second, adjust the participants' perspective. Encourage them to look at situations differently to come up with new solutions. The final stage, and in many ways the most critical, is moving forward so that the new ideas become reality instead of simply more items on the list of great things the organization started but never finished.

Step 1: Setting the stage

It is difficult enough to evaluate what is being done in an organization, but even more difficult to see what is not being done. Give your brainstorming team every chance to open their minds to all alternatives. The Packaging Machinery Manufacturers Institute, Arlington, Virginia, provides a great example of what can happen in a successful brainstorming session. Craig Silverio, CAE, PMMI's vice president, finance, says PMMI needed new revenue streams. "It was important that we put less reliance on our trade show income. Previously, it represented 80 percent of our total income." As a result of brainstorming sessions, Silverio says, "We have identified more than half a dozen new sources of revenue. The new sources include getting sponsors for our seminars, marketing some of our products such as seminars and software to our members' customers, and more than a dozen new affinity programs, two of which--freight and insurance--already net us approximately $100,000 per year. The brainstorming process worked extreme ly well for us and has resulted not only in important new revenue streams but also in a whole new creative attitude on the part of the staff." PMMI CEO Charles "Chuck" Yuska put the crucial importance on determined staff involvement.

Consider bringing in an experienced facilitator. While every association is different, associations have much in common. Therefore, bringing in an experienced facilitator who has worked in revenue-raising brainstorming sessions in other associations will give your organization an advantage in the process. New ideas implemented in one association may not be replicable in another, but slightly different versions may work well.

A good facilitator should be able to elicit dozens of viable new ideas. Often the best will come from staff. The staff is in regular contact with the general membership of the association and will hear from time to time what products and services those members need and want. Similarly, staff sees what sells and what doesn't. Finally, their work experience in your association and others will often serve to foster the development of good ideas.

Why you haven't seen many good ideas already. It seems that every staff member of every association is busy 110 percent of the time. The fact that they may have great new ideas does not mean that they have had the opportunity or the inclination to share them. Unless there's a specific method for seeking their ideas, they are unlikely to volunteer them. People know significant risks are associated with proposing new ideas:

* They may be afraid to look foolish.

* Their boss may think they are grandstanding.

* It may not fit the culture of the organization.

* It may create more work.

In general, there is little opportunity, relatively little reward, and lots of risk in volunteering new ideas. Thus, a special opportunity must be created to get at staffs ideas.

Who to invite? Invite no more than 10 or 12 bright, creative people to the brainstorming session. Avoid selecting the high-powered old hands who are well invested in what the organization is already doing. Ideas to alter products or improve pricing on existing products and services may be opposed by those individuals.

The staff you want in attendance are those who bring good ideas and enthusiasm to whatever they do. They tend to be hard working, bright, and perhaps somewhat irreverent. Remember, these people will be entrusted with the difficult task of identifying what you are not yet doing.

Some organizations have found that inviting the executive director to the meeting puts a damper on creativity. In other organizations, the CEO's inclusion is essential to success. Each association must determine whether the intimidation factor of the CEO's presence will be offset by the experience, flexibility, and creativity he or she offers.

It is certainly possible to have additional brainstorming sessions with members as well as staff however, it is rarely productive to mix the two. Staff generally will be cautious with their comments around most members, and this process is most productive when caution is thrown to the wind. If membership is to be tapped, it is best to work with members who are representative of the organization as a whole, since they are not so fully invested in the existing products and services as insiders such as board or committee members.

Generally speaking, seeking out the opinions of these outsider members is done most efficaciously through surveys, interviews, and multiple focus groups rather than through brainstorming sessions. Additionally, a members' brainstorming session will bring with it political complexities that a staff brainstorming session will not. Once an idea has surfaced, the member responsible likely will seek ownership and push that idea as a political agenda; whereas, staff involved in brainstorming, generally speaking, will be looking at the bottom-line impact and member satisfaction.

Make sure participants have fun. It is essential to maintain an environment of spontaneity in a brainstorming session. The facilitator must create a highly energized, somewhat playful atmosphere in which momentum can build and new ideas can flow and should be responsible for making sure that excitement, rather than pressure, fuels the session. Building excitement and avoiding pressure is an art form in this environment; many attendees will be intimidated simply by being in a room of people with whom they don't regularly work. The facilitator must exhibit excitement about the process that attendees will pick up. Additionally, the facilitator must be confident that the outcome will be positive.

Enlist a good note taker. It's important that someone be assigned to take notes. This will enable the organization to gather the key ideas succinctly for later review. The note taker should not be involved in the brainstorming or in recording details; he or she should instead record enough of a description of each idea so that it can subsequently be judged. In some cases, two or three words will do, in others a sentence describing a process or a product will be required. To avoid bias or the tendency to record certain ideas positively and others negatively the note taker must not be involved in the conversation. Also, involvement in the conversation relegates the importance of taking excellent notes to secondary status.

A private location is essential. To maintain the spontaneity and momentum of the meeting, it is important to select a private location. If it is to be within the offices, it must be an uninterruptible meeting. Interruptions will dampen, if not stop, the momentum of the conversation and development of new ideas. Similarly, cell phones should be excluded. Dedicate the time set aside for the meeting to this critical endeavor.

"We don't do that here." During the brainstorming session, listen for the phrase, "We don't do that here." This type of statement indicates an ingrained paradigm. If the organization has done things in certain ways, and something falls outside of the usual way of doing things, such a glaring sign of an unexplored avenue is a clear signal to move precisely in that direction. It is an invitation to see whether something that has not been done in the past, in fact, ought to be considered in the future.

The National Tooling and Machining Association of Fort Washington, Maryland, had a number of breakthroughs during its brainstorming session. NTMA members are facing substantial economic and technological challenges nationally and internationally. Thus, the effort to develop new revenue streams has put real pressure on them to be open to new ideas. Sandy Bailey, NTMA's meetings coordinator and newsletter editor, thought one of the best new ideas was getting advertising in the membership directory. "Previously we had just never dreamed of putting advertising in the directory. It was not something we did, so the idea sounded wrong at first, but it made sense after the first shock," Bailey says. "We now sell close to 10 full pages of advertising in the directory, bringing in thousands of dollars we simply overlooked before."

Step 2: Adjusting the perspective

When you've assembled your brainstorming team and have them in an appropriate location, the next step is to provide them with tools that will help germinate their best ideas about new or improved revenue streams. Staff members will have thought through many of these ideas in anticipation of the meeting. They should be encouraged to do so. Some new ideas will spring spontaneously from the moment. To facilitate birth of hidden ideas, creating new perspectives is essential.

There are no stupid ideas. The first new perspective that should be expressed is that in a brainstorming setting, there is no such thing as a bad idea. Some ideas will be unusable; some will make people laugh. Others will be run up the flagpole and no one will salute. But all ideas must be treated as potentially useful because some ideas that participants think might be trivial will have real value.

To make the flow of ideas as spontaneous as possible, individuals must give up their natural inhibition about looking foolish. When the first laughable idea comes to the fore, it should be applauded by the facilitator's saying, "Great, we've got our first unusable idea. Let's have a whole lot more."

Picking fruit from the lowest branches. It is always difficult to find the time, energy, and money to identify and execute a new idea that will produce a revenue stream. Thus, it is good to focus first on ideas that are easiest to achieve. To determine what is easiest to do, an organization should look at not only practicalities and logistics but also politics. An idea that is attractive from the perspective of raising revenue, but won't fly politically is not fruit from the lower branches. The best new revenue streams will make significant net profits for the organization while providing members with a product or service they greatly value.

The fruit from the lower branches also can be identified as ideas that cost the least to implement. Generally speaking, a low-cost revenue stream will not have a high return on investment, but that is not always the case. In maximizing the association's return on its investment, it is important to account for both out-of-pocket costs and staff time. Since an organization can do only so many things simultaneously, the time taken from existing programs and products to produce a new revenue stream is just as important, if not more so, than the out-of-pocket cost to initiate it.

Working with the low-hanging fruit perspective has helped the American Public Health Association (APHA), Washington, D.C., in its search for easily achievable new revenue streams. One of its best opportunities for additional revenues was its monthly newsletter. It was discovered during the brainstorming session that the most valuable ad spaces in the newsletter, the inside front cover and the inside and outside back covers, were used for association and editorial matters rather than being sold. Now the monthly newsletter has full-year contracts for both the inside front cover and the back cover. The revenues from these ads have helped APHA in a difficult advertising environment.

You can pursue only a few ideas. Given the political nature of associations, it will be difficult to get membership consensus to pursue more than one or two significant projects at a time. Similarly, getting governance to approve relatively minor changes in pricing or accept advertising in new areas can take time. To expedite matters, all changes that can be approved by management should be handled at that level. Any projects of sufficient size requiring presentation to the board should be accompanied by estimates of not only new revenue but also new out-of-pocket costs and any operating costs that will need to be diverted from the existing budget and other projects.

Significant new revenue-raising opportunities, such as new meetings or other products or services, should be carefully compared so that wise decisions can be made by the board, since it will determine what is best for the organization to pursue. In decisions such as these, the association will be dealing with change, and change generally causes pain. In organizations such as associations, which are based on democratic ideals, there almost always will be a division of opinion. Thus, the more succinctly summarized and fully documented the information for new opportunities, the more likely the best ideas will be accepted.

Extending an existing product line is generally a safe bet. For-profit America provides us with endless examples of the validity of extending product lines. Coca Cola's original product line was expanded to Diet Coke, Decaffeinated Coke, Decaffeinated Diet Coke, and more. Nabisco had similar success in stretching the Oreo cookie concept to include double-stuffed Oreos, giant Oreos, and mini Oreos.

For an association to take an existing popular product, perhaps an insurance program, and add additional types of insurance is an easier sell than to begin selling insurance in the first place. Once consumers are comfortable coming to you for a specific product, they are more likely to rely on you in the future for related products.

Richard Walker, NTMA's director of education, took this approach in maximizing the value of the association's 2001 Fall Conference. "This conference had a special focus on efficient, or 'lean,' manufacturing, which is a great concern for our members. We videotaped two days of conference workshops on lean manufacturing and did a direct mail promotion to members and nonmembers who did not attend the conference. We were able to profitably sell the package of two videos and the handout from the conference, and because the product has a good shelf life, we are featuring it in our new catalog," Walker says. "We are now building on the popularity of this product by adding online modules about lean manufacturing and other related technical topics to our Internet offerings."

Find new markets for your existing products. One of the problems many associations have is a limited marketplace for their products. A membership of a few thousand professionals is not nearly as attractive as one 10 times that size. If it's possible to interest others in your products, then it is likely to be profitable to do so.

Selling products internationally is one alternative. Associations that are used to providing a newsletter, magazine, and papers from their annual meeting to a small professional membership in the United States might find an attractive revenue stream by creating an electronic membership for individuals abroad. The electronic membership could rely on much of the same publication content and be available at a lower price through an international "members only" site on the Internet. Since the cost is negligible, a modest price creates a profit. A key concern is that regular memberships must retain significantly more perceived value than electronic memberships.

The best possible market is the general public. When a brainstorming session contemplates new markets for existing products, it is well worth considering the largest marketplace of all--the general public. It would be surprising if your association already had a product that would appeal to the mass market. However, given the great variety of associations and the tremendous expertise of volunteers, it is entirely possible that an organization could develop a product that might interest the general public.

Associations in health, electronics, automotive, and many other areas have subject matter that interests millions of U.S. citizens as well as individuals abroad. It is well worth the effort to consider whether your organization could develop a product that would be considered valuable by the public.

For a 501(c)(3) charitable, scientific, or educational organization, it might be possible to find a foundation to fund the development of such a product and a corporation that would underwrite the production or distribution of the product yet still allow the association to sell the product at a reasonable price. The key is the need within the marketplace, and this biggest of all marketplaces presents the greatest opportunities.

Watch what the competition's doing. In your pursuit of new products and new marketplaces, be aware of what your for-profit and not-for-profit competitors are doing. In the 1980s and earlier, not-for-profits were considered to have a niche that was simply not profitable enough to be worth pursuing by for-profits. Today, for-profits are closing in on our marketplace with major resources and significant speed. It's critical to know what these organizations are doing so that key revenue sources upon which you rely are not being undermined without your knowledge. This competitive intelligence will allow you to focus on providing what these organizations cannot. Without this critical information, any efforts to determine what your organization should risk delivering in the future, especially in the way of new products, may be fatal mistakes.

Examine your product line. In addition to looking at what's going on outside your organization, look at the key products and services your organization currently provides. Then decide whether there are some you should not offer. In every association, some constituency supports every product and program. Associations are famous for their inability to kill programs, even those that should have ceased long ago. Since the easiest way to create additional available funds is to stop spending unproductively, it is well worth the effort to cut the deadwood.

If only a few members use a program and the larger membership is supporting it, consider pricing it so that it is a break-even activity, allowing the members who want to use it to pay for it. This approach may price the service far beyond its value to those few members and they'll agree to let the program die.

Alternatively, if it is simply impossible to eliminate such a program, consider shrinking the costs (by reducing the number of pages in a magazine or newsletter, for example, or reducing the amount of staff support for less popular services). The association's responsibility is to the broader membership, not to the member who makes the most noise.

What about pricing? In any brainstorming session, time must be spent focusing on pricing. It is hard to believe, but some organizations still base their products' prices on direct costs only, failing to calculate the overhead required to produce services, much less allow for a profit.

Organizations should carefully evaluate any product they sell that does not produce a reasonable profit. New products require time and money. That investment will be available only from reserves built in the past or profits earned in the present. Thus, pricing is key.

Many associations will say, "We're pricing products as high as we can," or "We're pricing what the market will bear." These statements tend to be untested in the marketplace. For instance, when discussing pricing of their exhibit space at the annual meeting, the brainstormers at APHA said they thought the prices were fair. However, their pricing strategy was not as aggressive as it could have been. As a result of the session, they decided to charge higher rates for premium spaces. We all know that the booths nearest to the main entrance and exits' at corners, and in areas near food stations are worth considerably more to exhibitors than locations with less traffic. Yet APHA had traditionally charged the same price for its entire exhibit space. Kitty Hsu Dana, associate executive director and chief operating officer, reports that by charging special premiums for their best spaces, APHA generated an income stream of tens of thousands of dollars that will run far into the future--a valuable result of a simple pa radigm shift.

What members buy can mean real dollars for the association. In brainstorming about advertisers and sponsors, remember opportunities beyond your current supporters. The best of these opportunities come from a membership that controls the buying power of larger institutions. For example, an association whose members purchase the supplies for hospitals, municipalities, and the like will have far greater access to advertising and sponsorship revenues than those whose members do no purchasing. This is not to say that associations whose members do not purchase as part of their jobs have no opportunities. Associations whose members have common interests should determine if any purchasing related to these interests would create a perception of valuable marketplace access for vendors of those products.

Advertisers as sponsors and sponsors as advertisers. In discussing additional advertising opportunities, make sure you examine whether existing advertisers are purchasing sponsorship opportunities and whether existing sponsors are advertising. Simply put, your best advertisers should be your best sponsors and vice versa. Investigate selling packages that combine advertising and sponsorship.

Consider finding a sponsor for everything. Most associations think in terms of sponsorships as they relate to meetings or, perhaps, publications. The truth is that nothing should stop an association from getting a sponsor for everything.

For example, an opportunity that is frequently overlooked is a weekly electronic newsletter. The newsletter will be scanned by a great many people, since it has the latest news. Therefore, sole sponsorship--just a line across the bottom, listing the vendor's name with some appropriate sponsorship notice--could be valuable to a sponsor. This change may attract comment from members but will not diminish the quality of the communication. Most members who complain about such things will quiet down when it is pointed out that these changes can prevent a dues increase.

In looking for sponsorship opportunities, the brainstorming group should remember that a sponsorship can be found for everything; it is only a question of price. If your newsletter has never been sponsored before, and it's something that everyone in the association reads, offer the first right of refusal to your best advertiser. Ask for as much as you dare, but consider taking what they offer, even if it is half the amount. If the opportunity is rejected, take it to the next biggest advertiser and begin again. Everything will sell eventually; it is only a question of price.

Thinking further about unbundling. The concept that some members value some products and don't value others leads to an interesting opportunity. Total unbundling of products and services for membership dues, has proven to be problematic. There is a baseline of products, such as newsletters and magazines that traditionally are included with membership. However, as in the area of sponsorships, it's important in brainstorming to step back and honestly examine the package.

Many associations taking such a bard look will find products and services that not all members want, much less need. If these products and services can be unbundled and repriced, the organization will save substantially by providing such products only to those who are interested in them. Frequently, the brainstorming group will conclude that if the item were unbundled and priced separately, no one would want it. In this case, the organization should ask why it's providing it in the first place and could create new monies by ceasing its production altogether.

Step 3: Successfully moving forward

Creating a good team, putting it to work in an appropriate setting, and reviewing the perspectives listed above and others will result in a variety of revenue-generating ideas. Some will be eliminated, some will garner greater interest, and some will be considered no-brainers-simply things the organization ought to do. At this point, the organization should move forward deliberately.

Senior management makes the initial decisions. To expeditiously turn the best ideas into revenue streams, the top management of the association must review the ideas and decide which ones will be implemented and which will be delayed or rejected.

Obvious improvements that do not require the approval of governance should be implemented promptly. Even the changes easiest to achieve will require a political sell, either internally or externally. If the new project is one that an existing department can pursue with existing staff and governance approval is not required, the opportunity still should be analyzed to determine its relative value compared to other opportunities. In addition to impact on the bottom line, the analysis should include, at a minimum, the investment required, the stress on staff, and any likely political fallout.

For more substantial projects--those that require investment and have the greatest potential--business plans should be developed. The plan should be as elaborate as the investment is substantial. For those plans requiring new staff or considerable sums, in-depth business analyses should be conducted before the projects are presented to governance for approval.

A champion must be found for each new revenue proposal. Given the pressure on association staff, unless a specific individual is willing to accept this additional responsibility and sufficient time is made available for that undertaking, it simply will not happen. Just because the organization has developed and approved an idea, doesn't mean it will turn into a revenue stream. A revenue stream will require the investment of time and money as well as a champion to see it through.

When the champions have accepted their responsibilities, specific development plans must be created. For the simplest ideas, such as going after a specific new advertiser or selling the back page of a magazine, set a revenue goal and a specific reporting deadline. For more complex ideas, create specific development plans with revenue goals, milestones, and reporting dates. This ensures that the requisite effort will be undertaken and businesslike implementation will occur. Schedule regular internal or external reviews of all new implementations.

The importance of this stage cannot be underestimated. When asked for his comments about his organization's successful brainstorming process, Charles "Chuck" Yuska, CEO of PMMI focused on the dependence he placed on his CFO, Craig Silverio in this critical third phase. "There are lots of good ideas out there. I relied on Craig to help determine which were the ones we should be doing--and to follow up to make sure that the ideas we pursued got done."

In today's uncertain economic environment, finding and pursuing new revenue streams that provide ongoing income for your association can be satisfying. However, your association should benefit from a by-product of this process: Inviting your staff to bring creative solutions to the fore will create the kind of work environment the best workers want. Brainstorming sessions that result in revenue streams can increase esprit de corps, an essential element of an association's success.

RELATED ARTICLE: BRAINSTORMING CREATES BREAKTHROUGH PERSPECTIVES

Heres are some real-life results from associations who took their brainstorming sessions to the next level.

* An association from the western United States had plenty of reserves but was getting a poor return on its investments. Meanwhile, members found it difficult to borrow the small sums they needed to operate from local banks and many were using credit cards for their borrowing needs. While brainstorming, the association staff concluded that the problem stemmed from the banks' failure to understand the nature of their members' business and that any money loaned would be quite safe. The association can get more than twice the current corporate bond rate with less than half the risk by floating loans to its members.

* More than one association has discovered while brainstorming that it has not focused on the fact that it runs a major conference without a single sponsor.

* An association found, much to its chagrin, that it was charging all corporate members the same membership rate even though its Fortune 500 companies cost them far more than the mom-and-pop shops. And it was charging its corporate members less than the memberships were actually costing the association.

* Another association was embarrassed to admit to itself that it was charging for shipping and handling based on rates that were 15 years out of date. Some staff knew but were afraid to say anything. Other associations have discovered while brainstorming that they weren't charging anything for shipping and handling even though they shipped nearly 100,000 items per year.

* A nonprofit organization in New York focused on the fact that classrooms in New York City were hard to come by and realized that they had one with good access that was empty 95 percent of the time.

* An Oklahoma association discovered its members were due a federal fuel rebate of 16 cents per gallon on gasoline they used. The total eligible fuel was well into the millions of gallons, but filing for rebates was complicated. The association decided to offer to do the filing for the members for a commission.

* Having a large membership can be a real boon. One organization with a membership of almost 200,000 was facing a legal fight of real importance to its members. Unfortunately, the association had little in reserves. At the brainstorming session, someone asked "Would each member be willing to donate $10?" Everyone agreed that almost all members could and would, and one attendee recalled that the association had done something similar in the past and had gotten terrific member response. Bingo, an instant $2 million for the legal battle.

Andrew S. Lang is the national director of nonprofit services for BDO Seidman, LLP, and executive director of BDO's nonprofit think tank, the Institute for Nonprofit Excellence, Bethesda, Maryland. E-mail: [e-mail].