October 23, 2024
Evaluating New and Innovative Revenue Opportunities
Written by: Susan Davis, M.S., CAE
As an association leader, you are called upon to innovate continuously, evaluate program potential and develop new revenue opportunities.
In a recent research study through our work with ASAE’s Association Insights Center (AIC), more than half (60%) of executives stated that one of their major challenges to this pursuit was having adequate bandwidth as an organization to devote to new innovations.
Leaders also stated complexities such as legacy governance structures, loss-leader programs, siloed functions and departments built for traditional activities rather than experimentation or product innovation contribute to innovation challenges.
Overall, challenges associated with developing new products, programs or services fell into three main categories: strategic, cultural and tactical.
Strategic: Associations rooted in mission-based endeavors may have difficulty prioritizing innovation. They may also face challenges connecting new product ideas to the organization’s mission-based strategy.
Cultural: Association governance models and organizational structures and processes may lack emphasis on business-minded innovation and experimentation, further limiting new ideas.
Tactical: Associations may not have product or service development processes, leaving staff uncertain and disincentivized in bringing new ideas forward.
In response to the tactical challenges that often hinder innovation, we created a rubric based on McKinley’s knowledge and expertise on what makes a product successful and integrated key areas identified in the AIC research. The "New Revenue Opportunities: Evaluation Rubric" can be used as a framework to approach discussions on evaluating new revenue opportunities.
Download the "New Revenue Opportunities: Evaluation Rubric."
Instructions for implementing the rubric at your association:
This rubric can be used to assess new and innovative revenue ideas in terms of strategy, culture and tactical feasibility.
- Familiarize yourself with the rubric. Read through the rubric carefully to understand the criteria and corresponding rating scales.
- Assign weights. Assign numerical values (1-3) to each criterion to indicate its relative importance. For example, a criterion that’s critically important would be assigned a weight of 3. If revenue is the most important criterion, assign the “Financial ROI” with a weight of 3. Enter the assigned weight within the weight column. If a criterion is not important at all, it would be assigned a weight of 1. McKinley recommends placing the greatest emphasis on strategic alignment and service to stakeholders.
- Evaluate performance. Assess the opportunity being evaluated against each criterion.
- Assign ratings. For each criterion, select the rating that most accurately reflects the current reality (1-3) and enter it into the rating column. The rating descriptions are included in the chart.
- Calculate the scores. Multiply the weight (1-3) times the rating (1-3) to calculate scores for each criterion.
- Calculate the overall weighted scores. Add up individual criterion scores in the score column and divide by the sum of all weights to determine the overall weighted score.
- Establish a minimum weighted score that is acceptable for your association. We recommend a minimum weighted score of around 2.5. This suggests that the opportunity needs to be rated high on most criteria, but some flexibility is allowed for minor shortcomings.
- Discuss the results. Make a decision on whether to pursue an opportunity by reviewing and discussing results, especially for scores close to the threshold. Scores close to the minimum threshold may require a more in-depth analysis of the opportunity. Identify which criteria are lowering the score and assess if these issues can be mitigated.
- Document decisions. Document decisions and rationale for scores for future reference.
Tips
- Be objective when assigning ratings for each criterion.
- Consider a supporting narrative that backs up each of your ratings to add context.
- See the sample completed rubric labeled "Sample Completed Rubric."
- Contact your legal counsel if there is a hint that an idea to generate revenue may not align with your tax status.
- A team-based approach is recommended for more objective scoring when applicable. Reference the Approach section below for guidance on completing this exercise as a group.
Approach
When doing this exercise as a group, the best approach depends on factors such as:
- Group size and composition.
- Time constraints.
- Complexity of the opportunities being evaluated.
- Organizational culture and decision-making norms.
In many cases, a hybrid approach can be effective:
- Have individuals complete the rubric individually first.
- Calculate averages for weights and ratings.
- Use a facilitated group discussion to review the averages, focusing on areas with significant variance or critical importance.
- Allow for adjustments based on the group discussion, potentially reaching a consensus on final weights and ratings.
This method is inclusive of different working styles and personalities and will support group decision-making processes. Like all decision-making tools, this resource should be used as a starting point to support conversation and should not replace candid and direct conversations about new revenue opportunities.
Definitions
The following are definitions for each criterion in the rubric:
- Strategic Alignment. Alignment with mission, vision and strategy.
- Service to Stakeholders. The level of impact to customers and their demand for the product or service.
- Alignment to Value Proposition. The degree to which the product/service reinforces or dilutes the value proposition and brand identity of the association.
- Cultural Fit. The extent to which the association's staff and volunteer culture aligns with and supports the implementation of new or innovative ideas.
- Tactical Readiness. The feasibility of implementing within available or sourceable capabilities and resources.
- Technology Feasibility. The ability to implement with existing technology and technical capabilities.
- Competitive Advantage. Unique organizational strengths, resources or positioning that enable market differentiation.
- Market Saturation. The number of competitors that have a significant market share of the target customer pool.
- Financial ROI. Expected financial return on investment, considering both short and long-term profitability.
By using this rubric, you will have a clear system that determines if a revenue idea, such as a product, program or service, is viable and worth pursuing.
Interested in utilizing this rubric at your association?
Join us for a webinar that will guide you through this tool and help you effectively assess new and innovative revenue ideas.
Webinar Details:
November 19, 2024 from 1-2 p.m. ET | Registration complimentary with RSVP. Register here.
For a thorough review of the rubric, please reach out to our team. Our consultants specialize in helping associations ideate, test and refine innovative income-generating activities. We are prepared to support your association in implementing effective strategies for sustainable growth.
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