The Guidebook for Business Associations: Interview with Terrance Barkan CAE

Terrance Barkan is a CAE (Certified Association Executive) who focuses on helping associations build international growth strategies and business plans. For the past 27 years he has worked in over 60 countries spanning over 6 continents, developing his international management career predominantly in the not-for-profit sector.

He wrote ‘Global Growth Strategies; the International Association’, used by more associations than any other publication to help shape their international strategies and business plans. He was also selected by the Center for International Private Enterprise (CIPE) to author their guidebook, ‘Business Associations for the 21st Century’. The book is used as a reference guide for CIPE employees that are working in post-conflict countries around the world to establish democratic business associations.

Barkan has also been an author of articles, guidelines, original research and white papers on international association growth strategies. He served as the Chair of the International Section Council for the American Society for Association Executives (ASAE), is a former member of the Board of the European Society of Association Executives and has been an adviser to the Chinese Federation of Industrial Economics (CFIC).

Barkan was invited in Georgia by the United States Agency for International Development (USAID)- funded project Governing for Growth (G4G) with the support of the Center for International Private Enterprise (CIPE) to evaluate the state of business associations in Georgia and to provide customized guidance on how they can build their capacity and effectiveness.

GEORGIA TODAY met with him this weekend to talk to him about his upcoming publication for Georgian Business Associations.

Tell us about the G4G project?

G4G is designed to support the Government of Georgia to create a better enabling environment in which legal and regulatory reforms are fairly and transparently conceived, implemented and enforced providing a level playing field for small and medium size enterprise growth. It supports effective formulation of the government policies necessary to drive economic development through the promotion of constructive Public-Private Dialogue (PPD) in business-enabling economic reforms, such as tax Policy and Administration; trade facilitation system/transport and logistics; capital markets; pension reform; building codes; state procurements; insolvency reform; innovation and technology; crop insurance; water resource management; electricity trading mechanism; and energy strategy reform. This requires strengthening of the government’s institutional capacity, strengthening the private sector and civil society actors’ capacity to effectively engage with the government, and ensuring a productive PPD process. G4G is strengthening the capacity of both the public and private sectors to effectively co-operate on elaboration of the legislative changes required for the identified reforms through an inclusive consultative process.

What’s your impression of the Georgia business sphere?

What I’ve observed about Georgia is that it is in a really unique position. It’s amazing, for me it’s like where Switzerland was after World War Two. 70 years ago, Switzerland was a poor and mainly rural country. Then they decided to focus on quality, so they looked at the financial sector, sophisticated engineering, tourism. We can all see where Switzerland is today. It has a lot of similarities with Georgia; it’s a small country, mountainous, small population, so for me Georgia could look at Switzerland as a model to build towards. There’s tremendous opportunity, and the access these business associations have to the government today to be able to have a dialogue to make educated, sound policy and legislation is a fantastic opportunity for the private sector and for the government. It’s a great chance for the government to make good policies for the long-term benefit of the country.

Its relatively easy to establish a business here, so I think there are some excellent opportunities. The geo-political location of Georgia is an interesting position to be in. The alliance and alignment with the EU and the US are things that must be preserved because, for the long-term, it’s important for access to very large markets. This could be very good if Georgia became more export-orientated, but that then goes back to the quality issue because to compete in these mature markets, you must have quality products and services. It’s a great opportunity, especially for a small-population country: if you look at Denmark, Belgium or Holland, these are all small-population countries and they’re all export-orientated. Switzerland is the same, all of these countries have to be export- and trade-orientated, otherwise they don’t have a large enough domestic market. To be export-orientated, you have to be competitive. To be competitive today, you have to have quality products and services.

…And what would happen if Georgia fails in this regard?

It’s in everyone’s best interest to protect this way of operating; to maintain transparency, the rule of law, fact-based decision-making, democratic processes and engagement with all stake-holders. It is important for the country to keep its progress transparent to keep its World Bank ranking as one of the top country’s for doing business.

I think the risk is that policies would get made that are not consensus-based, which means that whoever has the biggest voice can shape it to their benefit. One piece of advice I have for the country and for the government is to have a focus on quality, as I mentioned before. That means professionalism on all levels, it means education, it means doing business in a transparent way and following the law. The Swiss model is based on quality and Georgia has a great opportunity to create that brand for itself, but that means using best practices. What associations are really good at is developing best practices through a peer-review process. This is for every single sector that you can imagine. There is an association everywhere for anything that human beings do; whatever industry it is, they focus on best practices through this peer-review process. I think it’s a tremendous advantage for a society to accelerate development and not have to go through a slow growing process.

Tell US about your new guidebook

It’s to help Georgian business associations improve their capability to be more effective and successful in what they’re doing. Some of the challenges they face are quite new, many of them are to do with industry sectors that are not yet mature, which is a problem because most associations serve well-established industry sectors. In Georgia, the problem is that some of the business sectors themselves are not yet mature and the associations are also new. So, the guidebook is to help them and to be a catalyst for the learning process; to mature faster than if they tried to learn these things on their own.

One of the concepts we’re trying to convey to them is value-based pricing. They need to ask what the value is of what they deliver to the end user. So, if you’re a business association and you have companies that are members, we don’t talk about the membership fee; it’s irrelevant. What’s important is what the company can do with the information they get and how valuable it is to their business. So, if they’re a 10 million GEL company and they get just a small percentage of improvement because they have better workplace safety, or they have better quality processes, then how valuable is that to the company? That is what they should think about when they think of the membership fee, not saying ‘here’s a membership fee’, when they aren’t sure what they’re getting. Because the whole purpose of these business associations is to help businesses be more effective and profitable.

Most people don’t understand how important the not-for-profit business and professional association sector is; for example, food safety standards, car safety standards, come out of industry associations where peer groups work together to establish these standards and then put them forward to government, so that they can make a more informed and intelligent decision on legislation. If associations didn’t play this role, it would be up to individual companies which is not very democratic, or there would be no information and the government would have to do it in an absence of information, which is also not good. So, the average person doesn’t understand or appreciate how important the work is that happens in these associations. And it’s important for government to listen to groups that represent whole industries as opposed to just one or two voices.

You’ve written two other books before this

Well, one book I wrote is specifically for business associations and I wrote it for the Center for International Enterprise. Anybody can request this book for free by download. I’ve also written one called International Strategy for Associations, which I update every year. It’s for anybody interested in just a general understanding of a trade or professional association and the role that it plays in society. I wrote this one because I kept getting the same questions; ‘what’s the difference between an international association and a global one?’ ‘What are the different business models?’ ‘What are some of the governance issues?’ One thing that is unique about an association is you have a volunteer board of directors, so you have this governance structure that sits on top of the organization that has to run like a business.

The other thing people misunderstand is the term ‘not-for-profit’. This doesn’t mean that the association cannot make a profit, it means that it’s not paying income tax. It also means that any surplus that the association makes gets reinvested in services to the members. So, the difference is that no individual person profits from the operations. Associations still have to be sustainable financially, which means they have to make a surplus every year, so they can grow and add services for their members. It’s just like a business, except there are no individual shareholders or profits. What I like about this model is you get businesses coming together who would otherwise be competitors, to work on a common problem.

Can you give US a real-world example of this?

One very interesting group we worked with was the International Carwash Association. When I said before that there is an association for everything, I really meant everything! So, the ICA is an association for owners with two or more outlets and this group is primarily in the US. They were looking at global expansion and serving the market. First, they looked to Europe and found, from our market study, that there were more carwashes than in the US. We recommended that they establish a trade show in Amsterdam. For the first show we estimated that they would get a minimum of 1000 people which would at least break-even financially, but they had 2000. Within one month of announcing the next show, they had already sold 60% of the exhibition space. The point here is that they were successful because there was a good market study and real data was used. So, for associations here in Georgia, if they want to address a market, they need to first measure it. They also need to know who their competitors are; not just other similar associations, but pro-profit companies, magazines, and tradeshow organizers that are serving the same market.

Tom Day