In 2001, the Institute did $6m upline revenue and lost $2m. By end of ’03 MSCI had a revenue stream of $4.2 million and returned to member equity about $190k, so they had a $2.2m bottomline swing to the good on a little less than $2m in revenue. MSCI declared a victory and launched a growth strategy. In 2008 they did $9.3m. This year they’ll hit around $8m… in one of the toughest economic slumps in history. How did this CEO and his trade association get change so right? They did a lot and they did it all at once. Sometimes it’s easier that way… when you’re going for transformation.
Early on they attacked cost structure, took out about 40% of staff, and brought in several new members of the senior team. Within education MSCI went through their offerings and dropped almost half their courses. They stayed focused on their core where they had clear expertise and got rid of fringe programs. They created new programs, most notably an executive education program with Washington University’s Business School in St Louis. At this highly rated executive education institution MSCI now has a proprietary executive education program.
In the first 60 days they changed the name of the organization, dropping the word steel and putting in the word metals. In ’02 they merged with a 50-year-old trade association that was focused primarily on aluminum, the National Association of Aluminum Distributors. So, in the first year while executing a turnaround strategy they also were executing a merger and integration with a whole new set of member customers.
Changing a name is a big deal. “We had the word steel in our name since 1936. We started out as the American Horseshoe and Heavy Hardware Association 101 years ago. In ’36 we became the American Steel Warehouse Association. In 1952 we became the Steel Service Center Institute. In 2002 we changed Steel to Metals. For the steel segment of our membership, that was a pretty significant accomplishment.”
Many leaders stop there, but there’s so much more.
Bob overhauled his approach to everything including the boardroom. He says, “We changed our board meetings from 2 days to 4-5 hours…. completely changed the agenda and made it much more like a corporate board meeting. Board preparation, pre-work, and focus have been instituted. Any topic, issue, subject, behavior that my CEOs tolerate in their boardrooms is perfectly appropriate in our boardroom. Any topic, issue, subject, behavior that they would not tolerate… well, for example, hotels.
“My staff gets paid to put together the conferences. If I am going to be accountable to the bottomline than I need to be free to negotiate the best deals. Unlike the past where the annual meeting was held wherever the wife of the past chair wanted to have the meeting held. We stopped that immediately.”
Sounds like a no brainer, right? Well, there’s even more and here’s where Bob drives value home to volunteer leaders. He says, “We changed the parochial thought process that said your dues and registration fees are your greatest cost to belonging to an association. That is a flawed thought process. The greatest cost is the members’ time.
“When I ask a CEO to participate on an executive committee, it will be a good use of their time. We live in a 7/24 world, everyone is doing more, and everyone is torn in this day and age. I am competing for people’s time not only with their business, but with their churches, their families, their little leagues, their personal time. Time is the greatest investment someone is going to make.”
MSCI terminated its relationship with their previous research and data vendor for not providing timely or user friendly data. They aligned with a new econometric modeling firm and developed new programs with their data so today they are the authoritative source of data for shipments, inventory, financial benchmarking, and operational benchmarking within the metal distribution industry.
Bob says, “Our data is so good and so proprietary, the Wall Street analysts during the quarterly calls with the publicly traded companies cite our data when they are asking questions of the CEO or CFO of how they performed in the quarter.”
When MSCI launched their growth strategy in ’03 they became more inclusive and less clubby. They aligned around the vision that they would be the most important forum from an efficiency and cost-effectiveness standpoint. Bob says, “Whether you are a mill who makes it or a distributor who processed in and sold it into the manufacturing food chain, our vision was to become the pre-eminent trade association in that space.
“With that headset we expanded the definition of one of our membership categories to include companies that provide a product, like an overhead crane, or a service, like access to capital to anyone in our core membership categories. So, today we have in our membership categories Goldman Sachs, Credit Suisse, Morgan Stanley, JP Morgan Chase, Wells Fargo, UPS, all those financial service firms are today members as affiliate members because they provide a service to mills and or distributors.”
Bob has raised the bar on staff performance. “We are the gold standard. There is no one that gets as much out of their workforce as we do as measured by the investment we have made in our people.”
To occupy the pre-eminent space, they needed a world class publication, which today you can read from their website, Forward Magazine. It began in 2005, and is referred to by Bob as “our thought leadership advocacy publication.”
He says, “You will not find the look and feel of traditional trade association publication. We don’t do bowling scores and births, but rather focus on issues that we think are relevant for our members today or in the near future. We have profiled people like former Secretary of Labor, Elaine Chao, and Lakshmi Mittal, who at the time was the third wealthiest person in the world. In the current issue we do a piece on retired four-star general Michael Hayden, former head of CIA and NSA. This is the caliber of people you will find in Forward Magazine. It is a very different publication than most trade association magazines. It reflects the value we are generating.”
I asked Bob, what does it mean to run a trade association today? He replied, “We’re in the information business. We really are in the business of providing information to our members to help them run their businesses better.
“Whether it’s a data sheet or sitting in a conference listening to someone talk about the developing world and what it means to the global recovery. Our job is to make sure that both strategic and tactical information is being communicated to our members in ways they understand and constructively pushes them outside their comfort zone.”
Bob’s work seems never to be done, with multiple initiatives always in progress. His organization has turned around and today is doing well as a result. He notes, “We have about 375 companies, and about 60% were not members at year end ’01. In a day and age when companies are not necessarily joining trade associations that is a testimony of the value we provide our members.”