Associations exist only in the mind

Professional, trade, and public interest associations are significant businesses. In the United States alone, associations employ more than 1.6 million people, and generate an annual payroll of ~$50 billion.

Yet, ultimately, associations exist only in the mind.

Stay with me, and I’ll tell you a story that may convince you of the value of this strange point of view.

Fifty years ago, every business that wanted to offer credit to its customers had to have its own independent system to do so. Individual banks were trying to encourage merchants and customers to adopt newfangled things called “credit cards”, but they failed to solve the chicken-and-egg problem that consumers did not want to use a card that few merchants would accept and merchants did not want to accept a card that few consumers used.

Then in 1966, a man named Dee Hock had the vision, determination, resources, and a little luck to break this logjam. Dee described his journey in a fascinating book he wrote after his retirement in 1984, intriguingly titled: Birth of The Chaordic AgeDee was the first CEO of what became the mammoth multinational financial services corporation VISA, a company with a current market capitalization of over $200B.

What has this to do with associations? Well, you may be surprised to learn that VISA has never issued cards, extended credit or set rates and fees for consumers. The company is, in structure if not in capitalist terms, an association of tens of thousands of member banks who offer VISA-branded credit, debit, prepaid and cash-access programs to their hundreds of millions of customers. These banks, while competing with each other for customers, agree to honor each other’s trillions of dollars in transactions annually across borders and currencies.

At its core, VISA is a set of agreements between its members. The company’s value to its owners and customers is created from the mutual agreements its members have made. Without those agreements, VISA would not exist and we would return to the pre-VISA world when every financial entity had to have its own independent system of offering credit to its customers.

Although VISA is an atypical kind of for-profit organization, its core purpose is essentially identical to that of trade and professional associations. Associations are society’s instantiations of communities of practice, groups of people who share a common interest, profession, or passion and agree to actively engage around what they have in common. That leads us to Dee Hock’s (and my) view of organizations like VISA and associations:

“…organizations exist only in the mind; they are no more than the conceptual embodiments of the ancient idea of community.”
—Dee Hock, Birth of The Chaordic Age

This perspective is extremely important because it’s easy for associations to forget their initial and continued reasons for existence. Every association is created when at some moment in time a group of people with something in common wants to further a particular profession and/or the interests of those engaged in a profession and/or the public interest. Typically, the community already exists informally, and its “members” want to create a formal, legal structure to support, deepen, and widen its reach.

Associations can, however, lose sight of this primal and ongoing purpose. When this happens, they concentrate on self-perpetuation and/or expansion at the expense of supporting the community of practice for which they were created. Remembering that an association is, at its core, a set of agreements in people’s minds about the instantiation of a community that is important to them is key to keeping the association relevant to the community it serves.