Building a better business modelPosted: January 23, 2012
A new type of think tank needs a new business model – starting with better customer service.
Traditional think tanks have high fixed core costs (the in-house experts, the office as close to Westminster as possible etc). This means they have to raise funds continuously, by winning project commissions and the favour of wealthy donors. This can distract think tanks from the work they should be doing – as many commissioners of work (especially on smaller projects) have experienced for themselves.
Better research and policy work requires two things: a lower cost way of conducting research; and more diverse, sustainable sources of revenue.
So for our new think tank we’re exploring both of these things. I’ll return to the potential for conducting research online in future posts. But here I want to note some of our thinking on developing other sources of revenue.
Our think tank will undertake research commissions, but we want to try to avoid the constant (and costly) bidding cycle that traditional think tanks go through. Instead, if we can develop a large, lively, diverse community online (as InnoCentive has succeeded in doing), then this creates the possibility of becoming a ‘go-to’ organisation rather than endlessly chasing work (well, eventually).
We’re also interested in the potential of crowd funding. If the community can participate in research and policy work (as we intend), why can’t it also propose – and help to fund – projects as well? While it’s not a perfect guide, the number of people willing to support a project out of their own pocket is also a fair indication of how many people care about it – and so a test of its timeliness and relevance. So there’s an interesting notion here that the future of think tanks is as a platform for others to conduct research (again, akin to InnoCentive), instead of the old top-down, ‘we set the agenda’ approach.
We’re also talking to potential customers about a membership model, or as we’d prefer it, a genuine partnership offer. Many think tanks advertise what they describe as ‘membership’ to organisations (typically corporates), but it’s difficult to see what value this provides (a newsletter a few times a year, the ‘opportunity’ to spend more money on sponsoring a party conference event, and so on). Instead, we want to build real partnerships that grow over time. This means being driven far less by our own agenda and far more by what our customers actually want (and their view of what represents good value from a membership offer, for example).
Then there are various forms of consultancy – but we’re not there yet.
The underlying point is that, despite (or rather because of) their need to chase money, many traditional think tanks have a rather poor customer focus. It’s not because think tanks don’t care about their customers – it’s because their expensive business model compels them to chase the next customer rather than properly serve the ones they already have. This explains why publicity-hungry think tanks often value advocacy over analysis. Now if only those customers had a real alternative…