The NorCal Section Business Model

by Terry V. Molloy, P.E.

(Reprint from February, 2003 Transmitter)

Last month I wrote an article about the ISA Business Model. This month I would like to discuss the “Section Business Model.”  We all know that many companies that did not adjust their way of doing business to take into account the changes in their markets as a result of computer technology have fallen by the wayside.  Your business model must adapt to the changes your customers expect if you are to be successful.  This article will attempt to identify some of the causes fro our membership decline as well as describe our current demographics.  

What ISA Has Not Done – Listen to Our Members!

An interesting example is the supermarket business.  Scanners for expedited customer checkout as well as inventory control are critical to the success of that industry today.  Their customers expect that and effective cost management requires implementation of computer systems for inventory control.  However, the exception may prove the rule.  Many of you know that my wife is Chinese.  We often shop in the Asian grocery markets in San Francisco; there are no scanners in these markets.  Checkout can be tedious at times, but I have yet to find them out of anything we wanted.  Their prices are seventy percent or less than the price for a similar item in the supermarkets near my home.  The point here is that for those patronizing the Asian markets “shopping” is different experience than for those shopping for food in my neighborhood.  The message here; listen to your customer!

At the local section level our customers have told us they do not want to spend their evenings listening a commercial or watching a technical presentation on how to use some company’s widget.  Some of our members seem to enjoy the tours of facilities, but this is not a significant percentage of the membership.  We have had good responses to some of our training programs and I personally think that response would be better if we could get the word out to more people.  For the last several years your section leadership has been trying to figure out what our members want while watching a steady decline in the membership.  

Changes in Members Interests and Needs

Later in this article I will discuss the age demographics of our section but first we need to look at the changes that have taken place in our profession.  We need to look at how technological changes have changed to interests and learning needs of our members and potential members.  During the last fifteen to twenty years our control instruments have gotten “smarter.”  More and more of today’s control and measurement equipment use microprocessors and other forms of electronics as part of their “package.”  The I&C engineer of today often has to be more skilled in the computer field than in the basics of how process instruments work.  This has led to an expansion of the use of instrumentation that goes beyond controlling the process.  Today’s control systems are linked to the business management systems in many large corporations.  They bright young engineer entering the I&C field today quickly learns that the way up the ladder is to understand the integration of the control systems with the management functions and reporting.  He or she is letting someone else learn about the intricacies process measurement and control.  Fortunately for most of these companies they still have a few “old farts” around that keep them out of trouble.  Many of them are our current members, as you will see by the age demographics later.

One of the more significant changes in our profession has been the invasion of our profession by the Accounting / Management consulting companies like Anderson Worldwide, Ernst & Young, and Deloitte & Touche.  Some of the smarter people in these companies have figured out that if we could design a facility to work a certain way using the principles of engineering then we could optimize the “output” using the same principles.  All that had to be done was to include the cost factor in the equation.  Some of us “old farts” on the engineering side of the business had figured that out twenty-five years ago; the problem was those on the operating side did not trust the computers.  In most industries today computers are commonplace in all aspects of process control.  In fact one of the new areas of “Process Control Engineer” is called “Safety Instrumented Systems Engineering.”  One of the reasons this new “discipline” has evolved is as a result of using computers for safety systems; something we never did twenty-five years ago.  

Changing the Section Business Model

Business models must take a long-term look at the trends in the current business and then identify the critical success factors that will evolve as a result of these long-term trends.  Market segmentation and a competitive edge in a given market segment are two concepts that we have over looked at the local level.  Our section business model is like the ISA business model.  We still expect the companies of our volunteer leaders to pay the cost of the leader’s participation in local section functions as well as national functions.  This model is based on the good old days when Chevron, Bechtel, PG&E, and others had large engineering and construction departments.  Participation in ISA activities was either viewed as a “perk” for the good employee or as a valued activity that had a positive payback for the employer. From my personal experience at PG&E it was viewed more as a “perk” until the mid 1980’s when ISA got involved in some Nuclear Standards writing.  

The long-term trends in the process industry are to contract out engineering design work to consultants.  Most companies cannot afford the cost of a full-time “expert” on staff unless the company has a continuous need for these skills.  However, if the individual were really that good they would be better off in business for themselves. This is another trend we are seeing today.  Many of our more experienced engineers are going into business for themselves; some of the younger ones are also moving in that direction.  How does ISA serve this market?  At some of the classes Norcal has sponsored we had individuals there that came to make business connections and demonstrate their knowledge about a particular subject.  

Do I have some answers?  Yes. Are they the right answers? You tell me.  

Involve Our Members in the Solution and Compensate Them

First we need to focus on providing the training our members want through well-designed courses at reasonable prices, less than $100 for a one-day class.  We also need to provide our members on the supplier side of the equation with the opportunity to interact with the user community in a manner that is cost effective for all parties.  If I had to sum up our products they would be “Networking Opportunities,” “Technical Training,” “Standards Use,” and “Business Development.”  In our old business model both the supplier and user members valued all these products and the costs were borne by both.  Today the major financial support for the section comes from the supplier side, but this will not continue much longer unless we change our products.  Our products MUST be valued and attract the user

Members Need Incentives to Participate as Workers and Leaders

The change in products will also require a change in how our section is run.  Several years ago I wrote some articles about the responsibilities and burdens of accepting an ISA leadership potion.  I was criticized for discouraging potential leaders from participating.  In reality I was simply documenting the issues that were making it increasingly difficult to find quality leaders at all levels of our society.  We must budget for our leaders to participate in ISA national activities if we are to have a selection of quality candidates and to alter the direction of the ISA.  We can no longer expect the member’s company to pick up the cost, especially if the member’s company is his own business.  We will also have to budget to compensate our members for some of their work when that work goes beyond fifteen or twenty hours per month with no quantifiable benefit to the member.  This is actually an opportunity for local sections to provide experienced members with some income while getting a good value for the section.  As an example I have structured the Editor’s job for this newsletter such that we should be able to find a member willing to do it; partly for the money and partly for the ability to contribute to the sections success.  The revenue from this newsletter currently provides the Norcal Section enough income to fund at least one officer’s travel to each of the Presidents’ meetings.

The specific products I am recommending are as follows:

A Two-Day Technical Conference and Exhibit:

The Technical Conference and Exhibit will be held at the California Maritime Academy in late May / Early June 2004.  This date gives us sufficient time if we start now to do a good job.  The details need to be worked out but this would be first and foremost a quality technical conference.  There are six high quality classrooms, forty person capacity each, with state of the art presentation equipment in each room at the California Maritime Academy.  This will allow at least seventy-two hours of training and presentations for up to 240 people at a time. The exhibits would be limited to thirty-five to forty, ten by ten booths.  The vendors providing a high quality non-commercial presentation would get their booth space for half price.  Full priced booths would run about $600.  If we sell thirty-five booths at $300 each, we will raise $10,500 for the section.  If we had 1000 attendees and charged $15 each, we will raise another $15,000.  This event would provide the funding for our other activities, similar to the current national ISA business model but at a more reasonable cost.  This is an absolutely perfect location for this kind of an event.  The price is right for the facility.  We have the flexibility to be creative in what we do to attract the members and their guest.  One of the benefits for many potential attendees, it will be a reverse commute.  

Targeted ISA Standards Use Training:

Many ISA Standards provide a wealth of knowledge and training in their use would be beneficial to the novice user while providing an opportunity for our experienced members to share their knowledge, enhance their reputation, and earn a few dollars.  It will also promote the use of these standards, which will enhance ISA’s reputation, and thus the value of a membership.

Technical Training:

We currently run classes on a variety of subjects.  These classes should be expanded and promoted more widely.  As with the Standards training, similar opportunities exist.

Tours and Social Networking Events:

This has been the traditional “monthly” meeting concept of ISA of old.  However, it has become more and more of a problem to get quality events that draw enough people to make the leadership effort worthwhile.  The goal here would be to have events that target members and potential members in specific areas of the Norcal section as our section now includes members from as far away as Reno, as far north as the California border, and as far south as Santa Cruz.  The annual Golf tournament has been a great success.  We could hold one in the spring in the Sacramento area.    

These are just some ideas; I would like your ideas as well.  Now as promised earlier he are some demographics on “Membership Age” in the Norcal Section.

Membership Demographics

Just for “kicks” I decided to look at the age demographics of our Norcal Section members.  Only thirteen percent of our members are under forty years of age.  About fifty-four percent are over the age of fifty.  And about twenty-five percent are over the age of sixty.  Of the thirteen percent under age forty, less than forty-five percent (6% of total) had joined ISA prior to the year 2000 and less than thirty-five percent (4.5% of total) have been members more than five years.  I should point out that these statistics and the graphs below only represent eighty-three percent of our members in the Norcal Section.  About 150 members had no birth date in their record; of these, about forty were life members.  It is my opinion the percentages of younger members would decrease even more if we had complete data on all the members.

What does all this mean?  On the premise that a picture is worth a thousand words; the Norcal ISA is growing “OLD!”  The median age of the Norcal Section is 52 years old.  How many of us at fifty-two years of age are actively involved in the technical engineering aspects of process control?

This chart shows the Cumulative Membership of the Norcal Section and how our age distribution is skewed toward the more senior members of our profession.  Again this shows that 13% of our members are below age forty.  I believe that this is a significant part of our problem.  

This last graph shows our current percentage of membership based on the year they joined ISA and represents about 80% of our membership.  The remaining 20% of our current members joined before 1980.  Ninety-seven of the 104 members that joined our section prior to 1968 are Life Members.  The remaining 90 members joined between 1968 and 1980; that group has thirty-one Life Members and one Fellow. The youngest person in this group is about 48 years old and joined in 1979.  This age distribution by join date shows us one other important fact; we are not getting the new engineering graduates to join our society.  Less than six percent (19) of the 342 members joining our section in the last three years were born after 1969.  Only sixteen percent of those joining in the last three years were under the age of forty.

What does this mean?  If we assume the average engineer will graduate from college by the age of twenty-five, then by the time they are forty they will have fifteen years experience.  How were they getting this experience?  Where were they going to learn about our profession?  What did they want that we were not providing?  Give me your ideas.  How can we promote our profession in the colleges?

Finally! When was the last time you suggested a young engineer join ISA?  

 new: 2/4/03 GJG