Antique Governance Plagues Cash-fat ISA

Click for Jim Pinto BiographyIn the changing business environment of this new century, most membership based technical societies are steadily declining. The Instrumentation, Systems and Automation Society (ISA) is just one example.

Strategic shifts

There are several strategic reasons for this decline. When business is booming, technical societies thrive because of demand – for regular networking opportunities, conferences, exhibitions, education, standards, publications, technical magazines and advertising. But when business declines, most of these activities wane.

In the US and Europe, the instrumentation and controls business is flat, at best, and the activities of all related technical societies show the same trends – there is simply lack of interest. In areas such as China, India, Singapore, Brazil, Mexico, engineering is a much-sought-after career and technical-society related activities are growing. But ISA and other similar U.S.-based organizations are slow to seize these growth opportunities. They languish, trying to recapture past glories in a market that is simply not interested.

Let put it this way: In the U.S., there is no more glamour in instrumentation and control engineering. No one in America really wants to become technicians in DuPont or GM. No one gets rich by tuning a control loop or designing an even more efficient fieldbus network. Instead, young people study to be lawyers, doctors and business people, or dream of becoming movie-stars or football heroes. It’s as simple as that; the emphasis has shifted. Why would anyone seek to improve services in a gold-mine when there is no more gold? Go out, and dig somewhere else.

Declining metrics

ISA started more than a half-century ago as the Instrument Society of America. It grew during the boom times in the instrumentation business, as a mechanism for sales people (representatives and distributors) to network with the end-user community. While the members were largely instrument engineers and technicians from large end-user organizations, the drive came primarily from "peddlers". This is still evidenced by the monthly meetings which are largely attended by sales people looking for customers. But the customers keep dropping out.

ISA has individual members only – not companies. Suppliers and end-user businesses are served indirectly through their employee involvement. Other organizations such as MCAA (which serves Suppliers) and CSIA (which serves Systems Integrators) have grown in parallel, though their revenues are not as large as ISA (which grosses about $ 15 million annually). But they are growing profitably with relatively minor resources.

In the past, most end-users (the customers) sponsored ISA membership (the annual dues, and attendance at conferences and exhibitions), seeking for their employees the educational support and supplier networking that ISA offered. But with the recent business decline, company sponsorship has mostly been withdrawn, and members must pay their own dues. Most individual members see nothing of value. This has caused a decline of membership from about 50-60,000 in the past, to about half that level now.

Decline of Exhibitions

Other growth metrics have followed the same trends. Perhaps most visible is the ISA Conference & Exhibition, the largest US based event which covered the instrumentation, controls and automation business, held annually at central venues (Chicago, Houston, etc.) with proximity to large end-user markets.

But during recent times large exhibitions have simply “gone away”. ISA Expos are simply not exciting any more. They don't have any dazzling technologies; mostly old and tired applications of products that most people already know about. And the conferences and tutorial sessions are the same; most sessions have just a handful of attendees.

Not only has attendance been declining steadily, but a large segment of those that attend today’s ISA shows are primarily exhibitors, looking for customers and visiting each others’ booths. The next ISA show is in Chicago, 25-27 October 2005. If you attend, I’ll appreciate your feedback. (See my July 2005 Automation.com article – Decline of Large Automation Exhibitions)

The large Suppliers have recognized this decline, and have simply moved to having their own private conferences where they can discuss their offerings with key customers, without having any competitive distractions. And companies like Automation Research (ARC) have jumped into the vacuum to offer strong end-user alternatives that are remarkably successful. Indeed, ARC revenues are approaching that of ISA.

To offset the distance/travel problem, ISA came up with a solution to attract local end-users – to have smaller, “local” shows. But this hasn’t worked – and the attendance is even sparser. At local conferences, there are often more panelists on the podium than people in the audience. By contrast, similar events in Singapore, Shanghai or India attract standing-room only crowds and speakers are treated like rock-stars.

Cash-cow on a melting iceberg

In the meantime, because of its significant background and past glories, ISA has accumulated a surplus of some $30 million. This simply stays in the bank, gaining interest, because no one has the guts or gumption, the decision-making capability to utilize this as a war-chest.

On top of this languishing cash, ISA also owns good property in the Research Triangle Park in N. Carolina which has appreciated significantly and represents another tidy nest-egg. And with this base, and a cadre of experienced but leaderless employees, it keeps pursuing old strategies and tired tactics in a vain effort to return to “the good old days”.

Antiquated governance

Societies like ISA typically have an “Executive Director” who is subject to a volunteer board and committees. Because ISA leadership is volunteer driven, it gets bogged down in paralysis-analysis – everyone has a valid opinion, and it’s hard to fire a volunteer. And so the hapless executive director has to sit through endless committee sessions, listening to long-winded discourse and instant indecision. And nothing really happens; major changes are virtually impossible.

ISA has a fundamental governance problem. The society was founded as a confederation of 18 local or regional societies in 1945. Each of them was concerned about giving up its autonomy, so they wrote a constitution that keeps the real power (including nominating officers) in the hands of the Sections. Local sections (or chapters) are a dying concept in all associations – no one has time or interest in going to monthly meetings anymore. Until that basic governance issue is fixed, ISA is going to continue to follow the local sections into their collective grave. This will be a difficult problem to fix.

The leadership succession quagmire is deeply entrenched in ISA’s governing documents and traditions. It is impossible to nominate anyone for an officer position who has not only stood in line for years, but who has come up through the ranks by serving in several volunteer positions at the local sections, technical divisions and geographic districts. Senior executives and young movers and shakers in automation would never “qualify” to be nominated.

In 1999, ISA’s Executive Board had 25 members (23 voting – I’m not sure what the other two were there for). This has been reduced to 18 (16 voting members) to make it more “nimble”. But, in doing so, it increased the size of the Executive Committee, the decision-making body, from 4 to 6 or 7, thus perpetuating paralysis at all levels. Further, the Executive Committee transitioned itself from a policy-making and direction-setting body to a “managing” body virtually taking away all executive decision-making authority from the Executive Director. As a result, no big decisions have been made in several years.

I think it was Peter Drucker who said, “A meeting of more than 5 or 6 people is not a meeting – it's a gathering. Decision-making becomes impossible.”

How can ISA right itself?

The problem is NOT the selection of a good Executive Director. I have talked personally for many hours with the recent experienced individual who resigned, and his two predecessors – all good people, but simply encumbered by impossible governance issues, and strategic decline.

Let’s take the “Executive Committee”. It is chaired by a president (last year’s secretary) assisted by the secretary (next year’s president). These people are typically selected by a committee of past presidents and sundry committee members who are mostly retired and have not much else to do than to mingle with other past presidents and sundry committee members. The current executive committee members have very little real authority to do anything significant without long-winded review by others on the board. And all the “board members” are volunteers, good people all, but all with very little real executive experience with operating a business. As a result, almost any decision of consequence is subject to “paralysis analysis”. And so the problem perpetuates.

Think on this: How can a volunteer president, with tenure of one year, do much else that try to correct old problems. By the time he/she does something significant, the year will be over and it will be time to step aside to make way for the new president, who is hampered by a similar tenure problem.

Indeed, the current ISA leadership has taken several steps to initiate several good changes. But sadly, in my opinion, these are mostly minor and cosmetic, and suffer from the same paralysis analysis that inhibits the radical changes that are needed.

Proposed 6-point plan

But let’s not dwell on the problems, and examine instead the viable solutions. Here’s my 6-point plan:

  1. Radical change from the antiquated 1945 governance restrictions. This problem cannot be solved by consensus. A way must be found to “cut the Gordian knot”.
  2. The Executive Committee should be chartered to operate with functions similar to a corporate Board, setting policy and direction, not make decisions for the management. This Board should include the President and Secretary (the President in waiting) – these titles are confusing and should be changed. Three outside directors should be appointed; one of them should be Chair. The outside board members should be high-level industry executives, perhaps one each from end-user user, supplier and Government ranks.
  3. The Board should appoint an executive director with “real” executive powers – the equivalent of a corporate CEO, present at all Board meetings. He/she must be given strong growth/profit objectives, with performance-based compensation. This strong leader must be empowered to produce results, based on key objectives set by the Board.
  4. Utilize some of the war-chest to make significant acquisitions, to expand the scope and involvement of ISA to other complementary arenas. Candidates for acquisition: ARC, MCAA, CSIA, WINA, WBF, and MESA. Some of these may not appear to be available, but the advantages of combination can be made attractive for them.
  5. Acquire major ownership in several international subsidiaries, in burgeoning growth areas: India, China, Singapore, Brazil, and Mexico. Growth of membership, education and standards activities, publications content and circulation, and advertising revenues should all escalate rapidly.
  6. Stop investing in the same, tired old “local” exhibitions which are primarily loss-making propositions. Support foreign exhibitions and conferences where there is enthusiastic attendance and burgeoning growth.

Can ISA do this? Well, I have certainly discussed these ideas with the current President, Secretary (President elect) and executive committee. It remains to be seen whether ISA, with its money-in-the-bank and real-estate its primary assets, will continue to be a melting iceberg. My own hope is that it can surge forward to generate a healthy new automation and controls organization in the new century.

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Jim Pinto is an industry analyst and commentator, writer, technology entrepreneur, investor and futurist. You can email him at: [email protected]. Or look at his poems, prognostications and predictions on his website: http://www.JimPinto.com . Read extracts from his new book, “Pinto’s Points” at: http://www.jimpinto.com/writings/points.html