The Theory of the Business is a framework created by Peter Drucker in his 1994 article of the same name. It is a formalism intended to concentrate assumptions around what an organization can expect to be paid for, what results are meaningful, and where it must excel in order to maintain leadership.

Assumptions About the Environment

These assumptions define what our organization ought to be paid for.

Society and Its Structure

We can expect that for the foreseeable future, people will continue to want to signal their competence. Companies will continue to want to signal their relevance. Craftspeople will want to hone their skills. Academics will want their papers read and implemented. Companies will want to sell their products and services, and likewise hire vetted workers, consultants and vendors. Organizations of all kinds are sitting on top of piles of money and their agents are actively looking for places to allocate it.

But the behaviours of the different constituents of society are themselves different: Managers behave differently from workers. Principals behave differently from agents. Public-sector behaves differently from private. Non-profit behaves differently from for-profit. As a professional association dedicated to the advancement of a craft and the enrichment of its practitioners, in our dealings we must take these differences into account.

This is to say nothing of the craft itself: As the volume of information in our civilization grows, so will our demands to make sense of it. At the same time, the incumbent authorities on truth are losing their respective grips through the democratization of narrative. In this reality, plausible trumps accurate, and familiar trumps precise.

There has never been more information in greater need of architecting—not just to generate more ad clicks or more e-commerce conversions, but also to enhance the wisdom of the world. Like Bruce Sterling admonished us in his closing keynote at the first IDEA conference, make it obvious to people that that's the proper thing to do.

The Market

The IAI straddles a two-sided market. The first side concerns individuals and their motivation to participate in a community of practice. The second concerns corporate entities and their interest in our members. The optimal revenue model lies in creating a genuine mutual benefit between the sides of this market. As we open up new revenue opportunities on the corporate side, it will be essential to reconcile them with those on the existing individual side.

Market Side A

This market is first and foremost a market for attention. A human being only has capacity for so many relationships with professional associations, irrespective of what they cost—though total cost is no doubt a factor. From the data extracted from the member database, we can realistically expect that a person is not likely to belong to more than three associations outside of those required to do their job (e.g. a union, a college of physicians, or a bar association). Indeed, only about 1/4 of the member population indicated belonging to any organization besides the IAI.

There is another aspect of the attention market, which concerns the interest on the part of business leaders in the strategic benefits of information architecture. Outreach of this kind, on its own, is an identifiable service worth paying for.

Differentiation

Is information architecture distinct from interaction design, usability engineering and content strategy? Absolutely. Does information architecture subsume completely under the umbrella of user experience design? No, but that's primarily who's interested in it. Or is it?

Ratio chart showing the other professional affiliations of IAI members. Organization names and member counts appear on mouseover.

While nearly half of the people sampled are also in the U(x)PA, IxDA and SIGCHI (presumably making them all UX/usability people), there is also a significant constituency of library science professionals (ASIST, ALA, SLA etc) and documentation specialists (e.g. STC). Moreover, the organizations in the other category, which consists of the the majority of the population, are literally all over the map. So perhaps trying to differentiate ourselves from the other UX organizations is barking up the wrong tree.

Competitors

Here is a list of organizations that compete with the IAI for members:

Organization Standard Rate Student Rate
ACM $99 base + $99 for library + $50 for SIGCHI + $30 for SIGWEB $19 to $62 + $50 for SIGCHI + $19 for SIGWEB
AIGA $50 to $2500; $250 highlighted N/A
ALA $65 first year, $98 second, $130 third and onward $33
ASIS&T $140 + $25 for magazine + $10 per SIG past the first $40 + $15 for magazine + $10 per SIG past the first
IAI $40 $20
IEEE (proper) $185 $32
IEEE Computer Society $123 $40
IxDA Free Free
SLA $40 to $200, depending on income $40
STC $225 + $75 + $60 for both annuals $75 + $75 + $60 for both annuals
UXPA $100 + $25 for new members $35
W3C Community Groups Free Free
W3C (proper) $7,900 for small business; $68,500 for large; $2,250 for startups N/A

What can we say about this table?

  • We're cheaper than all other sampled professional associations, with the exception of the IxDA which is free. (The W3C is technically not a professional association, and is only present for completeness.)
  • Many organizations surcharge for SIGs and library access.
  • It seems like the pricing is totally arbitrary.

Market Side B

Let us assume the individuals on one side of our market are interested primarily in the material on offer and in connecting with each other. The other side of the market is chiefly concerned with the individuals from the first. The IAI member base represents a unified demographic segment which is valuable to corporate and/or institutional entities in a number of ways. Consider:

Corporate entities select for strategic behaviour. Even a non-profit grant foundation is always buying something with its money. It is our duty as a non-profit intermediary in this two-sided market to prevent one side from benefiting at the expense of the other.

The Customer

As Drucker notes, organizations almost always have more than one archetypal customer. We understand this in the UX-o-sphere in terms of scenarios, when, for instance, a purchasing manager buys, say, a call centre management system that she will likely never touch. We call her the customer, insofar as she signs the cheque, and we call everybody else users. Drucker considers them for the same purpose we do, he just doesn't make the distinction we need to do our jobs.

Given this scenario, it is useful to introduce a tool originally conceived by the late economist Milton Friedman, The Four Ways to Spend Money:

Whatever your opinion is of Friedman, this is still a useful cognitive tool.
Spend: Your Money Somebody Else's Money
On Yourself

Concerned equally about cost and value.

IAI individual members are squarely in this category.

Concerned about value more than cost.

Corporate members are content to spend company money to enrol their teams as well as themselves.

On Somebody Else

Concerned about cost more than value.

If we were a 501(c)3, we could write tax receipts for donations. Also: would it make sense to be able to give a membership to the IAI as a gift?

Concerned about things other than cost or value.

These are corporate managers, bureaucrats, grant panel judges, etc. Nobody ever got fired for making a safe decision.

We are currently concerned with the first quadrant and to some extent the second. We haven't much explored the third, and we've talked about the fourth (insofar as grants).

Alan Cooper remarked in The Inmates Are Running The Asylum about how the best kind of product is one that a person is happy to spend their own money on. From a logistical perspective, however, individual people don't have nearly as much money as corporate entities, and the money in those entities is almost always controlled by somebody it doesn't belong to.

Per the first quadrant:

The decision to join a professional association is overwhelmingly a rational one. What material benefit do I get in return? and is it worth the money? are the essential questions a person asks when deciding to join, and ultimately, when deciding to let their membership lapse.

However, the first quadrant, the individual spending his or her own money on him- or herself, is the only one amenable to non-strategic motivations: I like the community, or everybody else is doing it, for instance.

Irrespective of these considerations, the offerings to this quadrant must be affordable: within reach of the lower end (~$50,000/yr) and scarcely a dent to the median (~$100,000/yr) earner. As it is with vanilla membership, the purchasing power of students should be taken into account for all offerings.

Per the second quadrant:

The most likely instance of a person who has the opportunity to spend somebody else's money in conjunction with the IAI would be somebody like a team leader: with a modest discretionary budget to make things go smoother. These people are the ones using their expense accounts to buy group memberships for their teams, and themselves alongside.

The group membership is an interesting creature, because while it nominally doesn't generate any more overall revenue, it does favourably change the shape of the cash flow.

Per the third quadrant:
Aside from the aforementioned—changing status to collect personal donations—there is another way for individuals to express patronage for the ends of the IAI, which is to adopt a stratified membership, similar to AIGA. Even if the stratification is purely symbolic, like the jump from $250/yr to $500/yr in AIGA membership levels, it's an opportunity for members to show their patronage to the organization.
Per the last quadrant:
The professional resource allocator—the person A who spends person B's money on person C—may have the best intentions and want to do a good job, she just isn't going to be as cautious about cost and value as she would if she was spending her own money on something she would benefit directly from. Instead, our manager friend's main concern is risk: either safe bets or cheap lottery tickets, always easily understood, and good publicity for the purchaser no matter the outcome.

So the people with access to the least money have the highest personal expectations, while the people with access to the most money are largely looking for safe, measurable, strategic results. Being a non-profit, this doesn't necessarily commute to a direct cash return, but it could be reflected in advertising value, increased sales due to discounted offerings, access to vetted candidates for employment or consulting work, the funding of research into new technical capability, or some other end in the political economy.

Technology

The technologies currently called Technology are the technologies we help create. Our members are experts at handling the very medium we use to provide the majority of our information services—The World-Wide Web. The advent of this medium has slashed the marginal cost of delivering information services asymptotically toward zero. This is a clear place we depart from the patterns of our competitors: we believe that an expert will (correctly) construe us as stingy for trying to charge them for information they know costs us nothing to share.

If we are barring ourselves from charging money for that which isn't scarce, we're going to need to discover what is scarce that we can charge for. Good thing there are people hard at work on that: Kevin Kelly in his article Better than Free.

What Is Abundant, and What People Expect From Us

These generative values, as Kelly calls them, are not something we can charge for on their own, although perhaps we could if coupled with, or a necessary component of, at least one item from the other group. On their own, though, these generatives are part of our duty to demonstrate as the Information Architecture Institute.

Immediacy
The web is immediate. Anything less than immediate in an automated system is a sign that something is broken.
Findability
It's kind of our job, isn't it?

On the Fence

These generatives are too ambiguous to determine if they belong in either the abundant group or the scarce group.

Accessibility

Kelly doesn't mean accessibility like we mean it, though it ought to be implied. He means access, in a curious contrast to ownership. Think cross-channel service design: whatever you want, wherever you are, whenever you want it, and then dismiss when you don't need it anymore. Think iCloud.

If you put a page on the web, the marginal cost of serving it up is asymptotically zero. Our members know that. As such it can (and should) be perceived as disingenuous to block access to it. That's why #icanhazpdf exists. Anything that falls into this pattern neither worth, nor in our interests to protect.

There is another component to access, that being access on multiple endpoints, like phones, tablets and e-readers, as well as automated agents (i.e. API consumers). This carries a significant fixed cost which may be amenable to funding through grants or corporate sponsorships.

And there is still another component to access, which certain entities would pay for: access to the time, attention and produce of our members. Likewise, member discounts to products and services fall under the purview of access.

Authenticity

This generative is probably closer to the scarce group, but only under certain conditions. It is meaningful for the Institute to put its stamp on a person or a thing, and it costs real human attention and effort to authenticate either, beyond trifles like hosting content or signing a cryptographic key. The Journal of IA is an example of this, though for the aforementioned reasons, it would be detrimental to charge for it.

However, a vetting and rating system for mentors could be worth money if turned public, and/or Mozilla-style achievement badges.

What Is Genuinely Scarce, and What We Can Charge For

These generatives each have in common that they typically incur variable costs, which have to be defrayed in proportion to their usage.

Personalization
That statement aside, a personal profile on the IAI site that showcases a person's projects, publications and community status would not incur a variable cost but still be worth paying for. The mentoring program does incur variable costs, however, and is personalized by definition.
Interpretation
Interpretation is having a person analyze an artifact and represent it in a different, more understandable form. So far, the closest concrete example of a service that does this is the mentoring program, though it pervades the entire organization and the practice of information architecture.
Embodiment
Something made of atoms that exists in real space. IDEA filled this role in the past, as World IA Day does now; likewise does the mentoring program. Books, merchandise and other artifacts, or discounts on such artifacts through third parties, jobs, contracts and other business arrangements between people facilitated by the IAI are also examples of embodiment. Specifically, businesses could finance research grants directly, to the tune of $5,000-20,000, for which the IAI could collect an administration fee.

The Wild Card

Patronage

Would people just give us money if they could? If, for instance, we changed our status to 501(c)3, if that was even legally feasible?

If we introduced a premium membership, which, like AIGA, carried no more privilege than recognition in our publications, would people pay for it? (AIGA has 83 members out of 23,000 that did.)

Assumptions About Our Specific Mission

These assumptions define what our organization considers to be meaningful results.

Assumptions About Our Core Competencies

These assumptions define what our organization must excel at in order to maintain leadership.

The IAI is fundamentally about the practice of information architecture, which is about helping people understand and make sense of their experiences, and making the next step obvious. Irrespective of technology, medium, or context. What we need to be able to do is show people the power of good information architecture, and by doing so show people why information architecture is important and distinct as a craft.