Would you risk thousands of dollars and months of investing human capital with only a 10 percent chance of success? When it comes to new program development, that's the gamble you take every time a new offering goes to market. Nine out of ten will fail. That's a fact. Some fail flat out and must be canceled. Most simply fail to hit your mission and margin objectives. Departments, organizations, relationships, and careers can all feel the negative impact.
There is insurance against this damaging set of circumstances. It's called diversification. The intricacies of the theory of diversification can be boiled down to a simple truism: Don't put all your eggs in one basket. The case for derivatives or extensions was made in my December 1998 column, "Using Extensions to Increase," page 58. This was followed up with a case example, "The CNN Scenario," on page 80 of the March/April 1999 issue.
Related Extensions Your organization's relationship with attendees needs to evolve from one of episodic participation to one that recognizes various learning preferences and facilitates attendee participation in multiple activities. What you want to create is a zone of contact: a means for reaching customers using multiple channels beyond traditional on-site programs. New methods of contact are evolving as distance learning technologies become more refined.
With the zone-of-contact model, providers increase their chances to meet professionals' needs for CPE at specific times, for specific topics. For sponsoring organizations, these related extensions provide opportunities to create new business, generate repeat business, and get closer to customers. It also allows you to reap the rewards of cumulative market share and profitability from the various channels. As with "The CNN Scenario," it becomes less critical how many participants you have for the primary program and more important what the yield is from the entire series of spin-offs.
It can take years and lots of money for a new program or product to gain acceptance in the marketplace. An extension strategy can be extremely valuable to an organization that already has a strong product or brand. Exten- sions come in at least three forms:
* 1. Line Extensions: The introduction of the same topic with new delivery channels, or new target audiences, or perhaps various levels of intensity (i.e., beginner, advanced).
* 2. Brand Extensions: The use of an existing brand to enter a completely different product class. This can reduce your risk because when a CPE provider launches a new program under the parent brand, customers and prospects assume the original brand standards will be maintained and are therefore willing to try the new product (e.g., the Tylenol brand name allowed Johnson and Johnson to introduce Tylenol Cold & Flu and Tylenol PM products). If consumers' perceptions of one of your CPE courses are positive, it is more likely that they will have the same feelings toward your new offerings.
* 3. Co-Branding: Also known as co-sponsorship, co-branding occurs when products or services are introduced having two brands associated with them. My own organization did this recently: The Harvard School of Public Health's Center for Continuing Professional Education and the Harvard Graduate School of Education's Programs in Professional Education co-branded the Harvard Program on Continuing Education for the Health Professions.
The Downside of Diversification Using related extensions to diversify can expand the normal cycle of product maturity. It can provide the safety of diversification, the ability to offer new products with an established and dependable brand name, and the increased income andbenefits of multiple spin-offs. There are also some real risks, however. In my next column, I will explore the pitfalls of product extensions.