Taking Credit Union Strategic Planning to the Next Level; It's About More Than Beating the Competition

We all know the impediments: fierce competition, industry consolidation, compressed margins and the challenge of creating a sustaining value proposition. And when competitors can’t innovate fast enough, what do they do? They innovate the price! To achieve lasting success, one of the most important steps credit unions can take is to advance their strategic planning to the next level. I believe this not because I’m an expert in credit union strategic planning per se, but because the same reality faces technology companies. Many of the same environmental pressures are challenging both credit unions and their technology partners to reassess traditional views of strategic planning. The traditional approach goes something like this: Executives and volunteers gather for a day or two at an off-site meeting with (or worse, without) a facilitator, who has little contact with the company before-hand and primarily keeps the session moving productively. Hours are spent listing and prioritizing the organization’s strengths, weaknesses, threats and opportunities, usually yielding a list that could have just been copied from the previous year, saving everyone a lot of time. Sound familiar? Typically an ensuing discussion focuses on ways to beat the competition’s offer by adding new products or services that will keep us one step ahead. Therein lays the problem. Traditional strategic planning is often rooted in assumptions that are not valid – one being that success comes from beating the competition’s offer. But, since there are no patents in financial services, even the most innovative products quickly move from market-defining status to just plain table stakes. Take the recent innovations of American Express’s One Card and homebanking deposit-by-mail services (aka PSECU’s U-Post). Like so many innovations before, those will soon become standard product offerings for most credit unions. Another dangerous assumption is that our organizations can succeed by just doing more and doing it better. Since resources are always too limited, and unlikely to vastly expand in the current economic climate, where is that extra bandwidth going to come from? Obviously, execution is everything, but it is nave at best to assume that we have better talent or can win the race by simply “rowing harder.” Periodically, I have the privilege of participating in strategic planning sessions with our credit union clients. From what I’ve seen, the process is beginning to evolve in several respects. Some are engaging “strategy consultants” to go beyond meeting facilitation, to spend time gaining in-depth insight into the business’s fundamental dynamics, and then really challenge the status quo. We too have taken this approach recently with great results. Others are taking advantage of innovative industry programs such as Raddon’s CEO Strategies group and many others offered by Callahan’s, NAFCU and CUNA. Many are encouraging their teams to challenge long-held, deeply-rooted beliefs. The fact that our company is asked to participate in these sessions is itself evidence of an evolution – towards greater collaboration as trusted partners with common goals of mutual success. These credit unions don’t fear that having their vendor know their strategies will result in the vendor having some advantage over them. Together we need to evolve from a focus of getting the best price, on both sides of the equation, to creating the best value. I applaud credit unions that have begun to infuse new approaches like these into their strategic planning efforts. I’d also challenge credit unions to take the next step: to alter the very thinking that guides the planning process. That means overturning assumptions that have long dominated strategic planning, but that are in fact not relevant. A focus on outwitting the competition just by getting the next cool product out the door faster or having the best rate won’t create a sustainable advantage. To succeed in the marathon, as opposed to the sprint, we must begin to develop unique value propositions that are both distinguishing and difficult for competitors to replicate. As part of our own strategic planning process, we often turn to sources we feel can help us to cultivate that new way of thinking. Most recently, we’ve referenced a book called “Blue Oceans Strategy.” One of its tenets that really resonates with me is the notion that a company often needs to give up in order to gain. You can’t simply plan to “do more.” The authors contend it’s likely you’ll need to abandon some things – a product, service, or initiative – in order to extend and emphasize a truly unique offering. Talk about a new way of thinking – and a potentially painful one at that! Can you really contemplate abandoning something some members have come to expect? Don’t you risk losing some members in the process? Yes; but the risks of not giving up anything may prove even greater. The threat is to be just another also-ran competitor with “me too” products. Abandoning some long-held truths or traditional basics may be just the element we need to synthesize something entirely new. The authors of Blue Ocean Strategy cite Cirque du Soleil as a great example of this approach at work. Rather than improve on the traditional circus format, Cirque du Soleil turned the idea on its head – shedding expected elements like the three rings, ringmaster, and animals – to create a powerful new form of entertainment. In the process they sacrificed much of the traditional market (the kids) in favor of creating an entirely new audience. Likewise, before you jump into your next venture – entering the commercial market or broadening your reach with a new charter, for example – you may need to make a tough call about what to reduce or eliminate. Many who have switched to community charters have done just that – giving up the brand awareness of an established name and affiliation for the greater good of realizing the vast potential offered by a new charter. Each time you consider embarking on something new, I suggest you pose the question: If the upside is great enough, are there short- or long-term pains we’re willing to accept in exchange? Chip Filson hit the nail on the head in one of his recent Callahan & Associates’ reports, when he said the obstacle to success isn’t just issues like shrinking margins and competition; it’s a failure to respond to these issues with new ways of thinking. It isn’t just that the rules are changing quickly; the entire game is at stake. By taking strategic planning to the next level, credit unions can stay in the game and win.