How Credit Unions Can Avoid the ‘Strategic Black Hole’

Credit unions face unique challenges to stay competitive and relevant in today’s constantly evolving financial marketplace. Among those challenges is sinking into the deep, dark abyss of what is commonly referred to as the “strategic black hole” – the tendency of organizations to become so consumed by day-to-day operations and short-term objectives that they lose sight of their long-term strategic direction.

To avoid the “strategic blackhole,” credit unions should consider allocating resources dedicated solely to strategic planning, so they can stay ahead of their competitors and meet the ever-changing needs of their members.

The Many Hats of a Chief Strategic Officer

Creating a strategic officer position focused entirely on strategy is one way in which credit unions can keep a competitive edge, provide member-centric services and products, and jump to the next asset class. Implementing this position can help organizations maintain a strategic focus even during intense operational activity or market fluctuations.

A chief strategy officer fulfills several different functions that can help credit unions position themselves for long-term success, including:

Keeping a pulse on internal/external forces and member needs: The strategic officer can actively assess industry trends, monitor competitors and stay abreast of what consumers seek in a credit union. By continuously offering this valuable insight and analysis, the strategic officer supports evidence-based decision-making to help shape or sometimes change the credit union’s strategic direction.

Fostering collaboration and breaking down silos: Besides being focused on strategy, having a strategic officer in place can promote collaboration across business units and help build organizational knowledge for future leaders. The strategic officer role can align different strategies within the credit union so that various departments and business units work toward the same goals, enhancing overall synergy and efficiency. Moreover, the strategic officer is well-positioned to become a connector or influencer, providing a sounding board for team members seeking feedback on a particular initiative without going directly to their supervisor.

Mitigating risk and helping to stay compliant: While driving strategic initiatives, the strategic advancement role also ensures compliance with regulations and manages risks associated with implementing new strategies. They work closely with other departments, including compliance and risk management, to ensure that strategic decisions are implemented within a controlled and compliant framework.

Encouraging a spirit of innovation and adaptation: In the rapidly changing world of financial services, innovation, and adaptability are keys to success. Having a dedicated strategic officer in place can encourage a culture of innovation within the credit union to drive the exploration of new products, services and technology to meet evolving member needs.

Extending value to members: A credit union’s success lies in its ability to provide value to its members. The strategic advancement role champions a member-centric approach by aligning strategic member needs and preferences, enhancing member satisfaction and loyalty.

Acting as a change agent: Finally, the position of strategic officer can lead or assist with major change initiatives, providing guidance and direction, and ensuring that changes align with the overall strategic vision and are implemented effectively.

Other Ways to Prevent Becoming Lost in the Strategic Black Hole

In addition to defining a role specifically to manage the credit union’s strategic direction, below are several other best practices to avoid falling into the strategic black hole, all of which can be spearheaded by the chief strategy officer:

Create strategic teams of employees from multiple disciplines within the organization. Doing so allows for knowledge growth across the organization and enhances decision-making and innovation due to input from various perspectives. It also increases collaboration in the future because of the relationships formed across departments.

Schedule routine collaboration meetings to share progress. These touchpoints provide a platform for open communication, sharing knowledge and learning across organizations, and charting clear objectives and goals. It also increases employee engagement, which is always a plus.

Establish ongoing performance metrics to identify strengths and weaknesses. No matter how carefully a strategic initiative is planned, something may still go wrong. Monitoring performance metrics can help identify and quantify the strengths and weaknesses of the plan. Remember that depending on the strategic plan, it may be a year or more before enough data is available to validate its success. When devising metrics, ask whether or not they reflect the time, money and resources put into the strategic plan. These value assessments should be conducted for several years after the completion of the strategic initiative, providing quantifiable data that may be applied to future projects. When a proforma for a strategic initiative is presented, numerous assumptions are made. In subsequent metrics reviews, question how accurate the assumptions were and how they should be projected and weighted in later proformas. Finally, creating performance metrics early on keeps everyone across the organization accountable.

Take time to learn from your strategic initiatives. Once an initiative is completed, organizations often move more quickly to the next one without taking the time to review, learn from, and, most importantly, celebrate them. For example, a manager might only acknowledge a team member’s contributions to a strategic initiative. Making time to acknowledge successes in an open forum allows for more recognition, helping to boost overall morale.

A Final Word

The strategic black hole is easy to fall into when a credit union doesn’t allocate resources explicitly focused on strategic advancement. Creating a chief strategy position and implementing several critical strategic best practices can bring clarity, encourage innovation and develop a long-term vision for the organization. By keeping strategy in focus, credit unions can remain agile as they adapt to industry changes, meet member expectations and thrive in an increasingly dynamic environment, breaking free from the short-term operation cycle.

Gary Lanier is the vice president of strategic advancement for the $755 million Members Choice Credit Union in Houston, Texas.