September 11. There is absolutely no doubt that the events of that day changed the way life will be lived and business will be conducted for many years to come.
One thing, however, has not changed-strategic management must continue to be a management staple for credit unions that aspire to sustain high performance in their organizations.
In the days since the terrorist attacks some credit unions have considered shelving their strategic plans simply because the economy is too difficult to predict in these uncertain times. We're unsure about what rates will do, how much saving will take place, where consumer loan demand will go, and the level at which the markets will finally stabilize.
The fact of the matter is that we have always lived with economic fluctuations driven by historical uncertainties, and we always will. Even before Sept. 11, our economy was holding its collective breath in anticipation of the next devastating earthquake or hurricane, the next nuclear face-off between India and Pakistan, the next presidential assassination, the next outbreak of Ebola or AIDS, the next industry to become obsolete, the next invasion of the world's computers by a virus, or even the next terrorist attack. That these events will each happen again is a certainty. When they will happen again, and the magnitude of their impact upon our culture and economy, is uncertain. Such is the uncertainty with which our economy has lived ever since it first began.
Slaves To Adversity
The reason many companies cannot sustain success in spite of adversity is that they have chosen a planning approach that makes them a slave to adversity when it happens. They plan using an antiquated system that begins with an environmental scan and defines the destination as that which is attainable within the parameters of the existing environment, rather than that which is attainable within the limitless boundaries of the imagination. This approach is, in fact, not a planning approach at all, but a straight jacket that constrains the abilities of the board and the management team to create optimum value for their members.
Yet other companies have thrived in crisis, throughout our history. They thrived because they never lost sight of their goals, and because they continued to plan, develop, and implement strategies to reach those goals-even while immersed in crisis and uncertainty. Credit unions that use the Systems Thinking approach to planning and management are likely to be counted among those who thrive.
The Systems Thinking approach to planning begins at the end-with an organization's ideal future vision, as it is defined by that organization's mission (purpose) and core values. In Systems Thinking, vision is shaped by the imagination, never by the environment. In other words, vision is the product of what is conceivable, not what is permissible. Adherence to this fundamental principle is what separates winners from losers, survivors from those who perish, successes from failures.
Living & Dying With Forecasts
Financial institutions tend to live and die by economic forecasts, which makes sense because the economy is the very nature of their business. However, the economy is always uncertain and vision is rarely confined to just financial management. That is why the events of September 11 must not be allowed to stall the strategic management process in a credit union simply because rate forecasts are murky.
The events of that day may have altered the course you travel in order to reach your destination, but that destination whatever it is-remained basically unchanged on Sept. 12. Whether you were going after a community charter, seeking to open a new office, striving to reach a particular capital ratio or return on assets, enhancing your product line, or wanting to deliver a higher quality of service to your members, chances are that your destination is still the same target it was on Monday, Sept. 10. You may be choosing alternative paths to reach that destination, but chances are that it remains your goal.
Choosing alternative paths is both appropriate and acceptable. We often did that in the years before terrorists attacked our country, and we will continue to do it for years to come. We do it because the marketplace changes, our members change, competitors change, regulations change, the economy changes and technology changes. We also do it because we can do it. Strategic plans are fluid and the core strategies in them are rarely cast in stone. The vision, however, usually is.
What Your Vision Should Foresee
As we discussed earlier in this article, corporate vision is a collective set of realistic dreams that goes far beyond financial management. Vision addresses (or should address) each of these areas, and answers these questions relative to your desired position three years from today:
* The strategic direction of your credit union. Do you have a proactive or reactive operating posture? Do members, regulators, policies and procedures or other forces drive your credit union's direction? Are you investing for future growth or seeking to optimize short-term earnings? Are you expanding into new markets or product lines? What strategic alliances are you forming?
* The strategic direction of the credit union industry. Where is the industry headed? What do our regulators have planned for us in the near future? What is your credit union's role in the future of the industry?
* The image and reputation of your credit union. What is your corporate identity? How are you positioned in the marketplace? In which community and industry activities are you active? How do you exhibit market leadership, and for what compelling reason will someone choose to do business with your credit union?
* People associated with your credit union. What do your members look like? How do they think? Where do they come from? Who is your ideal employee? Where will you find more people like that ideal employee?
* Your credit union's products, services and distribution channels. Which products and services do you offer, and why? What type of research and development activities are you conducting? On which distribution channels do you rely?
* The financial health of your credit union. What goals do you have for capital, return on assets and other key financial benchmarks?
* The marketing of your credit union. What are your loan and deposit volumes? What is your market share? What is the source of the value that you offer to your members? What are your promotional objectives, advertising message and creative strategy? What promotional vehicles do you use? Through which communication channels do you reach your members? How do you keep your finger on the pulse of a member's changing attitudes, opinions and preferences?
* Management of your credit union's human resources. What skills, competencies, and special expertise do your employees have? What career paths are open to them? How are they compensated and incented? What personal and professional growth opportunities exist? How is internal communication facilitated between people, departments, and management and staff?
* Operational Issues. What process improvement and service quality initiatives are in place in your credit union? Do you use activity based costing or zero-based budgeting? What technologies are you introducing or enhancing in your credit union? Do you possess any specific intellectual capital? How do you leverage it?
As you can see, financial management is only part of the picture, and fear of an uncertain rate future should not cause the rest of that picture to fade to black. Financial shortfalls created by uncertain rate environments only mean that progress toward realizing your vision occurs more slowly, not that it must cease altogether. As long as any progress is possible-and it always is-then you owe it to your members to leave your strategic management process intact.
Strategic management: Does it have a role in your organization, post-Sept. 11? If high performance is your ultimate goal, strategic management must have a role-not as a bookend on a shelf in your office, but as a vital part of day-to-day activity in your credit union-every day.
Jim McComb is vice president-strategic management with WesCorp. Mr. McComb can be reached at jmccomb wescorp.org.