Expert: Fast Failure Better Than Slow Death

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SAN ANTONIO-The way to growth is innovation, but the problem at most small to midsized companies-including credit unions-is innovation is seen as "slow" and "risky."

That was the message from Doug Hall, an entrepreneur since his teenage years and founder/CEO of Eureka! Ranch, an invention and research think tank. Hall was quick to point out that he is a member of Malpeque Bay CU on Prince Edward Island in Canada, and is more than familiar with the credit union business model.

"I believe the only intelligent form of life in the banking industry is credit unions," he declared.

But that intelligent life has a problem, Hall suggested, and it is that banks are "stupid." He said it is not good for an industry to have stupid competitors because then there is less incentive to be innovative.

Yet innovation is essential, he insisted, as it creates market distinction. Lacking that, a company must be measurably cheaper than competitors. As an example, he cited the fact Apple, which does not compete on price, discontinues the No. 1 selling MP3 player to release its newest version, and manages to make a premium profit in the electronics space.

"Electronics is the most price-driven marketplace there is," he said. "Credit unions are so good, they should have double-digit membership growth every year. By all rights, credit unions should be a growth business, but when you have stupid competitors it is too easy to say, 'It's OK, we're smarter than they are.'"

What The Immigrants Brought

Hall told attendees of CUNA's America's Credit Union Conference here that just 15% of companies in the United States are proactive, and the other 85% are reactive. He said the U.S. has lost the focus on leading change that many immigrants brought to our shores in previous centuries.

Innovation and proactivity, he promised, would go a long way toward attracting the young people CUs say they wish to attract. He said many consumers ask why they should care about a given business, but noted young adults today are particularly sensitive to the "benefit promise" of a credit union.

"Why is the credit union here? That is what they want to know," he said. "The meaningfully unique ideas feel dangerous to management, but if they are not dangerous then they are not worthy of being called innovative."

Fear shuts people down and leaves them unable to react, he continued. Hall recommends taking small steps to build momentum in incorporating innovation into what a CU practices.

His axiom: "Fail fast. Fail cheap." Meaning try new programs that can be installed in seven days and if they don't work out, they don't have a large negative impact on the bottom line.

"The banks are confused," he said. "Their best people have left. There is no better time for credit unions to hit the gas. Why would anybody not use credit unions?"

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