Is It Really 'Cheating' If The Rules Are All Wrong?

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Have you ever "cheated to win?" Most likely, but perhaps not in the way that is implied in the question. If not, then you've "Played It Safe With Hopes For A Tie." And you've most likely lost.

The person who coined the phrase "Cheat to Win" did so to capture his own philosophy for achieving success, and successful he has been, having sold one company he founded for an amount in the 1990s that would still qualify it as a significantly-sized credit union today. That person is Bob MacDonald, who was one of the keynoters at The Credit Union Journal's inaugural Best Practices conference last week in Miami. Judging from the evaluations, I'm confident the crowd in attendance will agree with me that this Best Practices meeting was a best practice itself; each and every speaker shared ideas and strategies and innovations they had developed at their credit unions to overcome an obstacle or achieve a particular goal.

It didn't occur to me until afterward that each and every one of them had also cheated to win.

Mark Meyer of the Filene Institute i3 Group reviewed a whole list of credit union cheaters who have taken on new approaches to some age-old dilemmas. Coastal FCU overcame the "we can't do TV" mantra by doing it itself. Delta Community broke the "limited location" mindset by demonstrating for members just how much of a presence it has. Alliant FCU looked at 70 years of serving a very narrow, United Airlines-based FOM, and expanded to serve 100 companies under the friendly skies. Dupont Community had a card portfolio that was lagging; it could have sold the cards off like so many others, but instead pumped up volume and revenue by losing its marbles (see coverage in this issue).

Every one of the above is a rule breaker, noted MacDonald, who flunked out of college, became a door-to-door life insurance salesman and rose to become president of ITT Life by age 37. Later he co-founded LifeUSA, eventually selling it for $540 million.

"All our lives we deal with rules. What's the first thing we get when we get a job with a company? We get a rulebook," he said. "How many have ever heard the rule, 'That's the way we've always done it.' How many have heard the rule of conventional wisdom, 'This is what we have to do.' There are good rules and bad rules. But the point is we should never be afraid to question or challenge a rule and to try something new...When I talk about Cheat to Win (which is the name of his book) I'm not necessarily talking about building a huge company and becoming rich or famous. I define 'winning' as taking control of our own lives. Not what our parents want us to do or peers want us to do or our boss wants us to do, but what we want to do."

Among MacDonald's other observations:

* "Can anyone tell the difference in politicians? They're all the same. Remember when the Democrats had all those candidates and they were called the 'seven dwarves.' Why? Because they all followed the rules."

* "What rule did (FedEx founder) Fred Smith break? The rule was that the Postal Service had a monopoly on delivering mail for 200 years and that you could not compete with the Postal Service...By the way, he got a loan from the SBA in the same way everyone gets a loan from the SBA-by lying to them."

* MacDonald said business schools teach students to see the "barriers to entry," focusing on reasons "why you can't do it."

* When MacDonald founded LifeUSA, he required every employee to take 10% of their pay and buy stock in the start up, and for many it was a sacrifice. The goal, he said, was to remind everyone they had a skin in the game. "Who was most attracted to a company with high risk and no return? Women. For them it was their first opportunity to pierce the glass ceiling. But they had to cheat on the rule that they were told when growing up that they had to be administrative assistants." Two intersting notes: MacDonald said he was later sued by the EEOC, claiming LifeUSA discriminated against men, and he also structured the company from the outset so that he did not have majority control, in order to emphasize the trust he had in co-founders and workers.

* "You are in a tough business," MacDonald told credit unions. "Not all the change is comfortable. But you should pray for change, because change creates opportunity. In times of economic stability big companies will always win. But in times of volatility and change, it's not the big companies that win, it's the good companies. You can be big and good, but not often, because when you get to be a big company you forget the good. It's what I call the Agony of Success."

* "It drives me crazy to see peer group reports. What does that do? It causes everyone to be the same. Who should be your peer group comparison? It should be yourself. I want to know what the competition is doing, but only to beat their brains out. If you say it's a commodity business and I can't do anything about it, you're giving up, you're following the rule. So tell me how to not make it a commodity business?"

* "My point is it's nothing magic, but that it is OK to have that attitude and to think about those things. We may not always find the answer, but it's OK to look for the answer."

Frank J. Diekmann is Publisher of The Credit Union Journal.

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