The Big Leap Your Credit Union Should Take This Year

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Given that this year is a leap year, here's a resolution your credit union's management and board should adopt for 2004. At your next planning session, take a leap and ask yourself a very tough question: What changes in the market do we plainly see coming that we have dismissed as not applying to us?

Don't dodge the question. Don't dismiss anything. Don't survey yourselves. Provoke the kind of discussion that leads people to tell each other to take a flying leap. When it's all over and the bruised egos have healed, your credit union will have taken a big leap forward, and in the process done a better job of managing than many higher-profile companies that have found themselves being leapfrogged.

Prompting my own thinking on this was a recent invitation from Paul Mercer at the Ohio league to speak to a group of Buckeye credit unions and challenge their thinking. I had spoken to the Ohio league's annual meeting several years earlier, and I was struck by some of the developments during that relatively short period of time-particularly the growth of credit union assets. Pick your clich?, growth in any industry/company can be the double-edged sword, the be-careful-what-you-ask-for scenario, the big "We didn't even see it coming!"

In this leap year I found myself leaping back to some keen insights made a few years back by the Harvard Business School's Clayton M. Christensen regarding why some of what were once the best-managed, big, brand-name companies, in spite of their attention to customers and continual investment in new technology, didn't see change coming. What he came to discover was these companies saw change coming as clearly as everyone else-they simply concluded change didn't apply to them. And so management at KMart dismissed that fella in the pickup truck in Arkansas by the name of Sam Walton.

Thinking in these terms is the leap your credit union needs to take this year. You undoubtedly have a business disruption plan in place for a host of disasters-fires, earthquakes, tornadoes, wholesale system crashes-all of which tend to occur suddenly and are over quickly. But has your credit union planned for the type of "interruption" that occurs much more slowly, to the point of being invisible?

Growth could very well be a catalyst for that interruption. Have you surveyed your membership-especially those added in the last five years-about what they really "know" about you? Has the board watched a focus group of random members-not their relatives-recently? Did they really hear what was said, or just take away the anecdotes that reinforced what they want to believe? Have you done the same with employees? Is service becoming poorer even as your assets grow richer? What might that eventually mean? Have you gotten honest feedback from closed accounts?

These are the types of questions individual credit unions need to resolve this year to ask, because your credit union may very well be like the quiet subway platform that is about to be suddenly transformed by the arrival of the screeching train. And very quickly you're the out-of-towner who has 60 seconds to figure out whether this is your train-or if it's headed in the wrong direction.

At the macro level, I believe that as 2004 dawns the credit union community as a whole is that tourist on a subway platform, and that speeding train headed to the station in 2004 is the rapid emergence of the community charter. No doubt some of you are saying, "Hey, Frank, that train has already left the station." Perhaps, but the effect it has had on credit unions still lingers, as things associated with subways often do. (A special note to those of you who interpret any analysis of change as synonymous with criticizing that change-there's no such criticism to be had here of credit unions "going community." But not debating issues can lead to ending up as one of those chapters in Christensen's books.)

In the short term, those expansions have been to the benefit of credit unions. But in the long-term it will be to the detriment of the credit union community as a whole if someone doesn't take the lead and ask what it all means to ye ol' co-op business model. Member touch-points have been outsourced, card portfolios sold. Thousands of CU names have changed. Larger and taller headquarters have meant management works and the board meets further and further away from members on the ground floor.

If I had to sum up the view of many within credit unions it is to have convinced themselves that "members love us" and that some of the evolving conditions outlined above simply don't apply. They have. They do. And they certainly will. Many a once-successful company has taken the inside-out view that later lead to managers tearing out their insides.

So schedule a meeting right now for Feb. 29. It falls on a Sunday; set aside plenty of time to ask and debate and challenge one another whether that light you're following is the white hat, some good old boy in a pick-up truck, or the headlight of an oncoming subway train. Go ahead, take the leap.

Frank J. Diekmann is Editor of The Credit Union Journal. He can be reached at fdiekmann

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