GALVESTON, Texas-Credit unions may have an advantage in the financial services marketplace in that they have a noble purpose, but Jason Jennings said is insufficient differentiation to succeed.
Jennings, author of several books including "Hit the Ground Running," "Less is More," and "Think Big, Act Small," told attendees of the Texas Credit Union League's recent Annual Meeting here another one of his works is pertinent to what CUs are facing today: "It's Not the Big That Eat the Small, It's the Fast That Eat the Slow."
"Speed is important, as is productivity," he said. "A good measure of productivity is revenue per employee per year."
In preparation for his address, Jennings-who joined a credit union when he was just 14 years old-talked to CEOs at several CUs. They told him their credit unions need to keep growing; with consolidation rampant they figure they will either be acquired or be an acquirer, that they face a difficult task of differentiating their products and services in an ultracompetitive marketplace, that they must get young people to join, and that they must get older workers to get on board for the future.
"There are six secrets of differentiation I have found in extraordinary companies or organizations," Jennings said. "And it is not as if these companies had one or two of the six secrets, they all had all six."
Secret One: Having a cause or a noble sense of purpose
"Every credit union started this way," he pointed out. "Some companies did, as well, but eventually they became business as usual."
Causes, Jennings said, are big and bold, they give meaning to peoples' lives, and fix something that is wrong.
"The cause is more than a goal, it is the journey," he said. "It is climbing a mountain for which there is no top. Every credit union was born of a cause, so remind every employee and member of the cause."
Secret Two: Being committed to double-digit growth every year
Having this commitment to growth attracts and keeps the "right people," Jennings asserted. He said growth allows for reinvestment in the business, forces a company to better serve its customers by staying ahead of their wants and needs, and makes it become partners with its vendors.
Secret Three: Letting go
According to Jennings, good companies are able to let go of what used to work, of conventional wisdom, and of ego-all much to their betterment. He cited the bad example of General Motors, which could not let go of the decrepit Oldsmobile brand, and of GE Capital, which invested $100 million in Montgomery Ward-and proceeded to chase that money with $2 billion more over 10 years in a vain attempt to keep the failing retailer afloat.
"When a company lets go it is better able to deal with change, it stays more focused than its rivals and differentiation happens," he said.
Secret Four: Making certain everyone knows the strategy
In his travels, Jennings deals with some companies that practice openness, and others that attempt to guard every little corporate secret. Smucker's, which grew to $6 billion from $500 million over 10 years, has a booklet outlining its business strategy-which it makes available to every employee, every partner and every stockholder.
"Secret strategies don't work," Jennings assessed, "because people don't become emotionally connected to their work, corners get cut and illegal things happen. People expect transparency."
Secret Five: Making lots of small bets, not betting the ranch on one initiative
After Howard Schultz built Starbucks into a hugely successful enterprise, he retired. Just a few years later, though, the company was reeling, forcing Schultz to ride back to the rescue. Starbucks tried more than 200 small bets over 18 months, ranging from new store designs to offering free Wi-Fi, to introducing oatmeal, tea and desserts in its stores, to expansion in China. It soon earned back the revenue it lost, and its share price doubled, almost all as a result of the new endeavors, Jennings reported.
Secret Six: Seeing themselves as good stewards
"This means service over short-term self-interest, abandoning power over others, preserving natural and human resources, mentoring, and sharing information with all," he explained.
Jennings said the corporate model has a critical flaw in that most people as they rise up the ladder become more and more isolated from the public. He said the best way for CEOs to know what is going on is to "keep their hands dirty."
"They need to spend time with customers, asking how to solve their problems," he said. "At the best companies the CEOs aren't worried about superficial distinctions such as how big their office is, what suit they wear or what car they drive. They make everything better and they are coaches and mentors.
"Imagine what happens when everyone follows these principles. That is when true differentiation happens," he added.
