The Swiss watch-making industry was a giant in the world of high-quality craftsmanship from its humble beginnings in the mid-16th century until the late 1960s, in large part due to its ability to innovate. Yet in the 70s and early 80s, the industry floundered, losing over one-third of its employees, the result of what some said was its failure to embrace the electronic revolution.
Had these great craftsmen done nothing, their industry would now be on the scrap heap of history. Instead, amid fears that Japanese firms would take over some of the most well-respected Swiss brand names, the Swatch, a low-cost, high-tech, artistic watch, was created.
The Swiss watch industry is also notable in its enduring use of a modified guild system of doing business. History does not paint such a pretty picture of guilds in general.
Starting around 1100, people skilled in such crafts as bookbinding, weaving and embroidery formed guilds to further their business interests. These guilds would train their members in the intricacies of their craft, as well as set quality standards for their work. A village's reputation might be built on a special technique used in producing woolen goods, for example, and it was the guild's job to maintain the high standard and protect the technique, thereby, enhancing the region's reputation and economic well-being.
Guilds were successful for hundreds of years, as the artisans handed down their skills from generation to generation. The Industrial Revolution, however, brought about new ways of doing things-technological innovations that didn't fit within many guilds' very narrow framework. Eventually, innovators headed outside the villages, away from the guilds' control, to develop their own mass-produced goods, bringing about the fall of guilds as economic forces.
It's likely the guild leaders dismissed the new methods for the same reasons today's businesses-including credit unions and associations-fail to innovate as quickly as we should. With no point of reference to any type of machine, perhaps automation was just incomprehensible to guild leaders. Or perhaps they could see the possibilities all too clearly and shunned the technology in an effort to preserve their livelihoods. A third possibility is that they didn't want to risk their quality reputations by making any significant changes.
While it's guesswork at best to determine the motivations of long-gone guild leaders, I do see risk aversion as a strong drag on innovation in many businesses today. The "if it ain't broke, don't fix it" approach keeps many credit unions out of new markets, for example, and from offering new products, for fear their delinquency rates will slip a notch or their member satisfaction scores will take a beating.
Yes, both these measures are important, but innovation is our future, our way of ensuring we are not the next great example of an industry that failed to move forward.
Recent research supports this. "A strategy that anticipates customers' future needs is 10 times more predictive of success than one focused on customer satisfaction," writes Doug Hall in his new book Jump Start Your MARKETING Brain. Hall is founder of Cincinnati-based Eureka! Ranch, described as a "place for big ideas for new marketing messages, products and services."
In the study described in his book, leaders of 120 business units were asked questions to determine if their innovation strategy focused on customer satisfaction or the future. For example, those focused on customer satisfaction tended to agree with statements like "We are more customer focused than our competitors. We measure customer satisfaction systematically and frequently. Our business exists primarily to serve customers."
Those with a future orientation agreed with statements like "We help our customers anticipate developments in their markets. We continuously try to discover additional needs of our customers of which they are unaware. We innovate even at the risk of making our own products obsolete."
"The results of the two orientations were then correlated with each business unit's innovation success vs. competitors," explained Hall, who will open the new CUES Nexus Conference in April. "Modeling found that a future focus beat a customer satisfaction focus by a factor of 10!"
Discovering needs that customers aren't even aware they have is certainly not easy for any business. It can lead to many failures (think New Coke) and a few home runs (think Amazon). If your credit union decides to adopt a future focus, you and your board must be prepared for some failures-both by accepting the fact that you won't hit the home run without a few strikeouts and to the point of having exit plans to limit losses from those projects that don't pan out.
'Unlearn The Past'
In his book, Hall offers suggestions for finding latent member needs. One is to "Unlearn the past." Looking at very recent history, he maintains that "dominant firms in disk drives, copiers, minicomputers and mainframe computers stayed in their existing businesses too long. Stop asking current customers for ideas. Rather, focus some energy on the fringes-spend time with customers who never ever buy your category. Look into the future for your industry. What would you do if you were starting your business all over again right now?"
At CUES we asked ourselves this question as we planned the CUES Nexus Conference. What do marketers want, why do they attend conferences and how can we make this meeting different from all the rest were macro-level issues we considered. At the micro level, we examined every conference component-from meals to content-to put together the optimum mix of learning, fun, networking and take-home value.
We think marketers will notice-and appreciate-the changes, starting with the pre-conference Marketing Challenge and ending with marketing and creativity guru Allen Fahden, best-selling author of Is Half the World Crazy?
Are we taking a chance by messing with our old marketing conference format? Of course. Will marketers recognize the need for a high-energy event like this? We think so.
The idea is that everyone needs to plunge in with something completely new from time to time. That's what credit unions did with audio-response and home banking and what CUES did with our CEO Institute and other executive education programs. By continuing to move ahead, we'll all secure a positive place in the history books.
Fred Johnson is CEO of the Credit Union Executives Society (www.cues.org).
