The Secrets of The Truly Successful Strategic Planners

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Here we are again beginning to think about planning for next year. Now that we know the NCUA examiners will be asking to review our “Strategic Plan,” it may be time to put a bit of extra effort into our standing document this year.

We all know the drill–update our environmental scan, our SWOT and our action plans. We worked on our mission and vision statements last year, so that’s OK. Maybe we should push our project list out a bit farther, even if it’s vague–say five years. We’ll make sure that our risk-management language is up to snuff and our forecast assumptions make sense. After all, we’ve all been doing this for a long time and we’re pretty good at it.

This year’s conversation with the board is likely to be more focused on maintaining positive earnings and credit quality. We read about the losses on the West Coast and in Florida, but that’s not us–we’re already pretty conservative and have not made any big mistakes. The board is comfortable with what we’re doing.

Occasionally, a board member will push back with a comment about discussion not being strategic enough. Another might comment that we have had the same facilitator for four years and it may be time for a change. Still another will ask the annual question about how we are serving the “underserved”–but we usually get through it with a minimum of effort.

This is the picture for many mid-sized credit unions today–incremental planning, incremental results. The current “plan” may be adequate for the NCUA, but has little impact on day-to-day activities. Many of us continue to struggle with inadequate technology, inefficient processes, eroding member loyalty and the feeling that we really don’t have much that sets us apart from our competitors. We don’t really have a price advantage any more, and we have been forced to increase fee income to make ends meet. We believe that our reputation for good service will see us through the current slow-down and that renewed growth and profitability will return.

Why Some Credit Unions Are Growing

At Cornerstone, we have been privileged to advise some of the largest and most successful credit unions in the nation. We have learned that break-out growth and financial success takes a different planning and execution mindset. Why do some credit unions continue to grow while so many others stagnate? Here are a few answers.

* A few have been able to maintain a close relationship with a large sponsor organization, enabling them to keep operating expenses low enough to maintain a position of price leader in their respective markets.

* Many have benefited greatly from expanded investment in retail locations, marketing, community outreach and technology aimed at increasing member convenience and improving their service experience.

* Some have taken the time to discover a unique competitive strategy and have immersed the organization in it, communicating every day with staff and members alike to spread the strategic virus, creating a management culture that consistently works toward strategic objectives and a service infrastructure that supports the effort.

What’s different about their planning and execution? Here’s what sets them apart.

* They take the time and effort to really know their membership. This goes beyond the analysis available from popular national research resources. They consistently talk with their members, collect and analyze transaction data, conduct focus groups, identify member profitability drivers and focus on meeting the needs of high-value target segments.

* They make the effort to really understand their competitors. We have found that many credit unions know precious little about their competitors or how they might appeal to high-value member segments. Competitor profiling and secret shopping is commonplace. They take the time to learn why members defect.

* They develop stretch goals that are difficult to attain and then work backwards to develop activity goals that are sufficient to generate the desired results and ensure manager accountability for the desired activity levels. Success measures are developed and tracked for each functional area and negative variances are frequently discussed.

* The actual plan is a rolling, multi-year document that clearly links long-term strategy with mid- and short-term objectives, specific projects and timelines, success measures and manager accountability.

Other Strategies Of The Successful

* They maintain formal R&D teams that feed product innovation related to loans, deposits, payment services and wealth management–maintaining active new product pipelines that add value to targeted segments.

* They put significant time and money into training and coaching front-line employees to pursue specific activity goals and help them understand how they contribute to the larger strategic effort. The training is supported by contact management and advanced member intelligence.

* They align support functions and technology to enhance their ability to meet strategic objectives. This means not being tolerant of cumbersome and outdated operating systems and poorly integrated strategic applications that slow processes and waste staff time. The information-technology group is an effective resource of innovative support to business managers in meeting strategic goals. They have a passion for process improvement, both to enhance member service and to increase operating efficiency.

* They work to understand which specific jobs are mission critical in meeting strategic objectives and ensure that incumbents have the skills and drive to make things happen and the maturity to avoid building silos. Managers that are unsuited to their strategic roles are gently moved out of the way.

* They have processes in place that force them to filter new ideas and make priority decisions based on strategic goals and objectives, technology, physical expansion, delivery channel balance and all capital investment. It takes a major external event to precipitate a deviation from plan.

* Managers have timely and well-organized financial reporting including the ongoing profitability of members, products, branches and sales units. Financial incentives for management are aligned with, and support strategic objectives.

* They communicate, communicate and communicate with key constituencies, including members, business partners, key vendors and regulators about ongoing strategic objectives.

* They don’t let projects get stuck. There is frequent and sufficient dialogue to make sure that barriers are quickly removed. They make mistakes, but do not allow themselves to retreat – they learn and move on.

It may sound self-serving to say that they also hire good outside help when they need it. As you begin to think about your strategic planning this year–maybe it’s time for a more robust process–not just strategic planning, but strategic execution. It’s hard work but worth the ongoing effort. As our industry continues to consolidate, good planning and execution will make the difference between the winners and losers.

Ted Thames is Senior Director with Cornerstone Advisors, Inc. a strategy development and business planning consultancy. He can be reached at tthames 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.

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