The book The Art of War is attributed to Sun Tzu, born during the Spring and Autumn Period of China (722-481 BC), a time of constant war in China. He became a heroic general for the king of Wu. The book presents a philosophy of war for managing conflicts and winning battles. It is accepted as a masterpiece on strategy and often referenced by generals and theorists throughout history.
The wisdom of Sun Tzu has been applied in many fields beyond the strictly military, and can speak to credit unions as they struggle to be successful in this turbulent time. Let me paraphrase from the Art of War. There are five constant factors that should be taken into account to determine whether an enterprise, in this case a credit union, will be successful:
The Moral Law: The vision and mission, set by the board, which is clear, consistent and focused on meeting the needs of the membership and earning their loyalty.
Heaven: The regulatory structure and national economic environment and how the CU understands and adapts to them.
Earth: The membership and local economic environment and how the credit union understands and adapts to them.
The Commander: The quality and ability of the CEO including his or her wisdom, sincerity, integrity, benevolence, courage and strictness.
Method & Discipline: The human resources, facilities, technology, and operational procedures of the credit union and how they are structured and manipulated to most effectively meet the needs of the credit union membership.
These five factors should be understood by every CEO. The CEO who knows them will be successful; the CEO who does not will fail. The answers to the following seven questions can determine whether or not the CU will be successful against its competitors.
1. Has the board developed a clear mission and vision and do they adhere to it?
2. Does the CEO have greater ability compared to the competition's CEO's?
3. Has the credit union adapted itself to the national economic and regulatory environment and taken advantage of its unique membership and local environment?
4. Are credit union staff members held to high standards compared to the competition?
5. How does the quality of the CU staff, facilities, technology, and operational procedures of the credit union compare to its competitors?
6. How does the expertise and training of the CU executives and staff members compare to their counterparts at the competition?
7. How do the compensation and other human resources procedures of the CU compare to the competition, including overall compensation, incentive pay and dismissal for marginal performance?
These seven considerations will determine whether the credit union will succeed or fail against its competitors.
Sun Tzu's The Art of War has been studied by a hundred generations of leaders in many civilizations. Its philosophy is clear and its questions razor sharp. Credit unions can learn from its wisdom.
It does not take a huge leap of interpretation to see the comparability between the Chinese Spring and Autumn Period and the financial situation today. Both have been times of turmoil requiring clarity of thought and decisive action in accordance with an understanding of heaven and earth.
John Dolan Heitlinger consults on planning, turnarounds, metrics, and execution with credit unions. He can be reached at
