You're a Fog Cutter, But What About When the Fog Lifts?

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Sure, it's been a tough year, but you're feeling a bit proud of yourself. You're the leader of your credit union. You've made the hard decisions over the last year or two. Cut costs. Closed branches. Limited hours. Battened down those hatches. With success now redefined as "survival," you've been successful. Congratulations. You're completely unprepared for what's next.

That's the word from one of the world's leading management gurus, Ram Charan, the business strategist, university lecturer, and author of numerous books, including "Leadership in the Era of Economic Uncertainty." Charan has made a living examining why certain businesses don't just survive downturns, but prosper. In the process, he's hit on a number of elements of leadership common to those organizations that credit unions should heed.

We'll get to the point he made, above, in a minute. But first, these leadership traits:

• Personal credibility. "You must tell people and those who report to you what your personal reality is; many people lost that," Caran told BAI's Retail Delivery Show in Boston. "Many times you are asked to communicate things you don't believe in. You've got to have the toughness as a leader to say, 'there is no way I am going to lose credibility with my people.' Credibility is the leadership star."

Charan asked his audience to ID five or more companies outside of finance that are coming out stronger from the meltdown. The audience responded with the likes of IBM, Wal-Mart, Ford, Apple, and Amazon. But the audience, primarily made up of bank execs, couldn't help themselves, and also cited Goldman Sachs, the Wall Street firm that has emerged stronger than ever.

Charan shared a conversation he had with one Goldman leader about why that is so. When he asked why Goldman Sachs was the survivor and not a Lehman Bros. or other firm, the exec responded, "the story of Goldman Sachs is to be in the center of information. My people are no better. My computers are no faster. My technology is no different. The second piece is we train our people to do both risk and markets. We rotate through both. The third piece is our people at the higher levels, to be successful, must have social networks outside the industry. And the fourth piece is we share information across silos; working together is critical."

• Engage in staff meetings. Charan recommended this admittedly simple exercise. "Leadership is getting people in the right attitude and having them learn what is really happening. The first thing you should do at staff meetings is reserve 10 minutes and ask someone ahead of time to describe for five minutes…another business in which change was initiated and how it came out. He doesn't have to defend it. That's it. And then for five minutes discuss why was it successful, and if unsuccessful, why? If you do this 50 times a year, what will happen to your group? It changes the attitude. People learn. By seeing other people succeeding, new ideas come. And their anxiety levels go down."

• "People have anxiety. They don't have information," Charan said. "You need to think through 'how do I as a leader take my direct reports and others with me?' I want you to think about are you reaching your people with more frequency? Are you listening and talking to them? You say, 'I don't have time to do this.' If anxiety is high and you don't deal with it, what is happening to your effectiveness. Fear eats inside, the psychology of your organization."

• When Charan asked how many in his audience had had to downsize, most raised their hands. "In doing that the integrity is very important. You've got to protect your key talent-and protecting means engage them, it doesn't mean money. Nothing motivates key people more than having a success after dealing with most difficult problems. This is also the time if you need some key talent to catch them."

• Charan shared this story of how one iconic brand recovered from less-than-iconic days. In 1997, Charan was contacted by a board member of Apple, which was nearly broke and out of cash. Charan was asked to approach two companies about buying Apple, and he did so, contacting Dell and Compaq. Both said no. "When no one wants to buy you, what do you do? Hit the bottle," joked Charon. Instead, the board reached out to departed Apple co-founder Steve Jobs, who returned in exchange for $1 in salary and "a zillion stock options."

"Steve Jobs came in and looked at 26 products in the pipeline, and he selected four. What was he doing? Focus. Select your focus. The old business model in many cases will not work. You do not need 5,000 varieties of the same platform. Focus is essential to save you energy, to build, to innovate. Ford has focused. The other two companies have not. General Motors and Chrysler are now being forced to focus."

• For credit unions that have fixated on asset size as a growth metric, Charan said there is a strong case to be made for shrinking. "You've got to ask, 'By focusing am I going to be a smaller company?' Don't worry about it. If so it will help you grow further. Focus on 'Are you becoming stronger?'"

• Charan turned to the issue of how surviving the recession is no guarantee at all of surviving prosperity. "This is very serious. You have to believe in yourself that the fog will lift someday," he said. "And when it does and you have no innovation and no new business and no new business model, what will happen to you? You worked hard, cut costs, got liquidity, you survived, but you don't have anything to push your forward after the fog lifts. Stronger is the criterion, larger is not the criterion."

*Charan returned to his first point when he told his audience that bankers have no credibility in Washington. The result is a raft of pending legislation. "We need to get in with them in the drafting of the legislation. This is no longer just an American issue. There is enough driving from Brussels and possibly from the Chinese. So turn your attitude and say, 'OK these are the rules for all of us, how do we make this an opportunity to reposition ourselves?'"

• Among those changes, he noted, will be a likely crackdown on pricing of bounced check fees. "Think about your NSF biz model," he said. "Cards, too. Go and look at your business and decide which need to change and to shrink to free up resources."


Have you done something creative and effective to tell your credit union's story this year? What about the credit union story in general? Have you put the difference in "differentiation?" If so, heed the call for entries for this year's Frankie Awards. The Frankies recognize CUs that most effectively convey what a credit union is all about and why it should matter to members and non-members alike. Previous winners have shown budgets and asset sizes don't matter. And here's the best part — it's free and easy to enter.

Just e-mail me at with a brief explanation and any support materials of what you've done to tell your story.

Deadline for entries is Nov. 25.

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