From pie-in-the-sky ideas with no concrete action items to make them a reality, to letting one person’s cult of personality dominate, there are scads of things that can derail a good strategic planning session. Credit Union Journal asked a number of strategic planning experts one deceptively simple question: what are the most common mistakes made during strategic planning, and how to avoid them or fix them?
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Mistake No. 1: All ideas, no action
Almost every expert CU Journal talked with made note of this one. “Annual dreamy discussions about the next big pie-in-the-sky idea without candor around strategic progress and future readiness,” is how Sam Kilmer (pictured above) put it.
The senior director for Cornerstone Advisors in Scottsdale, Ariz., said the best remedy for this is to ensure there are regular follow-up discussions after the big annual strategic planning session. “These discussions need to focus on strategic execution and hard-nosed conversations about resource alignment versus strategic impact,” he said.
Mark Sievewright, financial services consultant, founder and CEO of Sievewright and Associates — and a frequent strategic planning facilitator — agreed, noting that if he was a credit union board member or leader and there were no tangible outcomes from strategic planning sessions, he would be “very disappointed.”
“I provide a summary of the discussion points and what was agreed to,” he said. “Planning sessions need to focus on strategic issues for the credit union, both positives and negatives. After the session there needs to be a capture of what was discussed.”
'Good intentions are not enough.'
Strong follow-up needs to go beyond just the initial summary. Several experts all suggested that the strategic plan — or at least different aspects of it — should be reviewed; quarterly or possibly even briefly during regular monthly board meetings, depending on the scope of things being reviewed.
Moreover, it’s called “pie in the sky” for a reason. That’s why building some tradeoffs into a strategic plan is also a good idea, Sievewright suggested. “Most credit unions cannot pursue each and every new technology,” he said. “Or, a credit union might see an opportunity to open six new branches, but it cannot afford to open all six at the same time, so it has to choose which one or two to open first.”
Susan Mitchell, CEO of Las Vegas-based credit union consultancy Mitchell, Stankovic & Associates (pictured above), called this one the single biggest mistake CUs make during strategic planning. “Good intentions are not enough,” she said. “Volunteers need to be given metrics for measurement of results and the ability to create what-if scenarios to provide guidance that has value.”
Mistake No. 2: Information overload
Sometimes, it’s too much data, other times, it’s a matter of too many presentations and not enough dialogue, but either way, one common strategic planning problem is getting bogged down by too much information.
“I see plans that are overly complex, which means they will be difficult to deliver on,” said Mike Schenk, vice president of research and policy analysis and senior economist for the Credit Union National Association (pictured above). “A lack of communication leaves members and employees unclear on the plan. Senior staff gets involved in the process, but it needs to be communicated all the way down to the lower levels of the organization on an ongoing basis. Let people know what the organization is trying to achieve so they can be focused on that. Marketing needs to be involved in the process so the marketer can market effectively. Being aware of the details is critically important.”
But being aware of the right details is even more important, he added, noting he sees plans that get focused on elements that aren’t relevant, which can lead to making unrealistic assumptions and goals.
“Some credit unions will decide to convert to a community charter and assume they will grow, and later they find out it is not that easy,” he offered. “You need to examine how you are different from your competitors, know what your competitive advantages are or how you are going to distinguish your credit union, rather than say you want to get to $1 billion. If you cover all of these bases, you are 90 percent of the way there.”
And it can all start before anyone has even sat down in the room, noted Sievewright, who said there actually is such a thing as too much content.
“You don’t want to have too many locked-in, formal presentations scheduled,” he offered. “You want to have more engagement and dialogue between the participants, not just people listening.”
Part of the problem, however, is that frequently the information inundation is the result of the board members actually requesting voluminous financial reports and the like, Kilmer added.
“Volunteer board members whose lives are packed with businesses, communities and families will not want to take such a chunk out of their life before being productive and engaged,” he asserted. “We are in a financial industry, but we cannot confuse financial accounting with management accountability. This usually means less reporting, but giving your directors reports that are more impact-oriented. This could include visuals where materialities clearly pop and are designed to provoke challenging conversation.”
While charts and dashboards are sometimes seen as “dumbing down” the data, Kilmer argued that good visuals spark good conversations.
Mistake No. 3: Dysfunction junction
There’s one on every board and management team. The one who will dominate every discussion. Or the one who will pooh-pooh any idea that’s not his or her own. Or the one…well, it turns out, sometimes, there’s more than one disruptive personality that winds up derailing a strategic planning session.
The remedy: bring in an expert, neutral facilitator.
In fact, bringing in a good facilitator can prevent or fix any number of problems, said experts, most of whom facilitate strategic planning sessions for a living.
But what about when the facilitator actually is the problem?
“I hear stories where the facilitator exerts too much control and actually affects the outcome of the meeting, or on the other hand exerts too little control and there are not enough voices represented in the discussion,” said Mark Sievewright, financial services consultant, founder and CEO of Sievewright and Associates (pictured above). “In the latter case, a small number of folks dominate the discussion.”
Mistake No. 4: Strategic vs. tactical
Carrie Hunt, EVP of government affairs and general counsel for the National Association of Federally-Insured Credit Unions (pictured above), said the biggest mistake a CU can make during a strategic planning session is not really knowing what “strategic planning” means. Hunt said the point is to set the overarching goals for the institution for a set period of time, usually 3 to 5 years into the future.
“We find some credit unions get more into tactics for a short period of time rather than the goals they are trying to achieve,” she said. “One example would be a credit union talking about how it would implement a new core conversion, rather than saying, ‘We are going to implement a core conversion in three years’ and then putting together a team to accomplish this. Thinking about tactics instead of strategy gets the whole process mired down, which makes it easy to lose focus.”
Once again, a good facilitator can help with this.
“The facilitator will keep people talking about how to make sure the credit union grows over a period of time,” Hunt advised. “Most credit unions talk about a 3-year to a 5-year window, and some talk about an even longer window.”
Mistake No. 5: Lack of preparation
Turns out the success of a strategic planning session can hinge on what happens before anyone even sits down at the table. Not having an agenda, not distributing information to be read ahead of time are immediate red flags, Sievewright said. Good pre-work, he said, allows participants to hit the ground running.
“Unless the credit union says, ‘no thank you,’ I always ask that there be some pre-reading,” he explained. “I share articles I value highly, on such topics as technology or serving customers better. I am a fan of [Credit Union National Association’s Environmental Scan (E-Scan)], having been a contributor to that for several years. I often will distribute the chapter I worked on, and if I have enough copies, the whole E-Scan.”
Of course, sometimes the prep work actually is the problem, if the prep work is simply a rehash of what has gone before.
Dr. Brandi Stankovic, a Las Vegas-based credit union consultant with the firm Mitchell, Stankovic & Associates (pictured above), said the biggest mistake CUs make is “doing the same thing in the same place and going after the same goals every year.”
According to Stankovic, what happens in too many cases is the board of directors OKs the same plan every year.
“There is not an effort to go in, see what is relevant, and then shake things up,” she warned. “The strategic plan is required for regulatory review, and CEOs typically are incented for financial performance, so the plan is checked off the list and then the credit union goes back to try to hit financial numbers.”
Mistake No. 6: Internalization and isolation
Like many other specialized industries, credit unions can easily become too inwardly focused — either specifically on themselves, or on the industry as a whole, rather than looking at not only themselves and their direct competitors but expanding beyond that scope to look at other industries and more.
To combat this, Kilmer suggested credit unions kick off their process by bringing in outside perspectives.
“Then, they should start their planning meetings by discussing their members, the markets they serve and thoroughly cover external developments including the overall and local economy, their competition, technology, demographics, and risks,” he advised. “Be sure to open and close the days in your strategic planning sessions with discussions of members and external market developments.”
Another way to tackle this is by recruiting new blood for both the board and management team — but that is not always an easy task, according to John Pembroke, president and CEO of the Credit Union Executives Society (pictured above).
“There is a war for talent going on because of the shortage of talent,” he said. “There is an aging of the work force, an improvement of the economy driving growth and lower levels of unemployment. These factors bring a need to attract talent and retain the individuals that are already in your organization.”
According to Pembroke, it is estimated the cost of turnover is three times the annual salary of current workers. “In the next planning cycle there needs to be a plan to attract, develop and retain talent,” both in terms of executives and directors.
Mistake No. 7: Budget? What Budget?
John Gregoire, principal of The ProCon Group, a consultancy based in Madison, Wis., said one of the biggest mistakes credit unions make is not linking their strategy to a budget.
“The strategic planning session seems to be held separately from the budget session,” he assessed. “At the budget session they discuss what technology they can afford, what branches they can afford to open. This is where they really determine where they can allocate resources. Sometimes there is not a clear link from strategy to spending. Sometimes the strategy gets jettisoned or modified to meet the acceptable ROA targets.”
To avoid this mistake, Gregoire said CUs should continue doing their strategic planning the way they have been — looking out over the horizon to where they want to be — but when it comes time for budgeting, instead of looking only at acceptable ROA, the budget should be considered the method of resourcing the strategy. He said key questions to ask include: What bodies do we need? What materials do we need?
Mistake No. 8: Focusing on answers
It is human nature to fear the unknown, noted Tony Ferris, CEO of consulting firm Rochdale Paragon Group, Overland Park, Kan., and CEO of apogee iQ, Rochdale Paragon’s governance, risk management and compliance software company. And that fear, he said, can lead to being too focused on the answers instead of asking the right questions — and accepting the fact that the future is uncertain.
“We focus on what we feel we can control and what we can clearly envision. We reward those who have ‘the answers’ rather than those who ‘ask the right questions,’” he suggested. “We must learn to anticipate the unknown, embrace uncertainty, strategically and systematically create strategy processes that fit, and we must spend more time truly conducting analytical analysis and sharing information across the organization and across stakeholders better than we have in the past.”
Mistake No. 9: Human nature run amok
From overconfidence and the sunk-cost effect to loss aversion and the herd mentality, there are number of naturally occurring human biases and blindspots that can sink strategic planning efforts, according to Tansley Stearns, chief impact officer for Filene Research Institute, Madison, Wis.
Sticking with something because you’ve invested so much in it you’re unwilling to accept that it’s not working and never will. Believing something simply because it’s been repeated often enough, so we stop questioning it – or not questioning something because we fear change. All of these are among the common human behaviors that can trip us up, she said.
“These are human mistakes and challenges, having biases. Go through these as a team and realize these are possible outcomes you might run into,” Stearns suggested. “One person might not see it in himself or herself, so we need colleagues to call us out. We also need to take a good look in the mirror and honestly say if we have made one of these errors and work on avoiding them in the future.”
Mistake No. 10: Fail to plan = plan to fail
The single biggest error Schenk said he sees is the large number of credit unions that simply don’t do any strategic planning at all. Not surprisingly, it often comes down to a numbers game that goes back to one of the most common numbers credit unions point to: asset size.
All of the big CUs engage in a “pretty vigorous strategic planning process,” he stated, “but when you get down to the smaller ones a lot do not do it.”
Schenk estimated some 40 percent of CUs have five or fewer employees. He said those 2,400 credit unions are “just trying to keep the doors open, keep making loans,” and so many of them forgo holding formal strategic planning sessions.
“But to me, as the old saying goes, if you fail to plan you are planning to fail,” Schenk said. “There are resources out there — including the state leagues — that will engage with the smaller shops at no cost. They need to take advantage of these resources.”
The irony, of course, is that without a plan, many of these credit unions will stay the same size, shrink or cease to exist. Moreover, that growth is essential to credit unions seeking to fulfill their people-helping-people mission.
What's your score?
Doing strategic planning correctly is “about growth,” Stankovic said. “Use a cooperative scorecard that goes beyond financial performance to measure community outreach, membership in community and/or industry boards, and investment in the membership. This way you measure how involved the CEO is. Every human being will go after what he/she is incented on. Everyone agrees the financials are important, but if we want to say our members come first, how are we measuring that? That is where the cooperative scorecard comes in.”
No matter what mistake your credit union has made, the experts agreed that the key question remains: Is there something of substance that can be salvaged? Oftentimes, the remedy is in the follow-through.
“The credit union might even want to have a follow-up, shorter session with dialogue on issues that were discussed. Perhaps use the next monthly board meeting,” Sievewright suggested.
Hunt agreed. “They can look at what was accomplished during the session and realize fairly quickly that they got down too much in the weeds and need to have a refresh,” she suggested. “The good part is strategic planning sessions are flexible and if you have a strategic plan in place it can be used for different scenarios in the credit union.”
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