1. Keep it simple - people use tools that are easy to handle and use. A single page is always better than 100 pages, if it conveys the same information - so try to be succinct rather than hefty with your strategic plan.
2. Communicate with yourself - you will pick up this strategic plan in the future and USE it, so don't be cryptic or vague. You are talking with yourself in the future, so write your plan as specifically as you can.
3. Drive to salient information - use bullet points rather than prose, and ALWAYS answer the specific questions in your planning worksheets. If you are asked for a prediction on growth in a specific market segment, write down a number rather than an explanation.
4. Remember you can change your plan - while we don't want to be whimsical about changing our plans, we do want to go back and tidy up bits of it over time, as reality overtakes our assumptions about the future. Go back and fix it up (as a team) when fixing the plan makes sense.
5. Use the plan to drive results, not politics - this should be obvious, but your team is planning to make the credit union succeed. Don't let people use it to drive an agenda that will not get make your credit union more successful.
6. Use a structure that makes the plan easy to refer to - the Simplified Strategic Planning process is ideal for this! And be sure to watch for Simplified Strategic Planning for Credit Unions, which is currently being written!
-Robert
Tuesday, May 29, 2007
Monday, May 28, 2007
Strategic Planning: Document or Tool?
One credit union I worked with on strategic planning was so proud of the previous year's plan, it was bound, had a fancy cover and was a document they were eager to show everyone.
Once I started breaking it down, I soon realized how this fancy document was essentially hollow and with even further exploration found barely any of the goals and objectives had even been attempted. The executive team and board were much more focused on creating a document than in creating a tool. We had plenty of work to do to really get a strategic focus that went beyond the creation of a fancy notebook.
A strategic plan as a tool is focused on taking a realistic vision and mapping out the steps to accomplishing that vision. Those steps should have a specific intent, an action or tactical plan complete with due dates, accountabilities, and a person, (a champion) in charge to drive this plan toward completion. Each area should also have a form of measurement to ensure everything is on target, is progressing well and most importantly; to identify when success is happening!
Simplified strategic planning is less about a fancy document, or a convoluted plan only someone with a doctorate in finance could understand. It's more about creating a simple, functional tool that everyone can understand, support, and dive into to make your vision a successful reality.
-- Russell
Once I started breaking it down, I soon realized how this fancy document was essentially hollow and with even further exploration found barely any of the goals and objectives had even been attempted. The executive team and board were much more focused on creating a document than in creating a tool. We had plenty of work to do to really get a strategic focus that went beyond the creation of a fancy notebook.
A strategic plan as a tool is focused on taking a realistic vision and mapping out the steps to accomplishing that vision. Those steps should have a specific intent, an action or tactical plan complete with due dates, accountabilities, and a person, (a champion) in charge to drive this plan toward completion. Each area should also have a form of measurement to ensure everything is on target, is progressing well and most importantly; to identify when success is happening!
Simplified strategic planning is less about a fancy document, or a convoluted plan only someone with a doctorate in finance could understand. It's more about creating a simple, functional tool that everyone can understand, support, and dive into to make your vision a successful reality.
-- Russell
Thursday, May 24, 2007
Market segmentation - "But we can't get any data!"
Often when doing strategic planning, I hear the team complain about how hard it is to get data for very specific market segments. To me, this is almost always a good thing. You see, the data we use in strategic planning is not accounting data - it is data we will use to set the course for your credit union. As such, the most important thing about this data is that it help us set the correct course. Sure, accuracy helps, but just knowing that one market is most likely bigger than another - or growing faster - is often plenty for good strategic decision making.
I'm also happy when there is little published data on a segment. Think about it - if you can get the data easily, so can your competitors. As a rule, great data is only available about highly mature markets with lots of competition, so I often take the availability of data as a signal that maybe we should radically change our segmentation, just to set ourselves apart.
-Robert
I'm also happy when there is little published data on a segment. Think about it - if you can get the data easily, so can your competitors. As a rule, great data is only available about highly mature markets with lots of competition, so I often take the availability of data as a signal that maybe we should radically change our segmentation, just to set ourselves apart.
-Robert
Wednesday, May 23, 2007
Market segmentation for credit unions - specialty and commodity
One of the most interesting things to look for when segmenting your markets for potential members is the difference between specialty and commodity buying behaviors.
A specialty member prefers your credit union for specific reasons, and is willing to overlook differences in rates and fees because of those reasons. Another way of looking at this is a specialty member gets premium value and pays a premium price. There can be lots of different values here - convenience (both hours and location), service, what it's like to be a member of your credit union, or any other extra little things you do for your members.
The commodity member has chosen your credit union strictly for the rates and fees. As a rule, a lot of credit unions try to woo these members with low rates, but these members are likely to look elsewhere if they think they can get better rates.
There are some very interesting points about these two behaviors and strategy. First, smaller credit unions tend to do better with specialty members, because they can be more service-oriented and do not have the economies of scale found in larger credit unions. Second, credit unions that focus on attracting just one type or the other tend to be more profitable, because catering to specialty members creates major problems for commodity members and vice versa.
How would you characterize your membership? Are they mostly one or the other, or do you have a mishmash of both?
-Robert
A specialty member prefers your credit union for specific reasons, and is willing to overlook differences in rates and fees because of those reasons. Another way of looking at this is a specialty member gets premium value and pays a premium price. There can be lots of different values here - convenience (both hours and location), service, what it's like to be a member of your credit union, or any other extra little things you do for your members.
The commodity member has chosen your credit union strictly for the rates and fees. As a rule, a lot of credit unions try to woo these members with low rates, but these members are likely to look elsewhere if they think they can get better rates.
There are some very interesting points about these two behaviors and strategy. First, smaller credit unions tend to do better with specialty members, because they can be more service-oriented and do not have the economies of scale found in larger credit unions. Second, credit unions that focus on attracting just one type or the other tend to be more profitable, because catering to specialty members creates major problems for commodity members and vice versa.
How would you characterize your membership? Are they mostly one or the other, or do you have a mishmash of both?
-Robert
Strategic Planning: Resistance is Futile!
When preparing for the future, credit union CEOs will encounter people who dig in their heels and resist change because they want to keep things exactly how they have been for years. Some of these people will be credit union board members, and some will be in the managerial ranks.
The key for the CEO looking to make his or her credit union a stronger entity in drastically changing times is to work for a critical mass of buy in.
The best approach, I call the "Compelling Argument" initiative, is a constant drip approach instead of a last minute tidal wave of information approach. Here is how it works. The greatest reason for change resistance is fear. The three basic fears everyone deals with (to different degrees of success) are the fear of failure, the fear of rejection and the fear of the unknown.
When you have someone resist strategic changes they are expressing fear on a couple of levels. They fear the new direction will fail and they don't want to be on a board or management team that failed. Or they will no longer have the necessary skill set to implement a new strategy; therefore they will eventually be rejected off the board or out of the managerial team because they no longer fit. Or, this new idea is so different than what has been tried previously they are fearful of the unknown of how employees and member will react, accept, and respond to the new direction.
A CEO must always have the best vision for any planning process to work; therefore, it is the CEOs responsibility to apply a constant drip of information that will educate, prepare, and create the compelling argument why the forthcoming changes are required to make the CEOs vision a reality. At manager's meeting and board meetings the attendees expect the CEO to offer information; in fact, they are open to hearing it. If you craft your information by sharing a small piece each meeting, by the time the strategic planning changes are finally discussed, the critical mass of people will feel comfortable because they are well-informed and understand the full purpose for the change, as well as realize this has been a well-thought out idea and not a knee-jerk reaction.
The few people that still have their heels dug into the dirt not wanting to move, will know they have been hearing your compelling arguments all year as to why this is necessary and they will lose their thunder of rallying resistance because their compelling arguments as to why not to change will pale by comparison.
By the second year, those resistance folks will have prepared a better case, which only help you to be more on your game because some of their arguments may be worth listening to and those red flags will force you to create even better information. In the end, everyone is better informed, more aware of what is going, and contributing more -- which ultimately makes for an even better strategic planning process.
-- Russell
The key for the CEO looking to make his or her credit union a stronger entity in drastically changing times is to work for a critical mass of buy in.
The best approach, I call the "Compelling Argument" initiative, is a constant drip approach instead of a last minute tidal wave of information approach. Here is how it works. The greatest reason for change resistance is fear. The three basic fears everyone deals with (to different degrees of success) are the fear of failure, the fear of rejection and the fear of the unknown.
When you have someone resist strategic changes they are expressing fear on a couple of levels. They fear the new direction will fail and they don't want to be on a board or management team that failed. Or they will no longer have the necessary skill set to implement a new strategy; therefore they will eventually be rejected off the board or out of the managerial team because they no longer fit. Or, this new idea is so different than what has been tried previously they are fearful of the unknown of how employees and member will react, accept, and respond to the new direction.
A CEO must always have the best vision for any planning process to work; therefore, it is the CEOs responsibility to apply a constant drip of information that will educate, prepare, and create the compelling argument why the forthcoming changes are required to make the CEOs vision a reality. At manager's meeting and board meetings the attendees expect the CEO to offer information; in fact, they are open to hearing it. If you craft your information by sharing a small piece each meeting, by the time the strategic planning changes are finally discussed, the critical mass of people will feel comfortable because they are well-informed and understand the full purpose for the change, as well as realize this has been a well-thought out idea and not a knee-jerk reaction.
The few people that still have their heels dug into the dirt not wanting to move, will know they have been hearing your compelling arguments all year as to why this is necessary and they will lose their thunder of rallying resistance because their compelling arguments as to why not to change will pale by comparison.
By the second year, those resistance folks will have prepared a better case, which only help you to be more on your game because some of their arguments may be worth listening to and those red flags will force you to create even better information. In the end, everyone is better informed, more aware of what is going, and contributing more -- which ultimately makes for an even better strategic planning process.
-- Russell
Tuesday, May 22, 2007
Strategic Planning: The Gloves Are Off -- Are you Ready?
Once upon a time credit unions occupied a desk in the human resources office as a benefit to employees of that one employer. Soon they had their own office and eventually their own branch. Once they had their own branch, credit unions sought after offering financial services to other employers wanting to provide an additional benefit to employees.
Strategically, many credit unions recognized jumping at the opportunity to distance themselves from just one employer gave the credit union a broader membership base, a stronger asset size, and better ratios.
In the not to distant past, credit unions began taking on community charters and moving from SEG-based membership to geographic memberships. This year credit unions are taking off the gloves and "hostile" takeovers are sending shockwaves through the industry.
As the credit union movement has shifted through the years, so should the sophistication and focus on strategic initiatives. Strategic planning once was a revisit of last years document, an update of some goals that had been set, and a refreshing of a mission statement and core value review -- along with a nice dinner and maybe a round of golf.
Today, strategic planning needs to address intense issues such as:
The possibilities of fellow credit unions coming after your membership
Defending or initiating a credit union takeover
Effective marketing in an information overload society
What changes you need to aggressively prepare for in the next 5 to 7 years
As credit union management has evolved to a more sophisticated level, so shall the strategic planning in competitive credit unions.
-- Russell
Strategically, many credit unions recognized jumping at the opportunity to distance themselves from just one employer gave the credit union a broader membership base, a stronger asset size, and better ratios.
In the not to distant past, credit unions began taking on community charters and moving from SEG-based membership to geographic memberships. This year credit unions are taking off the gloves and "hostile" takeovers are sending shockwaves through the industry.
As the credit union movement has shifted through the years, so should the sophistication and focus on strategic initiatives. Strategic planning once was a revisit of last years document, an update of some goals that had been set, and a refreshing of a mission statement and core value review -- along with a nice dinner and maybe a round of golf.
Today, strategic planning needs to address intense issues such as:
The possibilities of fellow credit unions coming after your membership
Defending or initiating a credit union takeover
Effective marketing in an information overload society
What changes you need to aggressively prepare for in the next 5 to 7 years
As credit union management has evolved to a more sophisticated level, so shall the strategic planning in competitive credit unions.
-- Russell
Monday, May 21, 2007
Strategic Planning - who should be on my team?
In a credit union, it's an excellent idea to have a planning team with 5 to 8 members. The strategic planning team should be made up of people with operational responsibilities within the credit union, as their primary responsibilities will include understanding the information that is most critical to strategic decision making and the implementation of the strategies. This specifically means the board should not do the primary strategic planning process. It's fine for a board to give input to the process, and review the outcomes, but we want to optimize the quality of input and the effectiveness of commitment to the plan - and the board can't bring either of these to the table as well as the hands-on executive team. I'm sure this position will not sit well with everyone (in fact, I'm not even sure Russell agrees!), so we'd love to hear from you if you either agree or disagree.
I usually recommend a good mix of people with responsibilities in 3 areas: operations, marketing/sales, and finance. This assumes, also, that the CEO is involved, since he or she will be responsible for the effectiveness of the overall strategy, and can best bring resources to bear on any issues that arise. A typical credit union team, then, will include the following people:
CEO/president
Head of Finance
Head of IT
Head of HR
Head of Business Development
Head of Member Services
There is room for 1 or 2 more people, and who those people are will definitely flavor the nature of your analysis, strategies, and ultimately your implementation, so it's worth some thought.
I usually recommend a good mix of people with responsibilities in 3 areas: operations, marketing/sales, and finance. This assumes, also, that the CEO is involved, since he or she will be responsible for the effectiveness of the overall strategy, and can best bring resources to bear on any issues that arise. A typical credit union team, then, will include the following people:
CEO/president
Head of Finance
Head of IT
Head of HR
Head of Business Development
Head of Member Services
There is room for 1 or 2 more people, and who those people are will definitely flavor the nature of your analysis, strategies, and ultimately your implementation, so it's worth some thought.
Sunday, May 20, 2007
Strategic Planning - is it different for credit unions?
How is strategic planning different at a credit union? First, let's look at the basic definition of strategic planning. Strategic planning is the planned, focused use of resources to optimize an organization's viability - whether that's profitability, survivability or growth-ability. In a credit union, all of these may be important to the membership. Profitability leads to greater financial soundness of the organization. Survivability is almost always desirable for members. And growth can also have important effects on the efficiency of the organization.
We need to remember that credit unions, as member governed organizations, also need to serve the membership in ways other than simple financial performance. The credit union, after all, exists to provide financial services to its members, ideally serving them better in some ways than alternative financial institutions. While this adds a dimension to strategic planning in a credit union that you won't see in, perhaps, a shoe store, it doesn't have as much effect on good strategy as you might think. After all, a shoe store that doesn't serve its customers well is going to have a hard time making money, and (in general) poor service is a poor strategy. The main difference is in the reason for serving members or customers well. A credit union serves its members well because it is - at least in part - created to do so. A store serves customers well because it leads to greater profitability.
How will this affect strategy? There are trade-offs between profit and service that may come up in your strategic planning. In a typical for-profit business, those trade-offs will be weighed differently than in a credit union. Providing better value to members in the form of service can - and should - be much more prevalent in credit unions because such service has a direct, inherent value to the organization that exists only indirectly (through increased customer loyalty and profitability) in other businesses.
(Robert)
We need to remember that credit unions, as member governed organizations, also need to serve the membership in ways other than simple financial performance. The credit union, after all, exists to provide financial services to its members, ideally serving them better in some ways than alternative financial institutions. While this adds a dimension to strategic planning in a credit union that you won't see in, perhaps, a shoe store, it doesn't have as much effect on good strategy as you might think. After all, a shoe store that doesn't serve its customers well is going to have a hard time making money, and (in general) poor service is a poor strategy. The main difference is in the reason for serving members or customers well. A credit union serves its members well because it is - at least in part - created to do so. A store serves customers well because it leads to greater profitability.
How will this affect strategy? There are trade-offs between profit and service that may come up in your strategic planning. In a typical for-profit business, those trade-offs will be weighed differently than in a credit union. Providing better value to members in the form of service can - and should - be much more prevalent in credit unions because such service has a direct, inherent value to the organization that exists only indirectly (through increased customer loyalty and profitability) in other businesses.
(Robert)
Saturday, May 19, 2007
Welcome!
If you are reading this, you are (hopefully) interested in strategic planning at credit unions. We are Russell White and Robert Bradford - two people who are eminently qualified to talk about the ins and outs of strategic planning at your credit union. Russell has consulted with hundreds of credit unions since 1991, while Robert is the author of the best-selling book on strategic planning (Simplified Strategic Planning). We'll be taking turns putting out insights about strategy in the credit union movement and how you can make your credit union more successful by doing a few things just a little differently.
We hope you'll take the time to respond to our posts if you have something to add, and contact us if you have any specific questions about strategic planning at credit unions.
We hope you'll take the time to respond to our posts if you have something to add, and contact us if you have any specific questions about strategic planning at credit unions.
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