Giving the Credit Union Direction

Strategic planning is a key tool for putting direction into the management of your credit union. While it is possible for a credit union to survive by focusing on operational excellence in areas like customer service and marketing, you will seldom see a credit union truly thrive without a clearly defined strategy. Strategic planning is a process that requires you to define the future direction of your organization. Without such a direction, you are likely to find your credit union drifting – staying afloat, possibly, but not really going anywhere. In strategic planning, we ask the question “Where do we want to go?”

We answer this big question by addressing the truly strategic issues in your business. Ultimately, these issues revolve around three more specific questions:

-What will we sell?

-To whom will we sell it?

-How do we beat (or better, avoid) competition?

At first blush, these questions may seem easy to answer. In reailty, many of the strategic issues you face as a credit union can be boiled down to one of these three, basic questions. For example, the easy answer to "what will we sell?" is "personal financial services". But how well does your credit union provide all of these services? Many credit unions will struggle to provide "one stop shopping" to their members - and then face escalating costs as they are required to add infrastructure which is only fractionally used. Perhaps there are some services we should provide - and others we should simply make available to our members through a strategic alliance with another organization? Which services should be self-performed - and which should be outsourced - is a truly strategic question for many credit unions.

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)