Gaining Scale through Network Communities

The official 21st Century is here, and after all the forgotten hoopla of Y2K, businesses are now really focused on what will give them long-term competitive advantages in this new century. It is an Internet world. It is easier than ever to find new partners and new solutions, and opportunity seems to be everywhere. But has anything really changed?

Working With Partners to Gain Competitive Advantage

The official 21st Century is here, and after all the forgotten hoopla of Y2K, businesses are now really focused on what will give them long-term competitive advantages in this new century. It is an Internet world. It is easier than ever to find new partners and new solutions, and opportunity seems to be everywhere. But has anything really changed? In most cases, credit union organizations, including CUSOs, continue to be too independently focused for their market influence, their ability to muster resources, and to take short-term strategies and make them long-term competitive advantages. Our organization is faced with the same challenges that credit unions will see over the next ten years-finding a way to influence the marketplace and prosper effectively based on our scale in comparison to our competition. Like those credit unions, we need to find a strategy that gives us long-term advantage.

The major concept our firm will focus on the next several years is leveraging and taking full benefit from the new business models of "Network Communities." Network communities could be viewed as a simple extension for business modeling based on the technology concepts of the Internet. But they can be much more. In WESCO's case, credit union network communities are based on the power of the philosophies of the credit union industry, the diversity of credit union organizations, and the foundation of interactive and credit union-led technologies.

Credit union network communities must focus on how technology unites the networked organizations for the overall health of the community. To be successful, they need to be governed as much by the rules of the community as they are by the potential of technology. The organizations as a group must view building new marketplaces as being as important as new technical tools. They interactively combine consumers, solution providers, technology, and the culture of cooperation to create a fertile development landscape for ideas.

Independently, both words network and community have common everyday meanings to business people, and by layering the concepts, it is much easier to see the power of combining the two. Credit unions have been long-term advocates for cooperatively sharing and interacting with their networked counterparts. From business conferences and trade organizations, to simply keeping in contact with their favorite business partners, credit union leaders know the power of managing effective networking. But credit unions have not spent much time trying to marry business networking with organized and interactive communication standards, databases and their definitions, and business logic that allows commerce to easily flow through everyday processes and reporting. Adding a common technology network to the power of credit union cooperation can take a simple idea that must be executed one set of business rules at a time per organization, and turn it into a wave of activity based on a common foundation.

To be powerful, we must harness and understand the concept of communities. The dictionary defines a community as, "a society of people having common rights and privileges, or common interest, civil, political, etc., or living under the same laws and regulations." In other words, a network community may be as small as single office or as large as an entire industry. Consider today's credit union marketplace. The majority of our community is still independent organizations with asset structures that may be too small (and the benchmark for small is changing every day) to effectively compete in the long term. They struggle with resources, policies and business solutions that are far too independent and require too much replication of work to capitalize on new ideas. Finding scale or the opportunities based on scale is becoming more and more the focus of every credit union leader. Network communities give credit union leaders the immediate benefits that come from scale. Once again, it is much more than technology. It is focusing the power of business cooperation and technology on the long-term development of the community's business potential.

As a data processor, WESCO's focus is to understand that our technology tools and the technical network that we provide as a foundation for the WESCO client community, are not the end-all. WESCO must focus on being a community player. Much like a committee member on a U.S. city's business development council, it needs to be concerned with building new marketplace opportunities, gaining access to existing opportunities, and leveraging the scale for the entire community. The power of technology is not to build gadgets and quick hit tools that will sell immediately upon presenting them to clients. The power of technology is harvesting the efficiencies of long-term strategies and effective processes that allow other community players to prosper.

For example, a data processor might see a need to write an accounting and servicing platform to coordinate loan participations for a credit union. An effective business planner for a network community might set a larger goal of creating new models for infusing income into the community. One is a simple process based on debits and credits and the tracking of a loan database; the other demands that you build a loan participation marketplace. Independently, each credit union that chooses to participate will need the technology of the accounting platform, but collectively, it's far more important that they create the opportunity for all the players just to participate. Ultimately it comes down to the coordination and the focus of all the members of the network community.

As you try to absorb all of the above, you might conclude that this is simply a model by which a data processor is trying to gain advantage by being the center of its clients' overall business focus. WESCO believes that you are selling the concept far too short if you think that there is no need for credit unions today to find new models for operation that combine the needs of their members with solutions that they can control, help develop, and gain a new voice along with scale.

Consider a hundred organizations that have a technology platform that addresses each user and workstation as effectively as the Post Office addresses the credit union's office, and that uses ASP concepts for communications as effectively as a public phone network. Add a set of technology managers who are as focused on the continuity and consistency of the network as they are on the core processing tools. Then add a model where the participants in this technology community understand an interactive set of business processes and preset exchanges between their potential credit union partners. On top of this, layer a set of community developers who are constantly focused on the issues of the day and building solutions that are both profitable and effectively initiated by its community members. All this together is WESCO's concept of an effective networked credit union community.

There are alternatives to the concepts of an organized network community. They have been around for a long time and have been very effective for many organizations in the credit union marketplace. They include independent for-profit solution vendors interacting with independent credit union organizations struggling with coordinating and developing technology interfaces. Over the last several years, there has been some improvement, but over all, it seems to fall short for many credit unions. As an alternative, network communities require more shared equity between the community participants-an equity based on not only owning the resources, but acting as a community citizen and force.

Randy Karnes, CEO
(800) 327-3478 ext 101




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Jan. 21, 2002



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