Take Inventory To Achieve Success

Jim Cardwell addresses Circle-W's new challenge by advocating an assessment of key strengths and then pushing the reset button on their strategy for the future.

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» Jim Cardwell: Take Inventory To Achieve Success
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» Rhonda & Kelly Cooke: Financial Strength And Time Make This Challenge Manageable


Circle-W Credit Union is preparing for its upcoming annual Board meeting to cover possible repositioning strategies and future directions of the organization. It’s a crucial meeting that will shape the credit union’s outlook in such areas as member service, technology, business processes, community involvement, etc. In preparing for such important endeavors, what can Circle-W do to address these issues for its future well-being?

According to The Chasm Group’s Michael Tanner, author of A Framework for Strategy, you should handle issues of this nature by taking inventory of your organization’s competitive resources before moving forward. “Before developing ideas related to changing strategy or repositioning,” Tanner explains, “it always makes sense to take an inventory of what exists and attempt to deeply understand your company’s existing sources of competitive advantage in a methodical way.”

Having said that, the following inventory of what currently exists at the credit union will be critical for considering (or making decisions about) any options regarding its future. Here’s what the inventory found:

1. Distribution (access for and to members will be a critical element in determining a strategy transition)

  • Access for members – Online, mail, branches, call center. What is current usage for all major distribution channels?
  • Access to members – A critical element, because the credit union will be losing five offices in four states. Plus, it will not have the direct Circle-W human resources (HR) link to the member. How significant is the HR function of Circle-W as an access point to members and potential members?
  • Understanding of member’s needs – The credit union seems to have a general understanding of its members’ ages. But because it uses HR for “managing” written communication with the members, it is not clear the depth of demographic analysis and member profiling done by the credit union itself. Does the credit union track member usage/service usage behavior?

2. Scorecard and Benchmarking

  • Use Callahan’s CU Analyzer to see, and understand, the credit union’s Scorecard results as well as benchmarking Circle-W Credit Union results compared to other credit unions in the area, including the nearby $2 billion credit union.
  • Prepare a SWAT analysis of the credit union – including processes. Determine Circle-W’s strengths and weaknesses as a current “player” in the marketplace.

3. Change Management

  • What are the credit union’s skills and capacity for change for each of the stakeholders (Board, CEO, executive team, management, staff, and members)?

4. Competency of the Board

  • How did the Board members, who are presumably employees of the sponsor company, not see this coming? And now there are only 18 months to change how the credit union does business? Do they understand the credit union business?

5. Competency of the CEO

  •  The CEO said she had a good relationship with the sponsor. Why was she “surprised” by the international buy-out?

Once the credit union Board has reviewed, discussed, and answered these issues, they now have a point of reference to begin thinking about how to move forward in the future. The Board and executive team now have an opportunity to “re-invent” themselves.

Pushing the Reset Button

Based on the book by Michel Robert, Strategy II – Pure and Simple, Robert constructs the following framework for an organization’s successful quest to re-invent itself.

Robert’s outline for future positioning shows that the Board and executive team must answer these two questions: 1) What should the credit union look like – in other words, its vision and image; and 2) what is the strategic/operational plan on how to get there?

The credit union in this case study demonstrates a unique opportunity to “push the reset button” and decide what its new vision is without the dependency of the long-time sponsor. In determining the “what” (the credit union’s strategic vision), it is important for the credit union board and executive team to reach an agreement on the credit union’s “heartbeat.” For example, is the “heartbeat” the product concept, or class of member or user you serve, or distribution, etc.?

The Board and CEO need to agree on the “heartbeat” of the credit union that goes beyond “given capabilities” of quality, member service, growth, and profit. The “heartbeat” should represent the credit union’s area of strategic advantage and strategic leverage against competitors.

Making Trade-Offs

Popular strategy guru Michael Porter says when building strategy, you need to make trade-offs – the more of one thing means the less of another. Trade-offs arise for three reasons: inconsistencies in image or reputation; different positions require different machinery, people, and systems; and limits on internal coordination and control. Without trade-offs, there is a lot of wasted effort – and confusing messages to staff and members.

One of the most important disciplines to practice in strategy development is to use the philosophy of the 80/20 Rule (most of the return comes from 20 percent of the effort). In other words, don’t try to do everything. Subsequently, what are the most important things to do and invest in that will give you 80 percent of the return?

To further expand on building a good strategy, remember to focus your message: Clarify and simplify the business model; re-establish the brand and target market; AND maintain stability during the transition.

Once the credit union has its strategic vision and has created the strategic/operational plan, the Board and executive team need to use the plan to determine the following aspects:

  • The values and “behaviors” that are expected from the Board and staff to support the vision and plan need to be developed, communicated, and reinforced as the credit union transitions to its new business model.
  • The structure of the credit union needs to meet the execution of the plan – for example, organize according to functional area or organize around process.

Once the vision and the strategic/operating plan, values/behaviors, and structure are agreed upon, the next step is to execute. The elements of strategy execution require some basic elements:

  • Use continuous communication and collaboration to engage all stakeholders so they will want to achieve the goals and vision of the “new” credit union.
  • Establish Scorecards to “measure the journey” of the enterprise, functions, processes, and staff. Use Scorecards to help prioritize how project resources will be deployed.
  • Align the work results the credit union wants employees to accomplish with the strategic/operational plan – and make sure managers coach for success.
  • Implement timely performance and accountability feedback loops to ensure appropriate corrective action can be taken.
  • Ensure the right staff and skills are in place and provide additional support, tools, technology, and training when gaps are evident.
  • Communicate clearly the strategic/operational plan to all employees and make sure there are timely accountability feedback mechanisms in place.
  • Reinforce the behaviors necessary to execute to the desired vision.

The most important element above is strategic thinking. It is the “touchstone” to which all other actions are aligned – so the Board, CEO, and other executives need to agree on the vision.

Once the Board, CEO, and other executives are aligned in their thinking about where the credit union is headed, a clear and focused strategy can be created and followed with discipline. The journey is laid out for all to see and execute. This obvious or deliberate plan to reposition Circle-W Credit Union can be executed with an enhanced degree of success, which will ensure that both the organization and its members will win and prosper.