The Competitive Triangle and the Importance of Strategic Planning

Once again, credit unions have begun financial planning for the next fiscal year, and the newly released second quarter data is influencing decisions. Goals and targets are being created, reassessed, modified, and updated to suit today's distinctive economic environment. Interest rates are still extremely low, share growth is slowing, and net interest margin is rapidly diminishing: all this calls for a change in traditional strategic planning so that credit unions can capitalize on these unique economic situations.

 
 


Once again, credit unions have begun financial planning for the next fiscal year, and the newly released second quarter data is influencing decisions. Goals and targets are being created, reassessed, modified, and updated to suit today's distinctive economic environment. Interest rates are still extremely low, share growth is slowing, and net interest margin is rapidly diminishing: all this calls for a change in traditional strategic planning so that credit unions can capitalize on these unique economic situations.

It is essential to remember that not only are the end results of the data a critical reflection of performance over the past year, but the pathway to these results must be scrutinized in order for your credit union to maximize its potential. Chip Filson's article, Creating a Culture of Data Awareness, from last week reflected the need for ''awareness of the importance of proper measurements at all levels in an organization.'' Many readers also agreed, commenting about the ''importance of measurement and awareness of results to ensure success'' and the need for ''my management team to see this.''

A credit union must develop a strategy whose primary purpose is to answer the question-what is my credit union's sustainable competitive advantage? And what is this advantage based on? The key strategic assessment is to ask how much of a course change does the credit union have to make in its core business activities either to gain or to retain that advantage. A planning process that assesses the amount of change to be made is essential.

 

 

 

Aug. 25, 2003


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