The concern around disruption in financial services is greater than ever before, but your credit union can take critical steps now to look at disruption through a different lens in 2017 and beyond.
1. Take Time To Understand Important Definitions
The concept of disruptive innovation was developed by Harvard Business School Professor Clayton Christensen and understanding his definition makes it more manageable and less intimidating. With that in mind, the Callahan team is working with credit unions nationwide to help demystify this fundamental market dynamic.
A simple definition of disruptive innovation is the application of a new or alternative business model that allows a competitor to deliver better value to existing consumers (low-end disruptive innovation) or opens the door to consumers that have not previously been served (new market disruptive innovation).
There is more to understanding disruptive innovation than one simple definition, however. Having your leadership team spend time learning together about this concept — before choosing to pursue a specific strategy — can be the difference-maker in your organization’s long-term success.
2. Consider Real-World Examples
There’s nothing inherently disruptive about technology. What’s important is what you do with it. The critical element in disruptive innovation is a new business model.
Sometimes a disruptive business model is based on new technology, or at least technology that’s new to the sector, but not always.
CVS's walk-in clinic, Minute Clinic, doesn’t have any fancy new technology. It doesn’t even have much old technology — or doctors for that matter. But for busy people with simple ailments, it’s a quick in-and-out way to get the prescription they probably already knew they needed. Fast, affordable care for simple ailments doesn’t serve everyone with a medical need, but it’s good enough for those who don’t need more. That's low-end disruptive innovation.
New market disruptive innovation is just as simple. Crest Whitestrips was a brand new technology that created an entirely new market of people who previously could not have their teeth whitened. It's not exactly a professional teeth whitening, but it's not months of dentist treatments and thousands of dollars either.
3. Discuss What This Means For Your Credit Union
Every established business facing the threat of low-end disruptive innovation has to make a decision: Defend the space or find a way to beat the superior value proposition being offered by the new competitor.
As cooperatives, credit unions are uniquely positioned to deliver better value and should already be focusing on the member relationship. But value is in the eye of the consumer. Sometimes it’s financial; other times, it’s about convenience or emotional needs, such as the hours you’re open, how you interact with members, and whether services are delivered through a device.
4. Decide What To Do Next
One thing I’ve learned working with Clayton Christensen’s material is that credit unions have the opportunity to be more aggressive and less defensive in their strategy. But that requires a commitment to think differently. And that’s where Callahan’s Leadership Team Development program comes in.
Callahan’s first LTD offering, Disruptive Strategy with Clayton Christensen, helps teams learn together how to avoid disruption and create new growth opportunities. Offered in collaboration with HBX, Harvard Business School’s innovative online learning initiative, this team learning program delivers new tools for addressing strategic challenges, a common language for framing problems, and practice using these on real issues your credit union is facing today.
Is your team prepared for disruptive innovation in 2017? Discover how credit unions are elevating their business practices and achieving success through team learning. Contact Callahan & Associates today.