Every credit union has something it calls a strategy, but many are not all that strategic.

Real strategy should be based on a vision of what the credit union can become over the next 10 or 20 years. It should inspire BHAGs (big, hairy, audacious goals) and serve as a guide when assessing threats, evaluating opportunities, and considering investments.

These are the roles of strategy; they make it fundamentally different from the operational business planning conducted at fall strategic planning retreats. In the fall, teams focus look backward to think ahead How are we doing? Will we make budget? Are we on plan? What do we need to work harder on? What do we need to change? What comes next?

Planning is about resource allocation, operations, execution, and performance. It should be concrete, actionable, and formal. Even if the annual plan is part of a three- or five-year arc, it’s still fundamentally operational. In the fall, it’s the plan next year’s road map that matters most.

Strategy is a guide and test for the annual plan. Grounded in mission and values, strategy is conceptual rather than concrete. It’s about the future what your credit union is, where it’s going, and what it aspires to become. Strategy is more about the process than it is about any plan created.

Strategy also requires regular reassessment to align it with culture and mission and ensure it is sustainable in an evolving environment. This takes time, effort, and focus, time that does not exist during the fall.

That’s why I call spring the strategy season.

Strategy Is Different

There are many myths about strategic planning. Some credit union fear it locks them in based on where they are and what they can see today. They fear it impedes agility and flexibility, limits vision and options, and in the words of one of my clients, guarantees missed opportunities and suboptimal outcomes.

These ideas apply to the obsolete notion of a complex, detailed (and probably a little pompous) STRATEGIC PLAN. Please don’t confuse the STRATEGIC PLAN with actual strategy.

Strategy, as Harvard Business School Professor Michael Porter states, is a framework for deciding what not to do. In practical terms, this means setting the critical path from where the credit union is today to a vision of where it wants to be at some point 10 years or more from now.

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Strategy is big picture, long-term, and high-level more about HOW to think than WHAT to think. It’s not the detailed plan of myth because leaders can’t see the future clearly enough for that. Instead, it sets direction and keeps the credit union headed along the right course with every big decision.

And strategy is fundamentally cultural. Because it is executed by the whole credit union team board, management, and employees strategy gets filtered through their perceptions of what the credit union is, how it works, and why it exists. That’s why alignment is critical.

At Callahan, we think real strategy has five basic characteristics:

1. Strategy is conceptual. Strategy is a guide, not a road map. It’s a test for initiatives, investments, and other major decisions as well as a source of inspiration.
2. Strategy is big picture. Strategy covers the entire organization, its operating environment, and how it interacts with employees, member-owners, partners, community, and competitors.
3. Strategy is visionary. Strategy looks over the horizon to frame the credit union’s future, five to 20 years or more out.
4. Strategy is condition-limited. Strategy reflects the focus, circumstances, operating environment, and understanding of what the credit union can and cannot accomplish.
5. Strategy is cultural. Strategy starts with mission, aligns with priorities and values, and reflects the credit union’s difference.

Responsibility for strategy depends on the credit union’s governance model, but we recommend the board and the executive team share it. Ultimately, the board needs to own strategy, but senior management also plays a critical role in conceiving, executing, and refining strategy on an ongoing basis.

Spring might be strategy season particularly if a credit union is starting from scratch but the process of strategy needs attention year round. Along with an annual spring deep dive, management should check in on strategy every month. The board should do so at least once a quarter.

Senior teams also should conduct some form of strategic exercise quarterly. The language and framework of strategy are different from those of operations. Using them effectively especially under the pressure of a strategic challenge is hard. It takes practice. Too often, management teams facing a crisis lose track of what really matters in the long term.

Not all plans are useless, but too many strategic plans aren’t strategic. Strategy matters, and it’s critical to creating and sustaining the differentiation that credit unions need to remain relevant.

With this in mind, here are four tough questions every credit union executive and board member should be asking:

• Does our strategy include a long-term, aspirational vision that captures our mission?
• Are we using and refining our strategy on an ongoing basis?
• Can our front-line staff clearly communicate why our credit union matters?
• Are we moving toward our credit union’s envisioned future state cohesively as a team?