Callahan & Associates has the privilege of working with — and learning from — credit union leaders across the country. As I’ve engaged with a growing number of leadership teams through Callahan’s Leadership Team Development program, I’ve come to recognize several myths that persist when I ask credit union executives about the overall concept of disruption.
Among credit unions, “disruptive innovation” is at risk of becoming little more than a feel-good label with no real meaning, not unlike “fast follower.”
How many credit unions would call themselves fast followers when it comes to new technology? Most, I suspect. Certainly most with more than $100 million in assets. But many credit union leaders use this term as their go-to response without fully understanding it.
When I ask executives what they mean by “fast follower,” many say they are determined to be second or third in their market ... among credit unions. In the context of retail banking — which is where credit unions compete — that usually makes them more of a late adopter than a fast follower.
We should not devalue disruptive innovation the way we have fast follower.
When challenges or obstacles arise, where will your team turn? Callahan's unique Leadership Team Development Program is a game-changing experience that can help your credit union avoid disruption and prepare for the evolving landscape ahead. Learn More.
Myth #1 — Disruption Is Easy
Some credit unions talk about becoming disruptively innovative as if it’s just a matter of ticking a couple of boxes during the monthly management meeting or having an internal innovation contest. Just like the concept of the fast follower, disruptive innovation risks becoming a buzzword that anyone can use for their own purpose and with their own meaning, leaving it to mean nothing at all.
Real disruptive innovation, as it’s defined and as it changes markets, is not simple. Practicing it is not easy. It requires a deep understanding of how markets work and how consumers make choices. Getting disruptive innovation right matters to credit unions and their member owners.
Myth #2 — Disruption Is Part Of Our Culture
“Credit unions are the original disruptors in financial services” is something I hear time and again. Eighty to 100 years ago, credit unions were disruptors. Perhaps as recently as 15 to 20 years ago that might still have been true.
But today? Not so much. Disruption is now part of our history.
A culture that fosters disruptive innovation requires characteristics that are a struggle for many credit unions. What happens if someone in middle management tries something new? And it doesn’t work? More often than not, I find barriers to disruptive innovation lurking just below the surface, regardless of the best intentions. Is disruption really part of your culture?
Myth #3 — Disruption Is Always Related To Technology
With the rapid pace of technological advancement we’ve seen in our lifetimes, it’s easy to see how this myth has become so ingrained. However, new technology does not automatically produce disruption — disruption is about creating new value.
Disruption delivers meaningfully better value propositions to consumers and generally delivers them through a different business model. Disruptive innovators might leverage some new technological capability, but it is with the purpose of meeting the market’s needs and delivering more value. Disruption itself does not require new technology.
Ask yourself a few questions…
Do ideas make their way up the food chain to your leadership team, or are there roadblocks along the way that keep even the best ideas from surfacing?
How likely are front-line staff or mid-managers to take a risk with a new idea or unproven product or process?
Does your credit union reward actions or outcomes?
The answers to these and other questions are what really determine whether a credit union has what it takes to be disruptively innovative.
Learn more about Callahan’s Leadership Team Development (LTD) program, a team learning experience offered in collaboration with HBX, Harvard Business School’s online learning initiative. Key learnings from the course, Disruptive Strategy with Clayton Christensen, include how to avoid disruption, create new growth opportunities, and adopt a common language for framing problems and creating solutions.
Don't wait for the marketplace to evolve around you. Learn how Leadership Team Development and Strategy Lab can help your leadership team step back and focus on issues of strategic importance, like how to best serve your members. Learn More.