CFO Focus: Strategic Planning to Survive and Thrive, Part 2

This article is reprinted with permission from the original. Read part 1 here.

Let’s talk about the hard work required to develop a strategic plan that is clear and concise, identifies the few wildly important goals and institutes accountability.

Strategic Planning to Survive and Thrive

Of course, there are many ways to approach this, but the reality is that strategic planning can and should be kept simple. We must ask ourselves the following seemingly simple yet very challenging questions:

• Where are we now?
• Where do we want to go?
• How will we get there?

These will not be easy to answer, nor should they be. Doing so requires a healthy debate among the board and management, an honest self-assessment, and data. 

Where Are We Now?

There are three parts to answering the question of “Where are we now?” The first two are easy; the third is not … at all.

1. Take a look back. This first easy piece is a look back at your institution’s historic performance and trends. Are you growing in a financially sustainable manner, and how are you growing? Are you taking on more risk or becoming too concentrated in any one area? Are you trending in the same manner as your peers and the industry? How strong are member-owner product penetrations and usage? Finally, what are you hearing from employees and member-owners? What are the surveys telling you? This is not what you think. This is what they are telling you. Pause and reflect on this wealth of information before moving on.
2. Assess the institution’s financial strength. More specifically, what is the organization’s net worth position and can it generate sufficient earnings? Again, pause and reflect on this. If necessary, take the time to evaluate what range of net worth is truly needed. Do not hoard capital from your member-owners; it belongs to them. Here’s a method to evaluate and determine what is necessary. If you have excess net worth, how will you strategically address that?
3. Consider people, processes and technology. This is the not-so-easy piece. You already have an inkling by now of where the institution needs to go and what needs to get done. Are the right people, processes and technologies in place to make it all happen? If not, you have difficult decisions to face, and this may also play into helping decide where you need to go.

Where Do We Want to Go?

Sorry folks, just as no two human beings are exactly alike, neither are two credit unions. Hence, we can’t offer specific plans, but we can offer the following key principles, questions and approaches:

1. Spoiler alert: You will never get to the final destination; your job is never over. Taking the time to thoughtfully go through the process and learn, reflect and grow is what matters. This is all about the journey, not a destination.
2. You, yes you, and the credit union need to listen, learn and evolve. This is the recipe for growth, both professionally and organizationally. Did you listen to your staff and your members in Step #1 above? What was revealed to you and how will you strategically address that?
3. How are you different? What is your uniqueness? Anything? Thousands of institutions offer the same products and services as your institution. How will you differentiate? Engaging and building relationships with your member-owners is always a good answer. But where specifically? Decide what member-owners, and what products and services you need to focus on.

How Do We Get There?

Almost home, but not quite. Now it’s time to identify the very few wildly important goals, create a compelling scoreboard and institute accountability.

In the book, The 4 Disciplines of Execution, the authors describe that the real enemy of executing strategies is your day job. Referred to as the “whirlwind,” this is the massive amount of energy that’s necessary to keep your operation going on a day-to-day basis. It’s also the thing that makes it so hard to execute anything new.

Discipline No. 1 is using all the hard work done thus far to identify the very few extremely important goals to execute, instead of trying to improve everything all at once. These are the “wildly important goals.” Then identify and act on lead measures, keep a compelling scoreboard and institute accountability.

Management must step out of the “whirlwind” and devote critical time to the wildly important goals while continually monitoring progress. Board members must hold management accountable by monitoring the scoreboards and staying out of the weeds. It’s up to management to decide the “how,” while the board is responsible for gauging the “if” and “when.”

Credit unions can survive and thrive and be important to the members and communities they serve. Don’t check the box; utilize strategic planning as an important process to ensure your credit union survives and thrives.

Rich Nave is CFO consultant at Aux. Nave has over 38 years of finance and accounting experience, including 17 years in the credit union industry, the last 13 as CFO for a large credit union in New York. Nave is passionate about helping credit unions thrive. Collaborative and service-oriented, he provides strategic insights and critical decision-making analytics while communicating the story behind the numbers.