The top 10 strategic planning mistakes and how to avoid, fix them
Do you go into your annual session with high hopes but come out feeling like it was time wasted? Experts share tips for how to get the most out of this process.
FROM PIE-IN-THE-SKY IDEAS WITH NO concrete action items to make them a reality, to letting one person’s cult of personality dominate, there are scads of things that can derail a good strategic planning session. Credit Union Journal asked a number of strategic planning experts one deceptively simple question: what are the most common mistakes made during strategic planning, and how to avoid them or fix them?
MISTAKE NO. 1: ALL IDEAS, NO ACTION
Almost every expert CU Journal talked with made note of this one. “Annual dreamy discussions about the next big pie-in-the-sky idea without candor around strategic progress and future readiness,” is how Sam Kilmer put it.
The senior director for Cornerstone Advisors in Scottsdale, Ariz., said the best remedy for this is to ensure there are regular follow-up discussions after the big annual strategic planning session. “These discussions need to focus on strategic execution and hard-nosed conversations about resource alignment versus strategic impact,” he said.
Mark Sievewright, financial services consultant, founder and CEO of Sievewright and Associates — and a frequent strategic planning facilitator — agreed, noting that if he was a credit union board member or leader and there were no tangible outcomes from strategic planning sessions, he would be “very disappointed.”
“I provide a summary of the discussion points and what was agreed to,” he said. “Planning sessions need to focus on strategic issues for the credit union, both positives and negatives. After the session there needs to be a capture of what was discussed.”
And that “capture” and follow-up needs to go beyond just the initial summary. Several experts all suggested that the strategic plan — or at least different aspects of it — should be reviewed; quarterly or possibly even briefly during regular monthly board meetings, depending on the scope of things being reviewed.
Moreover, it’s called “pie in the sky” for a reason. That’s why building some tradeoffs into a strategic plan is also a good idea, Sievewright suggested. “Most credit unions cannot pursue each and every new technology,” he said. “Or, a credit union might see an opportunity to open six new branches, but it cannot afford to open all six at the same time, so it has to choose which one or two to open first.”
Susan Mitchell, CEO of Las Vegas-based credit union consultancy Mitchell, Stankovic & Associates, called this one the single biggest mistake CUS make during strategic planning. “Good intentions are not enough,” she said. “Volunteers need to be given metrics for measurement of results and the ability to create what-if scenarios to provide guidance that has value.”
MISTAKE NO. 2: INFORMATION OVERLOAD
Sometimes, it’s too much data, other times, it’s a matter of too many presentations and not enough dialogue, but either way, one common strategic planning problem is getting bogged down by too much information.
“I see plans that are overly complex, which means they will be difficult to deliver on,” said Mike Schenk, vice president of research and policy analysis and senior economist for the Credit Union National Association. “A lack of communication leaves members and employees unclear on the plan. Senior staff gets involved in the process, but it needs to be communicated all the way down to the lower levels of the organization on an ongoing basis. Let people know what the organization is trying to achieve so they can be focused on that. Mar-
“These discussions need to focus on strategic execution and hard-nosed conversations [on resources and impact].” — Sam Kilmer, Cornerstone Advisors
Learn how to prevent and resolve these top errors
keting needs to be involved in the process so the marketer can market effectively. Being aware of the details is critically important.”
But being aware of the right details is even more important, he added, noting he sees plans that get focused on elements that aren’t relevant, which can lead to making unrealistic assumptions and goals.
“Some credit unions will decide to convert to a community charter and assume they will grow, and later they find out it is not that easy,” he offered. “You need to examine how you are different from your competitors, know what your competitive advantages are or how you are going to distinguish your credit union, rather than say you want to get to $1 billion. If you cover all of these bases, you are 90 percent of the way there.”
And it can all start before anyone has even sat down in the room, noted Sievewright, who said there actually is such a thing as too much content.
“You don’t want to have too many locked-in, formal presentations scheduled,” he offered. “You want to have more engagement and dialogue between the participants, not just people listening.”
Part of the problem, however, is that frequently the information inundation is the result of the board members actually requesting voluminous financial reports and the like, Kilmer added.
“Volunteer board members whose lives are packed with businesses, communities and families will not want to take such a chunk out of their life before being productive and engaged,” he asserted. “We are in a financial industry, but we cannot confuse financial accounting with management accountability. This usually means less reporting, but giving your directors reports that are more impact-oriented. This could include visuals where materialities clearly pop and are designed to provoke challenging conversation.”
While charts and dashboards are sometimes seen as “dumbing down” the data, Kilmer argued that good visuals spark good conversations.
MISTAKE NO. 3: DYSFUNCTION JUNCTION
There’s one on every board and management team. The one who will dominate every discussion. Or the one who will pooh-pooh any idea that’s not his or her own. Or the one…well, it turns out, sometimes, there’s more than one disruptive personality that winds up derailing a strategic planning session.
The remedy: bring in an expert, neutral facilitator.
In fact, bringing in a good facilitator can prevent or fix any number of problems, said experts, most of whom facilitate strategic planning sessions for a living.
But what about when the facilitator actually is the problem?
“I hear stories where the facilitator exerts too much control and actually affects the outcome of the meeting, or on the other hand exerts too little control and there are not enough voices represented in the discussion,” Sievewright related. “In the latter case, a small number of folks dominate the discussion.”
MISTAKE NO. 4: STRATEGIC VS. TACTICAL
Carrie Hunt, EVP of government affairs and general counsel for the National Association of Federally-insured Credit Unions, said the biggest mistake a CU can make during a strategic planning session is not really knowing what “strategic planning” means. Hunt said the point is to set the overarching goals for the institution for a set period of time, usually 3 to 5 years into the future.
“We find some credit unions get more into tactics for a short period of time rather than the goals they are trying to achieve,” she said. “One example would be a credit union talking about how it would implement a new core conversion, rather than saying, ‘We are going to implement a core conversion in three years’ and then putting together a team to accomplish this. Thinking about tactics instead of strategy gets the whole process mired down, which makes it easy to lose focus.”
Once again, a good facilitator can help with this.
“The facilitator will keep people talking about how to make sure the credit union grows over a period of time,” Hunt advised. “Most credit unions talk about a 3-year to a 5-year window, and some talk about an even longer window.”
MISTAKE NO. 5: LACK OF PREPARATION
Turns out the success of a strategic planning session can hinge on what happens before anyone even sits down at the table. Not having an agenda, not distributing information to be read ahead of time are immediate red flags, Sievewright said. Good pre-work, he said, allows participants to hit the ground running.
“Unless the credit union says, ‘no thank you,’ I always ask that there be some pre-reading,” he explained. “I share articles I value highly, on such topics as technology or serving customers better. I am a fan of [Credit Union National Association’s Environmental Scan (E-scan)], having been a contributor to that for several years. I often will distribute the chapter I worked on, and if I have enough copies, the whole E-scan.”
Of course, sometimes the prep work actually is the problem, if the prep work is simply a rehash of what has gone before.
Dr. Brandi Stankovic, a Las Vegas-based credit union consultant with the firm Mitchell, Stankovic & Associates, said the biggest mistake CUS make is “doing the same thing in the same place and going after the same goals every year.”
According to Stankovic, what happens in too many cases is the board of directors OKS the same plan every year.
“There is not an effort to go in, see what is relevant, and then shake things up,” she warned. “The strategic
plan is required for regulatory review, and CEOS typically are incented for financial performance, so the plan is checked off the list and then the credit union goes back to try to hit financial numbers.”
MISTAKE NO. 6: INTERNALIZATION AND ISOLATION
Like many other specialized industries, credit unions can easily become too inwardly focused — either specifically on themselves, or on the industry as a whole, rather than looking at not only themselves and their direct competitors but expanding beyond that scope to look at other industries and more.
To combat this, Kilmer suggested credit unions kick off their process by bringing in outside perspectives.
“Then, they should start their planning meetings by discussing their members, the markets they serve and thoroughly cover external developments including the overall and local economy, their competition, technology, demographics, and risks,” he advised. “Be sure to open and close the days in your strategic planning sessions with discussions of members and external market developments.”
Another way to tackle this is by recruiting new blood for both the board and management team — but that is not always an easy task, according to John Pembroke, president and CEO of Credit Union Executive Society.
“There is a war for talent going on because of the shortage of talent,” he said. “There is an aging of the work force, an improvement of the economy driving growth and lower levels of unemployment. These factors bring a need to attract talent and retain the individuals that are already in your organization.”
According to Pembroke, it is estimated the cost of turnover is three times the annual salary of current workers. “In the next planning cycle there needs to be a plan to attract, develop and retain talent,” both in terms of executives and directors.