How to make the most of your strategic planning
MISTAKE NO. 7 BUDGET? WHAT BUDGET?
John Gregoire, principal of The Procon Group, a consultancy based in Madison, Wis., said one of the biggest mistakes credit unions make is not linking their strategy to a budget.
“The strategic planning session seems to be held separately from the budget session,” he assessed. “At the budget session they discuss what technology they can afford, what branches they can afford to open. This is where they really determine where they can allocate resources. Sometimes there is not a clear link from strategy to spending. Sometimes the strategy gets jettisoned or modified to meet the acceptable ROA targets.”
To avoid this mistake, Gregoire said CUS should continue doing their strategic planning the way they have been — looking out over the horizon to where they want to be — but when it comes time for budgeting, instead of looking only at acceptable ROA, the budget should be considered the method of resourcing the strategy. He said key questions to ask include: What bodies do we need? What materials do we need
MISTAKE NO. 8: FOCUSING ON ANSWERS
It is human nature to fear the unknown, noted Tony Ferris, CEO of consulting firm Rochdale Paragon Group, Overland Park, Kan., and CEO of apogee iq, Rochdale Paragon’s governance, risk management and compliance software company. And that fear, he said, can lead to being too focused on the answers instead of asking the right questions — and accepting the fact that the future is uncertain.
“We focus on what we feel we can control and what we can clearly envision. We reward those who have ‘the answers’ rather than those who ‘ask the right questions,’” he suggested. “We must learn to anticipate the unknown, embrace uncertainty, strategically and systematically create strategy processes that fit, and we must spend more time truly conducting analytical analysis and sharing information across the organization and across stakeholders better than we have in the past.”
MISTAKE NO. 9 HUMAN NATURE RUN AMOK
From overconfidence and the sunk-cost effect to loss aversion and the herd mentality, there are number of naturally occurring human biases and blindspots that can sink strategic planning efforts, according to Tansley Stearns, chief impact officer for Filene Research Institute, Madison, Wis.
Sticking with something because you’ve invested so much in it you’re unwilling to accept that it’s not working and never will. Believing something simply because it’s been repeated often enough, so we stop questioning it – or not questioning something because we fear change. All of these are among the common human behaviors that can trip us up, she said.
“These are human mistakes and challenges, having biases. Go through these as a team and realize these are possible outcomes you might run into,” Stearns suggested. “One person might not see it in himself or herself, so we need colleagues to call us out. We also need to take a good look in the mirror and honestly say if we have made one of these errors and work on avoiding them in the future.”
MISTAKE NO. 10: FAIL TO PLAN=PLAN TO FAIL
The single biggest error Schenk said he sees is the large number of credit unions that simply don’t do any strategic planning at all. Not surprisingly, it often comes down to a numbers game that goes back to one of the most common numbers credit unions point to: asset size.
All of the big CUS engage in a “pretty vigorous strategic planning process,” he stated, “but when you get down to the smaller ones a lot do not do it.”
Schenk estimated some 40 percent of CUS have five or fewer employees. He said those 2,400 credit unions are “just trying to keep the doors open, keep making loans,” and so many of them forgo holding formal strategic planning sessions.
“But to me, as the old saying goes, if you fail to plan you are planning to fail,” Schenk said. “There are resources out there — including the state leagues — that will engage with the smaller shops at no cost. They need to take advantage of these resources.”
The irony, of course, is that without a plan, many of these credit unions will stay the same size, shrink or cease to exist. Moreover, that growth is essential to credit unions seeking to fulfill their people-helping-people mission.
Doing strategic planning correctly is “about growth,” Stankovic said. “Use a cooperative scorecard that goes beyond financial performance to measure community outreach, membership in community and/or industry boards, and investment in the membership. This way you measure how involved the CEO is. Every human being will go after what he/she is incented on. Everyone agrees the financials are important, but if we want to say our members come first, how are we measuring that? That is where the cooperative scorecard comes in.”
No matter what mistake your credit union has made, the experts agreed that the key question remains: Is there something of substance that can be salvaged? Oftentimes, the remedy is in the follow-through.
“The credit union might even want to have a follow-up, shorter session with dialogue on issues that were discussed. Perhaps use the next monthly board meeting,” Sievewright suggested.
Hunt agreed. “They can look at what was accomplished during the session and realize fairly quickly that they got down too much in the weeds and need to have a refresh,” she suggested. “The good part is strategic planning sessions are flexible and if you have a strategic plan in place it can be used for different scenarios in the credit union.”