The NAFCU Journal: The Formula for Successful Strategy

By John Spence

The Leadership Download column provides credit union executives with insights into running successful businesses.

The NAFCU Journal: Leadership Download Column - The Future of Leadership, By John Spence

I have been teaching strategic thinking and strategic planning in an executive-level course for the Securities Industry Institute at the Wharton School of Business for nearly 20 years, and I can boil down everything I teach into one formula. All effective strategy is: Valued Differentiation (x) Disciplined Execution. In other words, you must bring something to the marketplace that is: 1) unique and compelling; 2) highly valued by your target customer; 3) difficult if not impossible to copy; and 4) delivered with excellence. Traditionally, businesses have focused on four major areas to get a competitive advantage: product, price, place, and promotion. Unfortunately, they don’t work the best for credit unions for these reasons:

  • Product: Other credit unions and most banks offer similar products.
  • Price: Your products are highly regulated and cannot be significantly differentiated from those of your competition.
  • Place: Your branch locations might give you some advantage, but most consumers today prefer the convenience of online banking anyway.
  • Promotion: Marketing campaigns and promotions can be easily copied.

I have given a lot of thought to what credit unions can do for a successful strategy, and here are the areas I believe you should focus on.

  • People. The success of your credit union is 100% dependent on the quality of the people you can hire, grow and keep on your team. If you genuinely have the most talented people and they stay on your team, that will give you a competitive advantage.
  • Customer relationships. If you have fantastic relationships with your members, you have created a significant barrier that is nearly impossible for your competition to overcome.
  • Brand. If you have built a strong brand that is well known and highly respected, it is impossible for your competition to take that away from you.
  • Data. If you have collected proprietary data on your members and you use it effectively, that is impossible to copy.

To me, this means you should focus a significant amount of time on making your credit union a talent magnet. Invest in developing your staff and in becoming extremely close to your members, so you truly understand them. Work to build a superior brand, and become an expert at using all of the data you collect to create a definite strategic advantage.

In its purest form, strategy is simply the allocation of scarce resources. That means one of the most important strategic decisions you need to make is what will you say no to? What products and services will you not offer? What member groups will you not serve? Which projects that are not working are you going to walk away from, even though there might be a significant cost?

Several years ago, I was asked to give a keynote presentation to 1,600 employees from a Fortune 100 company on “The Essence of Excellence.” I spent a lot of time researching the topic, talked to successful CEOs, presidents of universities and top thought leaders, and in the end, I felt it all came down to three key ideas.

  • Focus. You have to be insanely focused on where you can win (target market), how you can win (strategy), who you want to play against (positioning), and how you want to play the game (vision and values).
  • Discipline. You have to have the courage and fortitude to stick with your strategy — unless there are significant changes in the marketplace.
  • Action. The amount of effort you apply will determine the amount of results you get.

There is not going to be less competition going forward; there is going to be more. And it is going to be harder and harder to stand out from that competition. Applying the Valued Differentiation (x) Disciplined Execution strategy can make all the difference.

John Spence is an international keynote speaker, executive coach and organizational trainer who has worked helping credit unions for more than 15 years. Spence will lead a leadership workshop at NAFCU’s Management and Leadership Institute this fall.

This article was published in the May-June 2020 edition of The NAFCU Journal magazine. 
Want to receive The NAFCU Journal in your inbox? Update your email preferences.

Related Content: