Governance, Leadership, Responsibility … Strategy!

As spring planning sessions get underway, these are the questions credit union leaders need to be asking to ensure maximum impact.

Last week’s 4 Fundamental Elements Every Spring Strategy Session Needs wrapped up with a simple take on roles and responsibilities. Simple, but not easy, so revisiting that seems like a good place to start this week. It also offers a good lens through which to address some of the other spring-cleaning tasks related to the care and maintenance of strategy.

Understanding who needs to do what, when and how it needs to get done, and why it’s important to get all of this right are among the hardest things credit union leaders ever deal with. Ensuring that everyone understands this the same way and is operating in harmony is not a key success factor for strategy, it’s the key foundational factor. Without that, success isn’t even an option.

Every modern credit union governance model makes strategy the shared responsibility of the board and executive leadership. While the details of how things are split depends on which model you use and how you’ve handled things historically, the fundamentals are fairly consistent, as is the absolute need to stay out of each other’s lane, even as you collaborate.

The board represents member-owners and is responsible to them for ensuring the credit union delivers on its purpose in a safe, sound, sustainable manner. Long ago, new credit unions were small, common bonds were personal, and operations might involve a shoe box. In those days, purpose was straightforward, boards also served as management, and a board’s greatest responsibility was fiduciary.

Today, even the smallest full-service credit union is fairly complex. Professionals provide management, examiners backstop safety and soundness, and good boards think and act strategically. Boards are now responsible for setting strategic direction, articulating purpose, establishing a timeframe for planning, defining what success should look like, and identifying key metrics to determine whether success has been attained.

The leadership team can help with these tasks, but ultimately, only the board can make the tough decisions. Active and engaged boards need to consider a host of important questions, including:

  • Who do you serve? You can’t be all things to all people.
  • Are you purpose-driven (and committed to everything that entails)?
  • Do you think and plan in strategic terms (5-20 years), tactical terms (3-5 years), or operational terms (1-2 years)?
  • Are your goals financial performance and growth or stakeholder impact?
    • If your goals are traditional, which metrics do you prioritize?
    • If your goals are non-financial, how are you measuring success and benchmarking performance?

Do You Have 90 Minutes To Talk Strategy?

Credit unions face unprecedented challenges, and strategic planning has never been more important. For leadership teams and boards, stepping back from the day-to-day to focus on the future is critical for long-term sustainability. Start your strategic conversation with a 90-minute virtual strategic briefing session from Callahan & Associates.

Learn More & Book Your Engagement Today


The Challenge For Leadership

The leadership team’s primary role in the development and management of strategy is to execute and deliver on the board’s intentions and aspirations. This involves three different tasks, each tough in its own right, and each requiring leaders to consider multiple options from multiple perspectives:

  • Assessing the operating and competitive environment, making sure to account for all possible alternative sources for the value your products and services deliver – not just banks, other financial services providers, and fintechs.
  • Understanding how members perceive and feel about your products and services, the jobs members are willing to hire you to do for them, and members’ emotional needs and priorities as well as their functional ones.
  • Knowing your own credit union, its resources, capabilities, limits, competitive advantages, culture, and reputation; knowing and understanding all the means you have available to make things work.

Tackling these responsibilities directly and constructively – and making difficult choices about focus and priorities in advance – will always produce better outcomes than avoiding them. Consistently doing it well requires focus and a framework. In other words, these jobs are not something you can do off the side of your desk or the corner of the boardroom table in between managing the credit union and handling other regular business.

Strategy is your North Star. In the words of the John L. Gaddis, Yale history professor and one of the greatest living students of strategy, it aligns “potentially unlimited aspirations with necessarily limited capabilities.” You make the best of those limited capabilities when you know what they are, what you are trying to accomplish with them, and why. That takes time and focus that doesn’t exist in the normal course of business. That’s why Callahan & Associates sees spring as strategy season. Spring is when there’s time to do the difficult spade work that makes gardens bloom and produces bumper crops.

Next week, we’ll look at making strategy operational, and operations sustainably successful, setting up the board and leadership to be successful in collaborating on strategy management.

March 20, 2023

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