Is Growth The Goal Or The Result?

An informal poll among credit union CEOs suggests the No. 1 goal of boards is “GROWTH!” In our movement, as in our country, it’s taken as gospel that bigger is better. Growth is considered the ultimate measure of success.

From many perspectives, this makes sense. Value is hard to define and harder to assess. Growth seems like the ideal proxy. Everyone understands what growth is and understands its value. Being bigger does have advantages — at least some economy of scale, the ability to offer more products and services to more members, and the tools to deliver greater impact to all stakeholders. Just as important, growth is easy to measure and track in simple, consistent, widely accepted terms.

The next question is usually, “How do we grow the right way?” The implication is a desire to grow sustainably and the answer is usually a plan to pursue multiple options in parallel, measuring success through membership growth, asset growth, more market penetration, and greater share of wallet.

But is this the right approach to building a sound, secure, and relevant future for your credit union? Should growth be your objective, or is it simply the lens through which we are all accustomed to seeing success? Put differently, is growth the right goal or is it an outcome of achieving the right goal?

This is not a rhetorical question.

Solid, sustainable growth is hard to achieve quickly or directly. It’s most often found at the end of a series of actions, making it a lagging indicator. Rapid growth is possible, but there’s always a trade-off, usually a sacrifice of longer-term opportunity.

Further, credit union products and services are commodities. Much as we might want to argue or believe otherwise, at their core, checking accounts are checking accounts, credit cards are credit cards, and mortgages are mortgages. Details might differ but the fundamentals do not.

This puts credit unions on the wrong side of an economic truism: in a commodity business, scale is king. Credit unions don’t have it, and all the consolidation in the world won’t provide it. Worse, service no longer closes the gap. The latest data from the American Consumer Satisfaction Index shows banks beating credit unions for the fifth year in a row.

Add this to the ongoing battles over taxation, and the bizarre decision of consumer advocates to paint credit unions as villains, and the historic credit union business model is under attack from all sides. It’s the perfect storm, and the credit union movement risks getting swamped.

To be relevant for future generations of average American consumers, credit unions need to pivot. They need to shift their focus from rapid growth and generic economic value — delivered with care — to a non-commodity value proposition that makes a material difference in the lives of members and other stakeholders and that generates strong, organic growth as a result.

Decades of research and documented success proves this approach works across every industry. It can — and does — work for credit unions, too. At Callahan, we’ve captured these ideas and tailored them for credit unions in our Sustainable Growth Framework, a dynamic process in which each element drives success with the next.

The Callahan Sustainable Growth Framework is grounded in the principle that credit unions exist to deliver lasting, positive impact for their member-owners. The keystone of the SGF is Purpose, where purpose is:

• Specific to the stakeholders being served.
• Clearly and consistently understood by all stakeholders.
• Embedded in the business model.
• Measurable and trackable over time.

This brings us back to the question: Is growth the right goal or is it an inevitable outcome of achieving the right goal? At Callahan, we think the best answer for the future of our movement is the latter. Focus on your purpose and execute. When you succeed, you’ll also achieve the growth you seek.

What Comes Next? Empower your executive team to communicate, plan, and align throughout the entire calendar year. Callahan’s suite of consulting services can help you do this and more. From strategy briefings and workshops to full-on planning, let our team help your team identify what’s important and build a framework for success. Let’s Start The Conversation.