Even as you execute your business continuity plan, ongoing work must be done on your credit union’s overall strategy. Here’s how to do it.
Let me be clear here; this article is not about crisis strategy, which involves contingency planning and business continuity planning for dealing with identified crises as they arise. It is about the formulation and reformulation of the regular ongoing strategy of the credit union during times of organizational stress. Setting aside your preparation for the future to concentrate solely on putting out the fires of today can be detrimental to the long-term viability of the organization.
I’ve had several calls from credit union CEOs over the last few weeks requesting guidance on a couple of topics relating to strategy. Their first concern is whether all existing strategic initiatives should simply be put on the back burner until we see the much-hoped-for, light at the end of the tunnel. My answer to that is a categorical no. Your competitors are not going to rein in their efforts to win the allegiance of your members. As far as is possible, under the challenging circumstances, there is an even greater need for quality strategic discussion now than in stable times.
The second question I’m being asked relates to how best to evaluate the relevance of existing strategic initiatives in light of the extreme volatility that’s resulting from the COVID-19 pandemic.
I’m a committed proponent of a system of strategy-development called discovery-driven planning, and I use it with all my clients. It is a technique first devised by Rita Gunther McGrath of Columbia University, and admired by such experts as the late Clayton Christensen, who called it “one of the most important ideas in management—ever.”
Discovery-driven planning relies on research, data analytics and logic to develop a strategy that has a strong possibility of success based on confidently predicted market needs, in a reasonably predictable future. Although the technique is specifically designed for use in an environment of change and uncertainty, I fully recognize that, in times of extreme crisis, when the future is highly unpredictable, and the needs of the marketplace are more fluid, discovery-driven planning can only be a starting point. Strategic discussion during major crises requires an added layer of complexity. If we underestimate the scope of the unpredictability, we run the risk of leaving our organization open to external threats—and we fail to identify opportunities that inevitably occur during volatile economic periods.
The thing I’m most convinced of is that discussion of our future should be happening now. I would suggest that each credit union assemble a team for this imperative purpose. In the surreal circumstances of self-isolation and lockdowns, that team need to meet virtually. Ideally, the team will consist of senior executives, board members and representatives of every key functional area of the organization. The objective of the team will be to hold each existing strategic initiative up to scrutiny and to question its current and future relevance. This is achieved by using a five-step discussion framework that progresses from the knowable (the things with which we are entirely comfortable – which gives us comfort) to the unknowable (the stuff that frightens us more than a Stephen King novel.)
Step 1. What is knowable?
Start with the knowns. There are usually many of them, and it is essential to ground these discussions in the comfort that we all get from obvious facts. The knowable is effectively the accumulation of your institutional knowledge—your business intelligence—and it is the bedrock of traditional discovery-driven planning. It might include hard data relating to both the markets you serve and the internal structure of the organization—such data as demographics, technology capabilities, financial strength, etc.
Step 2. What can we confidently assume about the future?
This question could look at such industry data as technology adoption rates, competitive trends, etc. We can also assume that COVID-19 will, at some point, be controlled, whether by herd immunity from vaccination or some other factor. The goal of this step is to discuss a limited set of likely alternatives, one of which is almost guaranteed to occur. The group’s analysis can’t identify which of the options will happen, but it can help establish probabilities.
Step 3. If there are several alternative futures, what are they?
By this point, the team members will start getting uncomfortable as they attempt to think through all the potential futures that stretch out ahead of us, including both the likely and the unlikely. Topics within this component could include questions about whether the crisis could result in seismic shifts in consumer behaviors. For example, after being forced to adopt digital technologies by the current crisis, could that speed up the shift from bricks-and-mortar to digital? Another area of discussion could relate to the potential duration of the crisis. The possible topics are plentiful.
Step 4. If the range of alternative futures is so expansive, what do we see as the outer limits of the spectrum?
There will be significant discomfort for the team in moving on to this step. Obviously, the lower limit of the range involves the crisis causing little change to the existing business model or the relevance of the current strategic initiatives. But what, in our wildest dreams (massive positive impact) or darkest nightmares (massive negative impact), could it mean for your organization, for the credit union movement and for the traditional financial services sector as a whole?
Step 5. What do we acknowledge is entirely unknowable?
In a situation where we can’t even predict a range of possible outcomes, we must have a reasoned, logical discussion where everyone agrees that now, more than ever before, there are circumstances that we can’t anticipate, and for which we can’t plan. This proven technique is rooted in the psychology of the management of collective fear. Human nature includes a desire for certainty. By initiating such a discussion, you introduce a degree of reassurance that “we’re all in this together.” Over time these Step 5 unknowables tend to migrate towards the knowable as the crisis is resolved. It can be extremely encouraging to revisit these topics as a resolution is achieved to emphasize the transitory nature of such upsetting unknowables.
The objective of this exercise is to scrutinize the strategic initiatives of the organization as to their current and future relevance when viewed through the prism of the five-step framework outlined above. Implementing this process provides the opportunity to:
- Control the knowable.
- Prepare for the likely.
- Be aware of the unlikely.
- Acknowledge the unknowable.
Reasoned discussion using this defined process is critical if we are to avoid the urge to ignore the many things we do know and act purely on gut instinct. Even in the more tenuous and ill-defined areas of the discussions, your team will be gaining valuable strategic perspective.
John Oliver is a highly regarded consultant in the field of strategy-development and the developer of CUplanner™, a comprehensive, risk-based planning process for credit unions.