Innovation creates win-wins for your credit union
Just being on the campus of MIT makes you feel smarter. When I was there last month for CUES’ inaugural Strategic Innovation Institute I, I was inspired by the many great ideas—everything from a prosthetic lens for the eye, to Guitar Hero—that have come from MIT minds. And when the institute professors and attendees (talk about talented folks) came into the classroom, the real fun began.
One of my key takeaways from the weeklong program was that innovation drives positive outcomes for both companies and customers.
For example, in one session we learned about Costco’s commitment to outstanding ethics—and how that has driven its sales. Costco has a value of not wanting to charge over 15 percent margin on any single product. Once the company bought 28,000 pairs of jeans from Levi, and sold them out within two hours at $28.99 a pair. Because of the sell-out, Costco was able to buy 30,000 more jeans at a lower per-unit cost. Because of its commitment to not charging more than a 15 percent margin, Costco offered these for $21.99 a pair.
Obviously, Costco could have stayed at the awesome price point of $28.99, but company ethics drive down the price—a rather innovative move, don’t you think? Not surprisingly, that second batch sold out as well. In all, the company’s commitment to its ethics drove those sales—and continues to drive the whole company.
In another session, MIT Professor Pierre Azouley, Ph.D., illustrated that the value created with a new and innovative product can become a win-win when the price point falls somewhere above the cost of developing and bringing that product to market and the value-add perceived by the consumer.
To show what he meant by that, Azouley asked the attendee next to me how much she had paid for her iPad. $499, she said. Azouley asked if she would have paid $600? She said yes. What about $700? Yes again. $800? No. $750? Yes. Apple made profit on iPads at $499 per device, but because this customer would have been willing to pay $750, she felt like she had won. Apple could put that product out at $500 and still make money, so the company won, too. It’s a win-win.
Attendees thought this inaugural Strategic Innovation Institute—a recent CUES innovation, if you will—was a real win as well. That sentiment is expressed in this CUES Skybox blog post, “The Magic of Innovation? Your People,” by Kris Van Beek, CCE, president/CEO of $900 million USAlliance Federal Credit Union, Rye, N.Y. And it was definitely what drove so many to say, “See you next year at Strategic Innovation Institute II at Stanford!”
Once these talented CU folks have completed both programs and the related assignments, they’ll earn the Certified Innovation Executive designation, CIE, signifying their deepened knowledge of applying innovation to serve members. If you’re interested in the win-win of innovation, but didn’t make it this year, Strategic Innovation Institute I repeats Sept. 20-25, 2015.
