The 3 most important strategic questions

It’s that time of year again when many of us are finalizing arrangements for annual strategic planning meetings. Besides nailing down the right venue and getting calendar confirmations from each of our board members, our thoughts turn to weightier matters and questions, such as “where do we go from here?”

In preparation of the event, questions are asked, challenges considered, and opportunities identified in order to determine the best mix of content and focus. Agenda content designed to engage the group, challenge ideas, and encourage strategic plays an important role in the execution of a productive meeting, however, having facilitated hundreds of strategic planning meetings for credit unions of all sizes and in all manner of venues ranging from scenic Caribbean oceanfront resorts to dilapidated board rooms that could barely fit 10 people, I can tell you that the most successful planning sessions (and credit unions) take time at the planning meeting to answer the following three critical questions.

Three critical questions that must be answered

Strategic thinking, according to Peter Drucker, is knowing the right questions to ask. He taught that the three most important strategic questions each company must answer are:

• What is our business? (Mission)
• What will our business be? (The changing environment that we are certain about)
• What should our business be? (Vision)

The best answers to these questions are elusive to many credit unions. Answering these questions isn’t as easy as you might think, especially in the ever-changing environment that we operate in. Consider for a moment our movement’s hallmark mission of “people helping people.” It sounds great, and it has inspired people for a very long time. But the blanket saying isn’t enough for individual credit unions. How we define “people” and “helping” in this statement can be as different as each unique credit union that embraces it.

To more fully understand what business we are in (our mission), we must have a pretty clear idea of whom, specifically, we serve. Most credit union leaders will acknowledge that they can’t be all things to all people. But sticking to that statement is challenging. The best alignment of people helping people it to find people who have a desperate need for a particular something. Real success comes when we find that specific something and consistently deliver it better than anyone else. Back in the old days, the people and the something were very clear to everyone. Credit unions were the people providing affordable access to credit to people the banks wouldn’t lend to. Everyone understood it, it worked, and credit unions experienced phenomenal growth.

But understanding what our business should be in the changing environment can be a bit more complicated. Whom, specifically, are the members we serve (and want to)? What generation do they spring from, and what is their economic status? What is their ethnicity? Are they high-touch or high-tech? Are they well-educated or working-class? What do they value? What do they need help with, specifically? Do they need help with basic financial matters, or complex retirement, or business ownership-related matters? Are they seeking their first auto loans, or do they just need someone to “buy” the loan paper from the car dealership to complete their purchase? What do they consistently need most, deposits or loans? Are they rate-shoppers, or seeking someone who will listen and give them a second chance? So many questions to answer. The most successful credit unions have a very firm understanding of whom they want to serve, and they know specifically what type of help is needed.

Once we can answer whom it is that we want to help, it’s time to align this mission to the opportunities in the environment. This will help us set our sights on what our business should be (vision) three, five, or 10 years from now. This is where so many of us try to be all things to all people, and it gets a lot of us into trouble. The competitive landscape we operate in has never been more competitive, and it’s only going to get more so. To be the most successful, we need to align our strengths with those consumer needs that we are in the best position to deliver.

For example, if it’s our intent to serve tech-centric consumers, we had better have the internal expertise, infrastructure, and innovative culture to be the best at consistently delivering the latest and the greatest. It’s difficult to “win” this consumer with last month’s technology. If we desire to serve platinum-credit rate shoppers, then we must have the scale to offer consistently rock bottom loan rates. Frankly, given the operating expenses at many smaller credit unions, it’s impossible to regularly have the lowest rates in town. They try, and they have the marginal or negative promotional Return on Investment ratios to prove it. If you desire to serve the lower-income, credit-challenged working class,  you’ll need to have higher loan yield and fee income to offset higher operating and loan loss expenses.  You’ll also need to have staff with higher empathy and skill sets to educate, serve, and develop this unique member group.

For best results, align your mission (of who you want to help), with the people who need your help the most. Remember, the field of potential lenders lined up at your local auto dealership is already pretty deep.

Why it matters

Any planning meeting – regardless of the venue quality, food, free branded gear, bar, or fancy-pants facilitator – that doesn’t facilitate your answers to these three questions isn’t strategic.

Your organization’s long-term viability is dependent on how well you’ve answered these questions. For better planning results, spend more time focused on them and less time on the “meet and greet” hors d’oeuvres.