Creative Approaches to Strategic Planning

Involve all employees for a dynamic planning process.

Strategic planning is a key to success and stability, but executives say the process must not be an exercise just for top management. "Make strategic planning systemic in your organization," advises Ken Marion, senior vice president, strategic planning, for $1.5 billion asset North Island Credit Union, San Diego. "Keep the energy level up by bringing in new perspectives and different resources. Stick to your core values and credit unions' 'people helping people' philosophy."

Marion; Kevin Foster-Keddie, CEO of $1 billion asset Washington State Employees Credit Union, Olympia; and Eileen Rivera, CEO of $275 million asset FAA First Federal Credit Union, Hawthorne, Calif., offer guidance for effective strategic planning.

Q What's your strategic planning process?

Marion: Our planning process is a continuous series of interconnected activities that take place throughout the year, not a one-time event. We dedicate a full-time executive to coordinating the strategic planning process. We've established a strategic council that meets quarterly to focus on strategic issues. We've increased the amount and quality of communication throughout the organization so all employees understand the credit union's key strategic objectives and the roles they play in achieving them.

One key objective of strategic planning is to generate or renew excitement. We encourage creativity and innovation. We want everyone in the credit union to understand where we are, where we're going, and how we're going to get there.

Our approach has four phases: strategic thinking, strategic planning, budgeting, and implementation. We try to make sure all credit union stakeholders are part of the process. Then we set the credit union's course over three distinct time horizons: long term (beyond five years), midterm (three to five years), and short term (one to two years).

Foster-Keddie: We had a formalized, static process where we met once a year. Now we look at strategy three ways:

1. The world view or traditional view. This is where you have a unique strategic position in the marketplace and you want to be top dog in that position. You want to be big and dominant. Amazon.com is a good example.

2. Differentiation. You differentiate yourself from competitors. You need to understand your members and products, and how you provide those products.

3. Adaptive evolver. With this model, you have only a temporary advantage in the marketplace, so you always must think ahead. Apple Computer is an example of that. It's always one step ahead.

We have a visioning process every few years where the board determines our vision for the next several years. Following the interactive visioning process, we bring in a facilitator. We also bring in an artist who draws as we discuss ideas and at the end provides us with a graphic of our vision. That vision of what we want to become challenges us to see how we'll get there. It's very different from what we used to do 20 years ago.

Then we figure out how to achieve our vision. We decided credit union service organizations (CUSOs) were more adaptable to introducing new products and services so we formed mortgage, investment services, and payday lending CUSOs. We were one of the first credit unions to get into payday lending. Now we offer our program to other credit unions.

Rivera: We have at least three strategic sessions each year that include our executive management team and a hired facilitator. Then the same facilitator meets with the board and the management team together. The facilitator also works with the executive team and middle management. At this stage, we develop our action plans. We have monthly management team meetings to review our plans, discuss our progress, and identify changes that may be needed.

A year ago we began using a software program developed by Cardwell [Westlake, Ohio]. It allows us to capture our mission, vision, and values and share them with management and staff. We can see where we are, compared with where we're supposed to be. Now we update our plans daily, not just annually.

All of our projects include an action plan. Everyone knows the status of every project all the time. We focus on results rather than means. It makes for more effective, more focused meetings.

Q What factors do you consider with strategic planning?

Marion: We try to stay member-focused and future-oriented. We consider both internal and external factors affecting the credit union. We assess members' needs and expectations, and look for opportunities. We analyze our competitive environment and our capabilities.

Our key strategic challenge is to make a successful transition from a financial institution with a limited field of membership to one open to the entire community. During the past four years, we've transformed our technology infrastructure, and we're planning to double the number of branches by the end of the decade.

We identify the social, technological, economic, environmental, and political forces affecting our business. They generally fall into two categories: predictable trends such as the emerging market influence of generation Y, and uncertainties such as the potential for credit union taxation. We've identified and prioritized key success factors-what we must do to succeed in our strategic market segments. We then assess our core competencies and weaknesses and decide on the appropriate action.

Q Results from your efforts?

Rivera: Our new method of strategic planning allows all managers to see our resource use. We can see when a particular department is especially busy, which allows us to better allocate time on various projects.

Strategic planning is more ingrained in us now than when we had an annual plan on paper. I love that it becomes painfully clear when we're not meeting our goals. Accountability is stepped up. For example, our member investment services aren't as profitable as they should be. That's on the radar now. It puts a fire under the management team and forces us to focus where needed.

Marion: Our planning process revealed that we needed a distinct and recognizable brand as part of our strategy. We set out to reposition North Island Credit Union in the San Diego community, promising to deliver an experience and create a financial environment that's "easy, free of worry, and a little more fun." Today, we're wellknown for our unique, experiential style of service delivery.

Q What challenges arise during strategic planning?

Rivera: Our eyes are bigger than our stomachs. We always want to do more than we realistically can during the year. Our new process helps us control that.

Marion: Engaging each stakeholder group at the right time and in an appropriate forum while retaining context and continuity. We've solved it by giving responsibility for coordination of strategic planning, communication, and progress-to-plan activities to a senior executive who manages the entire process.

Foster-Keddie: Credit unions tend to do what other credit unions are doing rather than trying something new and different. They don't take enough risks. Copying other credit unions carries its own risk. For example, a credit union might jump into something such as indirect lending just because another credit union is doing it. Credit unions need to do their own homework.

Q Lessons you've learned about strategic planning?

Foster-Keddie: You have to keep up with the latest changes and disciplines. You must think outside of the box. Credit unions often look at other credit unions and think, 'If they're doing it, we'll do it.' The real breakthrough is looking outside the industry and at other kinds of strategies.

You have to refresh the planning process constantly. As soon as you formulate the process, people will stop thinking creatively.

Marion: Keep things fresh, and keep people motivated. A good strategic planning process helps you frame your reality in different ways, forcing you to challenge your assumptions, avoid complacency, anticipate changes, and ereate a sense of urgency. At the very least, it enables you to tell your story and communicate your strategy from a fresh perspective. This keeps people involved and engaged.

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Copyright Credit Union National Association, Inc. Aug 2005
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