Strive for Five

Some events are cemented into your mind and impact your thinking forevermore. For me one such event is the first strategic planning session I ever facilitated.

It was an interesting experience for a number of reasons and it has many direct parallels with the work I do today for credit unions. Since it shaped my thinking about the realities of what makes a planning process work, it’s worth sharing.

It was a dreary Saturday morning in late January when I headed down the interstate to join my clients in what they affectionately referred to as the corporate conference room (aka around the dining room table). The windshield wipers kept time with the rumbling of the tires as I mentally reviewed my plan for the next two days.

The client was a third-generation family farming operation preparing for a transition in leadership—the youngest son was about to take over and he wanted to define a long-term vision for the business. His real goal was to make sure everyone was on board so they wouldn’t stumble as he attempted to right a struggling enterprise.

It was the mid-1980s and the farm crisis—caused by low prices and low farm incomes—was in full swing. Consolidation was the watchword of the day as everyone pursued the cost advantages of size. Finding a way to differentiate one business from another was an emerging opportunity and concern on everyone’s minds.

At the same time technology was (not so subtly) reshaping the industry by increasing efficiency, particularly for larger operations. Tax laws and government price support programs also were factors. And the economy was in a down cycle driven by reduced foreign demand, higher interest rates, and increased debt—all of which impacted farming operations of all sizes.

As I drove up the bucolic lane and parked my car, it occurred to me that this was going to be anything but easy. The things just described were well understood by the 10 family members who would be in the room, but there were no easy (or obvious) solutions to the challenges they faced (and would continue to face).

As we gathered around that kitchen table over a breakfast that would set the stage for two days of discussion, debate, deliberation, and decision-making about the future of the business, the tone was cautious, but optimistic. Having a rich history of success tends to create a belief that current problems can be overcome, and the work we had done leading up to the event had prepared the team for the process we were about to embark upon.

Fast forward to the next evening …. We wrapped up the session over dinner as we reaffirmed the three key decisions we had made. The focus was intentionally limited and much work remained to be done in defining the specific actions to be taken. But everyone was aligned around the commitment to stop doing some of the things they had long done and to embark on a path to create a stronger future.

As I pulled out of the driveway, my mind replayed the process we had gone through—using my simple three-question debrief system: “What worked?” “What didn’t?” and “What’s next?” I was proud of the team for answering the most challenging (and most important) question that is the essence of strategic planning—What are we not going to do? Today I’m convinced that it was that decision and their willingness to act upon it that have driven their success.

Chances are that as a leader in the CU industry today you see very strong parallels in the situation my first strategic planning client faced. In the years since, it has been my privilege to repeat the experience (and evolve it, based on insights gained from ongoing post-session debriefs) with many different organizations, including CUs.

Being a big fan of simplicity as a guiding concept for strategic planning, I’ve boiled down my thinking that evolved from this first endeavor to five key things you need to do to make your 2015 strategic planning process your best ever.

1. Define the Context

Begin by making a distinction between the strategic plan and the annual business plan. The strategic plan defines the long-term destination (or vision) that your credit union is pursuing, and outlines the relevant success metrics. The annual business plan is closely linked to the budgeting process and outlines the actions to be taken during the coming year. Simply stated, the strategic plan defines what the business will become and the business plan defines how the business will pursue the strategy.

In my experience credit unions often struggle with this distinction. Often this happens because of the timing of the planning session and its proximity to the budgeting process. The traditional pattern in the industry of holding strategic planning sessions in the fall inherently links the planning process to the budgeting process.

To break this linkage and establish a different context for your strategic planning process, consider moving the planning session earlier in the year. Doing so also provides more time for developing appropriate action plans in pursuit of the defined strategic vision.

2. Design Your Process

No standard strategic planning process will work perfectly for every organization. The talent, capacity, resources, market position, members, and objectives at the point in time the planning process occurs all need to be considered in defining the right planning process for your credit union.

That said, a few critical elements should be included in every strategic planning process:

Planning to plan: Work with your planning facilitator to map out the timeline and the milestones that will define your process, as well as your communication plan for keeping stakeholders informed before, during, and after the process.

Scanning the environment: Conduct a thorough environmental scan to define the range of strategic issues, opportunities, and challenges. Start the scan early and continue scanning throughout the strategic planning process. From strengths-weaknesses-opportunities-and-threats analysis to stakeholder surveys, to reviews of relevant information both inside and outside of the industry, to conversations with industry experts and peers, this process needs to focus on identifying the most critical factors to be considered in discovering the right strategic direction for your credit union.

Prioritizing the issues, opportunities and challenges: As you bring in data and information from scanning, be sure to prioritize the issues, opportunities, and challenges. The goal is to make the information manageable and to assemble data to support rigorous discussion, debate, and decision-making.

Equipping the team for success: Preparing the planning team is all-too-often overlooked. A helpful way to look at this is to think about providing the planning team with the information that would normally be shared during the planning session before the actual session. That way, the information can be consumed and processed in bite-sized chunks, and the team members can think about it at a deeper level. That prepares them to make better decisions during the actual planning session.

Conducting the off-site planning session: The planning session is a pivotal step in the strategy process and needs to be structured with care and intention. There are seven critical components to an effective planning session. Incorporating these into the execution of your strategic planning session will yield valuable results in the form of increased engagement, more productive discussions, and better decisions.

Defining the action plan: Within a few weeks of the planning session, the leadership team needs to convene to define the action plan for the year. The objective of this session is to align the annual business plan with the strategic plan so day-to-day decisions and actions support pursuit of the strategic destination. The output from this session feeds into the budgeting and the performance planning process.

3. Engage the Right People

Though you don’t need to expand the planning team to include every stakeholder group in the actual planning session, it is both valuable and important to capture their insights. It will increase the depth and breadth of discussions, and make sure the most important perspectives for the future are included in the conversation (even if no one in the room owns that point of view).

The key here is to find ways to engage key stakeholder groups, particularly those who will drive your CU’s success in the future, and include their ideas in the planning process.  Surveys, focus groups, telephone interviews, and invitations to participate in relevant segments of the planning session are possible ways to capture this input.

Always err on the side of bringing too much information and too many ideas into the process, so you can sort through them and make the best possible decisions.

4. Commit to a Strategic Mindset

Everyone involved in your process needs to realize strategic planning is about a longer-term horizon and discovering the big-picture destination for the credit union. It is not about how to market specific products, get more loans next quarter, or improve member service.

Committing to a strategic mindset doesn’t mean you try to predict what the future will look like, but rather that you envision alternative possible outcomes and consider which ones the CU is best suited to pursue.

If everyone on the team (and involved in the process) understands this is the desired objective, they can hold themselves (and others) accountable for maintaining that focus. That means reminding the team when the discussions “get in the weeds” and focus too much on operational details. That means accepting the uncertainty inherent in defining a future destination and engaging in serious deliberation about the possible impacts of things that could occur. And that means committing to being informed about things as they unfold so necessary course corrections can be made quickly.

5. Define the Action Plan

Too many planning sessions generate lengthy lists of action items that get piled onto the already overcrowded to-do lists of senior leaders. This is because the process skipped the step of defining the desired outcomes prior to the planning session (and because it is harder to say no to one thing than it is to say yes to many things).

The essential action here is to agree that a limited set of outcomes will be defined from the planning process. Committing to this means limiting the choices (not clustering like items together to artificially shorten the lists) and deciding what you are not going to do. It also means being willing to identify things you should stop doing to free up resources to pursue the things that are most important at this point in time.

This is perhaps the most difficult step in your planning process. It feels artificial to limit the outcomes before you even start, but the experience of successful businesses has repeatedly revealed the power of limited focus. Having the fortitude to make the decision to emerge from your planning process with no more than three to five action items will create more impact faster than a longer list every time.

Michael Hudson, Ph.D., is founder and principal of www.creditunionstrategy.com, Rehoboth Beach, Del. He is a frequent speaker at CU industry conferences and helps individual CUs discover and implement strategy, build and sustain culture, and identify and develop leaders.