Innovation Entrepreneurship

Marketing/Brand Strategy

Leadership

Sustainability

Trends

People

Hmmm…..

PEOPLE

Tomorrow’s Workforce !   Flexible !   Multi-Functional

!   Value Oriented

Does the credit union business model reflect the attributes of your staff?

HR IN THE FUTURE

!   Business Focused !   Strategic In Nature !   Data Centric !   Analytical Skills !   Aligned

PEOPLE ARE THE DIFFERENCE

!   Necessity vs Difference !   Transaction vs Relationships !   Create Experiences !   Think WOMP

SUSTAINABILITY

!   A non-negotiable requirement !   Balance Sheet vs. Income Statement !   Using the “Coop” model to leverage shared value

Is the credit union biz model a 5 yr., 10 yr., or longer (or shorter) solution?

AVOID A “SIX-PACK” OF MISTAKES

900 lb. Gorillas Eat 800 lb. Gorillas Relationships Matter Stop Believing Your Own Press Releases Expense Mgmt. On Steroids Board Independence Is Essential Grow Market Share…Never Be Satisfied

HMMM…STUFF TO THINK ABOUT

!   Supply Chain Efficiency Is Difficult To Achieve & Cost-cutting Kills The Culture & Brand

!   As A Result…Revenue Production Is Essential !   What Is “The On-Margin” versus “Off-Margin”

COMMON PRIORITIES TO BUSINESS

!   Access To Capital !   Reasonable & Certainty of Taxes !   Certainty & Efficient Regulation

WITHOUT…Fewer Companies Drive Fewer Jobs

THE NEW PRICING PARADIGM?

The Social Network Has Hit Its Stride In The Past , Biz Made The Decision on Pricing Now… !   Consumers !   Government !   Media !   Consumer Financial Protection Board (CFPB)

SUSTAINABILITY IN THE LONG TERM Retain existing members and attract new members to optimize revenue and achieve scale.

Develop new offers that quickly result in a profitable return on investment - ROI

Increase productivity and employee accountability in order to optimize work performance to achieve greater scale specific to labor costs.

Enhance cross-functionality to minimize hiring.

Improve member service and risk mitigation processes to optimize efficiency and reduce operating expense.

SUSTAINABILITY IN THE LONG TERM

Enterprise-wide focus on critical mass to best utilize capital and human resources.

Insure operating expense as % of asset remains efficient in growth.

Work diligently to grow loan activity to increase Net Interest Margin and Top-Line Revenue.

Net loan spreads and funding mix should reflect risk tolerance while maintaining profitability that exceeds investment opportunities.

Continue expansion of payment systems and transaction processing as a means by which to grow non-interest income.

INNOVATION

!   Cultural paradigm !   Re-ignites growth curve !   Create energy and change minds

Using this “destructive force” to better your credit union’s competitive position?

Energy

Does It Stick? Ramp It

Up Execution

“Tossin’ It Around”

Time

Innovation Map

GREAT BIG IDEAS TO INNOVATE

I.  People Before Profit II.  Stakeholder Value Provides Brand Boost V.  Service On Steroids VI.   Opportunities To Grow The Biz V. Don’t Be Satisfied With Satisfied VI. Speed…A Competitive Advantage

THREE CATEGORIES OF CUS

Winners Survivors Losers

The Risk Of The Unknown Becomes A Big Problem For Many Credit Unions

What Business’ Didn’t Exist 15 Years Ago?

THE ULTIMATE GOAL

A Leap In Value Rapidly Earns Buzz & Loyalty… And Dare We Say Growth

BIZ PLAN DISRUPTION G R O W T H

V A L U E

Disruption

Disruption Window

Innovate

Disruption = Competition, Legislation, Regulation, Financial, Macro Economy

HMMM…STUFF TO THINK ABOUT

Innovation is more necessary than nice. Immediate ROI usually works against innovation.

THE “ALCHEMY” OF GROWTH

!   CUs need 3 different “Horizons of Investment” !   Current…Today’s cash flow (up to 12 months) !   Near Term…Today’s revenue + tomorrow’s cash flow (12 -36 months) !   Future…Options on investment beyond the current

horizon ( 36+ months)

THINKING LONGER TERM

Horizon 3

Horizon 2

Horizon 1 Time

Today’s Cash Flow (0 – 12 Months)

Today’s Revenue & Tomorrow’s Cash Flow (12 – 36 Months)

Future Growth R & D/Cap. Exp. (36 – 72 Months)

HMMM…STUFF TO THINK ABOUT

We need “functional & planned obsolescence” in our products that creates a new buzz. “Product driven” companies do this .

Think P & G…New & Improved Think Auto Industry…New model years

P&G AND CAR COMPANY MENTALITY

!   Keep the product fresh and compelling !   Planned obsolescence assists in achieving product

differentiation

HMMM…STUFF TO THINK ABOUT

Ask staff to uncover member needs that leads to innovation which creates elasticity for your products because they’ll be better and more economical. As a result, your product penetration improves, your members are dazzled, the brand is strengthened, loyalty increases, sales grow, profits grow and you increase & create more jobs.

CREATE “REAL GROWTH”

Create new categories or sub-categories for which competitors are not considered

MARKETING/BRAND

!   Be significant in your members’ lives !   Life Stages; Life Styles; Lifetime !   You must be more than service

Member participation and collaboration co-create brands & build bonds with the membership.

WHAT ABOUT THE CURVES WITHIN THE CURVE

WHAT CURVES ARE HIDDEN BELOW THE FANCIAL “WHAT’S BEHIND THE “S” W CURVE

Check Your Market Relevance Check Your Distinctive Capabilities Check Your Strength of Talent

STRIVE FOR “PSYCHIC PIZZA”

!   Compare CU to a “stellar industry” (not banks) !   Design to “head off” the problem !   Turn up all of the “unpleasants” that member

encounters

HMMM…STUFF TO THINK ABOUT

Members who have a problem with your CU instantly become more sensitive to the prices you charge, the rates you pay, the convenience you offer, etc. etc.

STRATEGIES TO AVOID MEMBER ISSUES

!   Pro-active Education: (warn the member about the problems they may encounter)

!   Have a Flexible Response: (across all channels) describing why you do what you do

!   Aggressively Seek & Solicit Complaints: (once you have education & channels of “why” in place)

THE REAL PROBLEM WITH MEMBER SERVICE

Inertia leads to complacency within the organization which results in member boredom which leads to member & credit union taking each other for granted

MAXIMIZE PROFITS

Member

Sales Marketing

Service

Interconnectedness Is Key Understand Your Costs Of Acquisition

ENTERPRISE WIDE UNDERSTANDING

Have a unified picture of what the member experience should look like

LOYALTY/BRAND INTEGRATION

Normative

Affective

Cognitive

Hard to imitate

Hard to deliver

Most meaningful

“Lifers”

Emotional/Spiritual/

“The Thing To do”

Make it Personal

Both functional & emotional …benefits are readily visible

Easy to Deliver

Easy to Lose

Easy to Imitate

TRENDS

!   Economic Dilemmas !   Increasing Regulation !   Changing Members

Get your handle around the impact of emerging trends that will effect your credit union over the next decade.

PARADIGMS FOR THE DECADE… Is Our Wealth Formula OK? Is This X & Y’s Life Event…Delayed Purchases, etc.? Will Pricing Elasticity Increase? Emerging Tech Trends? Marketing The Ol’ Fashioned Way? Branch Paradox…Is It Real? Strategic Planning Is Not An Event? Risk Management Changed Forever?

THREE CONCERNS OF MEMBERS

!   What lessons did we learn from the financial crisis !   Federal deficits and what needs to be done !   The current unemployment situation

WHAT DID CREDIT UNIONS LEARN ?

!   Misguided Comfort !   Misunderstood Risk !   Short-Term Choices

WHAT CUS CAN LEARN FROM THE FED DEFICIT

!   Raise income !   Gain operating efficiency (Note: Not “cut” expenses) !   Control future expenses

WHAT CUS CAN EXPECT FROM UNEMPLOYMENT

!   Monetary & fiscal policies aren’t helping !   Housing isn’t leading the recovery !   Households are retrenching !   Uncertainty weighs on business decisions !   The “hour-glass” of jobs

AMERICA’S WORKFORCE

Base Is Largest @ 15/1%

Middle Class

Low-Skill Low-Pay

High-Skill High-Pay

RICH GET RICHER

$180,810 95th Percentile

9X

Largest Gap Since Keeping Records -

1967

$20,000 20th percentile

JOB PICTURE

High

8.3% Unemployment

Low

Less Greater GDP

GDP (2011) +1.7%

Projected @ 2.5% Annualized 1st Qtr. 2012

GDP @ 4%

STRATEGY

!   Agility and nimble !   Quickly adapt !   Anticipate and Lead change

Develop deep differentiating capabilities that enables the credit union to separate from competition and “shape-shift” as the market changes.

TWO TYPES OF PROFIT

Good Bad

Know The Difference?????

The Wrong Choice Kills The Brand

LEADERSHIP

!   Tap into “Values Behaviors” !   Understand the myths & cultural norms that are

cultural drivers !   New, flexible, fluid management systems

Be visionary, be smart, empowering and supporting of a great “talent pool.”

THREE (3) THREATS TO THE BUSINESS PLAN

!   Imitation…Creates Cognitive Loyalty !   Operational Slack…Productivity Inefficiency !   Substitution…Products That Reduce Our Value

PLANNING SESSION DISCUSSION

!   Who Is Your Member? !   What Does The Member Value? !   How Do We Deliver Value @ An Affordable Cost? !   What Is Our Profit Formula? !   What Are The Key Resources Used? !   What Key Processes Are Employed?

ENTREPRENEURSHIP

!   Launching Products !   Create a Credit Union with meaning beyond the sum of

its parts !   Profit should not be only goal

Success comes from maintaining an entrepreneurial culture no matter how big or small.

THREE TIERS OF CONSUMERS

!   Close To You…Cognitive Level Of Loyalty !   Refuse To Use You…Unacceptable Offerings !   Never Thought Of You As An Option…Assumed

They Belonged Elsewhere

Go With The One That Provides You The Greatest Amount Of Potential

Make Sure You’re Profitable & Sustainable

A COMPLETELY FRESH PERSPECTIVE

!   See it from a fresh angle !   Don’t be anchored !   Reinvent the value proposition !   Understand what your CU really does !   Do you know what you’re really selling

ENTREPRENEURIAL TRAITS

!   Vision !   Passion !   Drive !   Integrity !   Innovation !   Risk-Taker !   Resilience !   Pro-active