Click on the following link:  http://www.fastcompany.com/1829462/martin-lindstrom-buyology-marketing-branding-creative-thinking-creative-pause?partner=homepage_newsletter

Nike is world famous for great marketing that continually delivers results.  Nike “invests” eight times more in social media than all of their conventional media, combined.   Does your marketing budget, and more importantly, the time your marketing people invest in all forms of Social Media look the same as Nike’s?

Credit Unions need to not only be active in Social Media, but take a highly focused, planned approach to all of their Social Media content and placement.  The following video is a “wake-up” call to all Credit Union CEOs, Senior Management Team members, Boards, CU trade associations, and Marketing folks…  Let’s get with it !!!

Review the following article by John Pavolotsky from CIO Insight:

“Cloud services” have arrived. Enterprises have either subscribed to cloud services or are seriously considering moving some of their IT infrastructure to the cloud. From an IT point of view, however, the cloud is not as new as it seems.

In fact, most CEOs already know quite a bit about the potential benefits and pitfalls of cloud services.  Consider an application service provider (ASP) transaction circa 2000. Even back then, cost, flexibility and the promise of eliminating at least some of a company’s IT infrastructure argued in favor of the ASP solution. Service level agreements (SLAs) were entering our lexicon. Information security was nascent. One of the overarching concerns was relinquishing control to the vendor, especially for mission-critical applications. That general concern, however, probably found its genesis in the mid-1980s, with the advent of outsourcing arrangements.

Fast forward to 2012, to the world of:

• the public cloud (infrastructure furnished to general public);
• the private cloud (infrastructure operated for specific customers);
• the hybrid cloud (a combination of public and private clouds);
• and the various cloud services models: software as a service (SaaS), platform as a service (PaaS) and infrastructure as a service (IaaS).

To be sure, the technologies (such as virtualization) have advanced, but in the end, a private cloud is still a remote data center, and SaaS is but an ASP under a different name. With a few exceptions, the conversation today between a CEO and CIO regarding a particular cloud service should not be terribly different from the conversation held in 2000 about an ASP solution. With cloud services, there is no reason to reinvent the wheel when it comes to helping your CEO understand the business implications of the solutions you’re recommending.

While a standard framework to assess each cloud service should be used, by definition each assessment should be different, as no two use cases, or prototypical data sets, will be the same. Email is not ERP, which is not CRM. Whether your company operates in a heavily regulated industry, such as financial services or health care, should weigh on the advisability of selecting a particular cloud service.

My suggested framework consists of three parts:

1. understanding all facets of the current solution;
2. conducting due diligence (technological, organizational and financial) about the proposed cloud service/provider; and
3. ensuring risk mitigation by negotiating certain protective provisions and remedies into the services agreement, if possible, and taking certain preventive measures, regardless of whether such an agreement adequately addresses the underlying concerns.

Understanding every aspect of the current solution is obvious enough, but its importance cannot be overstated. Consider information security, which continues to be viewed as one of the biggest impediments to the adoption of cloud services. At a minimum, your assessment should show not only the security measures available to protect the company’s IT infrastructure, but also how well those measures have, in fact, been implemented. Put simply, know your baseline and current risk profile.

Due diligence requires slightly more explanation. While a request for proposal is generally not necessary, care should be taken to understand whether the cloud service is in fact a “composite service” (meaning that it leverages the services of other cloud vendors, thus amplifying risk) and to request the SLA (if one is not readily provided). Your company should understand the vendor’s approach to data privacy and information security — including the tools used, historical breaches and root causes, if available, and remediation — as well as the vendor’s willingness to assist your company in its efforts to comply with statutory or regulatory requirements.

In fact, it is this focus on data privacy, information security and compliance that will most distinguish between the process of assessing a particular cloud service in 2012 and  evaluating an ASP solution back in 2000.

When selecting a cloud service provider it’s important to consider the vendor’s financial stability, and its organizational experience in running a data center or providing a hosted (cloud) service. The results of this due diligence should inform your contract negotiations. For example, if a question exists about the financial viability of the cloud vendor and your company has  the technical capability to operate a system internally or through another trusted vendor, remedies such as a source code escrow should be considered.

The cloud services agreement is a complex issue. Many such agreements are effectively nonnegotiable, and you should use caution trusting vendors with mission-critical functions or sensitive company data. If pushed, many vendors will negotiate their agreements, and your efforts should be focused on addressing the entire data life cycle. Among the points your contract should expressly provide:

• that the customer data is owned by your company and shall be deemed your company’s confidential information;
• specifying for what limited purpose and where the data is processed and stored, and for how long it will be retained; and
• expressly providing that the data will be made available to your company on demand, regardless of whether there is a dispute between the parties or any amount is then outstanding.

Further, the agreement should provide that the cloud vendor will cooperate with your company and with any new vendor in migrating the data when the contract has been terminated or has expired. The cloud services agreement should also specify the frequency of data backups as well as the pricing for any additional data backups and storage.

Care should be taken to detail the vendor’s information security practices and to negotiate in a duty to defend and otherwise make the company whole (indemnity) if a claim is asserted by a third party (e.g., one of your company’s customers) against the company based on a security breach caused by the vendor. Note that the indemnity should be carved out from the limitation-of-liability provision, which will usually limit damages to 12 months’ fees.

An important component of risk management is insurance, including a “no-fault” policy for security breaches, to which your company should be named as an additional insured. In terms of intellectual property, there is, as in the case of a traditional on-site deployment, the possibility that a third party may assert an infringement claim against your company. As in the case of a claim based on a security breach, an indemnity is a common protective measure and remedy.

Even where your cloud vendor agreement is nonnegotiable (or minimally negotiable), certain measures may be implemented to reduce risk. For example, if the vendor will not agree to make certain representations and warranties (promises) regarding information security, perhaps the implementation can be structured so that personal or other sensitive or valuable information (such as trade secrets) will not be submitted to the vendor.

Other basic good practices of IT system management can also help reduce risk. Install antivirus software on connected mobile devices, laptops or desktops accessing a particular cloud service through a Web browser to reduce the likelihood of a security breach. Implement redundant internet connections.  Create a remediation plan in case there is a security breach. Develop a contingency plan if the cloud service is suspended or unavailable beyond the window stated in the SLA.

Moving to the cloud is hardly ever an all-or-nothing proposition. A company may start with an application that is not mission-critical, and then as added measure build in redundancy for some time. As an intermediate step, a company can try a private cloud solutionbefore moving certain applications to a public cloud.

In sum, understand the risk profile of the particular cloud service and plan accordingly.

Check out this recent article from eWeek.com.

1. Experts are clueless. Experts—journalists, analysts, consultants, bankers, and gurus can’t “do” so they “advise.” They can tell you what is wrong with your product, but they cannot make a great one. They can tell you how to sell something, but they cannot sell it themselves. They can tell you how to create great teams, but they only manage a secretary. For example, the experts told us that the two biggest shortcomings of Macintosh in the mid 1980s was the lack of a daisy-wheel printer driver and Lotus 1-2-3; another advice gem from the experts was to buy Compaq. Hear what experts say, but don’t always listen to them.

2. Customers cannot tell you what they need. “Apple market research” is an oxymoron. The Apple focus group was the right hemisphere of Steve’s brain talking to the left one. If you ask customers what they want, they will tell you, “Better, faster, and cheaper”—that is, better sameness, not revolutionary change. They can only describe their desires in terms of what they are already using—around the time of the introduction of Macintosh, all people said they wanted was better, faster, and cheaper MS-DOS machines. The richest vein for tech startups is creating the product that you want to use—that’s what Steve and Woz did.

3. Jump to the next curve. Big wins happen when you go beyond better sameness. The best daisy-wheel printer companies were introducing new fonts in more sizes. Apple introduced the next curve: laser printing. Think of ice harvesters, ice factories, and refrigerator companies. Ice 1.0, 2.0, and 3.0. Are you still harvesting ice during the winter from a frozen pond?

4. The biggest challenges beget best work. I lived in fear that Steve would tell me that I, or my work, was crap. In public. This fear was a big challenge. Competing with IBM and then Microsoft was a big challenge. Changing the world was a big challenge. I, and Apple employees before me and after me, did their best work because we had to do our best work to meet the big challenges.

5. Design counts. Steve drove people nuts with his design demands—some shades of black weren’t black enough. Mere mortals think that black is black, and that a trash can is a trash can. Steve was such a perfectionist—a perfectionist Beyond: Thunderdome—and lo and behold he was right: some people care about design and many people at least sense it. Maybe not everyone, but the important ones.

6. You can’t go wrong with big graphics and big fonts. Take a look at Steve’s slides. The font is sixty points. There’s usually one big screenshot or graphic. Look at other tech speaker’s slides—even the ones who have seen Steve in action. The font is eight points, and there are no graphics. So many people say that Steve was the world’s greatest product introduction guy..don’t you wonder why more people don’t copy his style?

7. Changing your mind is a sign of intelligence. When Apple first shipped the iPhone there was no such thing as apps. Apps, Steve decreed, were a bad thing because you never know what they could be doing to your phone. Safari web apps were the way to go until six months later when Steve decided, or someone convinced Steve, that apps were the way to go—but of course. Duh! Apple came a long way in a short time from Safari web apps to “there’s an app for that.”

8. “Value” is different from “price.” Woe unto you if you decide everything based on price. Even more woe unto you if you compete solely on price. Price is not all that matters—what is important, at least to some people, is value. And value takes into account training, support, and the intrinsic joy of using the best tool that’s made. It’s pretty safe to say that no one buys Apple products because of their low price.

9. A players hire A+ players. Actually, Steve believed that A players hire A players—that is people who are as good as they are. I refined this slightly—my theory is that A players hire people even better than themselves. It’s clear, though, that B players hire C players so they can feel superior to them, and C players hire D players. If you start hiring B players, expect what Steve called “the bozo explosion” to happen in your organization.

10. Real CEOs demo. Steve Jobs could demo a pod, pad, phone, and Mac two to three times a year with millions of people watching, why is it that many CEOs call upon their vice-president of engineering to do a product demo? Maybe it’s to show that there’s a team effort in play. Maybe. It’s more likely that the CEO doesn’t understand what his/her company is making well enough to explain it. How pathetic is that?

11. Real CEOs ship. For all his perfectionism, Steve could ship. Maybe the product wasn’t perfect every time, but it was almost always great enough to go. The lesson is that Steve wasn’t tinkering for the sake of tinkering—he had a goal: shipping and achieving worldwide domination of existing markets or creation of new markets. Apple is an engineering-centric company, not a research-centric one. Which would you rather be: Apple or Xerox PARC?

12. Marketing boils down to providing unique value. Think of a 2 x 2 matrix. The vertical axis measures how your product differs from the competition. The horizontal axis measures the value of your product. Bottom right: valuable but not unique—you’ll have to compete on price. Top left: unique but not valuable—you’ll own a market that doesn’t exist. Bottom left: not unique and not value—you’re a bozo. Top right: unique and valuable—this is where you make margin, money, and history. For example, the iPod was unique and valuable because it was the only way to legally, inexpensively, and easily download music from the six biggest record labels.

Bonus: Some things need to be believed to be seen. When you are jumping curves, defying/ignoring the experts, facing off against big challenges, obsessing about design, and focusing on unique value, you will need to convince people to believe in what you are doing in order to see your efforts come to fruition. People needed to believe in Macintosh to see it become real. Ditto for iPod, iPhone, and iPad. Not everyone will believe—that’s okay. But the starting point of changing the world is changing a few minds. This is the greatest lesson of all that I learned from Steve.

Read more: http://blog.guykawasaki.com/2011/10/what-i-learned-from-steve-jobs.html#ixzz1cnSN3HTJ

As you can see in the graphic, there are four basic forms that illustrate the IT / Cloud relationship:  On Premise (Traditional IT), Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS).  Each form has its own set of benefits and drawbacks.

The traditional IT model, On Premise, is what many of us are most familiar with.  In this model you must maintain all of your own systems, software, and data.  In today’s world, this is typically the least efficient model because you must have the personnel, equipment and expertise to control and maintain the entire system.  While you do have a significant amount of control, this model generally has a higher opportunity for failure and requires a significant investment of capital in equipment, software, and ongoing personnel requirements.

The IaaS (Infrastructure as a Service) model is most clearly seen in the “data center” model.  In a data center, the equipment component is eliminated because you are using someone else’s hardware, but you are still responsible for the software that is installed on it.  This has some benefit over the On Premise model since you no longer have to worry about hardware failure.  However, this model still requires a knowledgeable staff to maintain the software and systems, providing  updating, connections, security and everything else that goes into maintaining complex networks.

In the third model, Platform as a Service (PaaS), the vendor controls the hardware and the core software on a server.  The provider then gives the subscriber limited access to change the data and structure on top of the base system.

Website hosting is an excellent example of the PaaS model.  The website is on someone else’s server.  They have an installed operating system and core software, but the subscriber has complete control over the content of the site.  This is a perfect marriage of the service provider and service user.  The custom side of Salesforce is another example.  Salesforce has the platform built, the subscriber must follow the rules (code) of their platform, but can still track anything desired such as, opportunities, clients, participants, contracts, etc.  Salesforce can also be used in a SaaS (Software as a Service) model while website hosting is a strictly PaaS solution.

Software as a Service (SaaS) consists of software on the web that is a hosted application – you must “log into” it.  Much like traditional software, there may be a significant list of preferences that you can customize, but at the core, the application is out of the box.  In this model, the hardware, software, platform, and basically the entire package is completely taken care of by the vendor.  You do not need to know anything about code, platforms, or IT in order to utilize this kind of service.

Box.net, AtTask, Salesforce and Google Apps are all examples of the SaaS model.  Typically, large support packages are also included as a part of your subscription or membership.  This model eliminates the need for a large number of highly trained IT personnel and is generally the most cost effective option over all if you can find the right programs to meet your needs.  It is important to note that SaaS and PaaS models are both updated automatically so that you are always working with the most current version which is a great benefit.

While each of these models has its benefits in today’s marketplace, careful thought and investigation should go into which model will provide the most benefit at the best cost for your organization.  Generally speaking, a PaaS or SaaS system will provide the most easily customizable options with the least investment, especially when the ongoing expense of personnel to “manage” more traditional solutions is factored in as part of the expense.

Also keep in mind that it often makes sense to mix and match solutions to best meet your needs, for instance it may make sense to use a SaaS program for your email and an IaaS provider for your data storage.

The landscape of IT and Cloud relationships is quickly changing and expanding.  Now is the time for most organizations to investigate their potential entrance into this new world.  The new models that are now available can provide a level of flexibility, at a reasonable investment, far beyond what has traditionally been accessible.

For more information on cloud models and how to go about auditing and converting your organization please contact Daniel Nice from our Partner organization Parachute Applications, LLC at 303-800-4525 or at daniel@parachuteapplications.com

http://www.fastcompany.com/1754859/how-square-is-accidentally-disrupting-the-entire-payments-industry?partner=homepage_newsletter

Based on NUCA most recent report on the state of the insurance fund, just shy of 25% of all CUs are significantly distressed and have CAMEL 3’s, 4’s and 5’s! This is shocking in and of itself. When you tie this fact with Nice’s provocative pronouncements in the article about the state of troubled credit unions, YOU, as a leader, have much to think about strategically – including… and beyond mergers.

Click on this link to view the full article: www.creditunionmagazine.com/articles/a-merger-slowdown

http://online.wsj.com/article/SB10001424052748704739504576067461795827534.html?m

When the members of the class of 2010 entered business school, the economy was strong and their post-graduation ambitions could be limitless. Just a few weeks later, the economy went into a tailspin. Theyʼve spent the past two years recalibrating their worldview and their definition of success…

View the complete article by clicking the link below.  You can also listen to the article by clicking the link below “Online Audio”.

Printed Article:
http://alexcusack.files.wordpress.com/2010/08/how-will-you-measure-your-life.pdf

Online Audio:
http://www.airsla.org/broadcasts/Readers_Digest110123.mp3

The following article by recognized business author and consultant Patrick Lencioni, “nails” the practical reality of dealing with a difficult employee (and can be applied to team member, volunteer, family member) etc.  I continually see this problem in many of our clients – even those high performing ones.

This short read may cause you to rethink how you approach all relationships and communication, and better prepare you for the new year:

http://www.businessweek.com/managing/content/oct2010/ca20101022_269023.htm

Rethinking the way you approach your business doesn’t mean that what we are currently doing is completely broken, it’s just one of the ways to continually improve what you have, so you have more of it, to provide to members and other stakeholders…   And isn’t creating more economic value for the members the primary reason why we do what we do?

We encourage you to read the following article by Aaron Levie, a Gen X’er, who also happens to be founder and CEO of Box.net – one of the largest, highly successful cloud computing enterprise providers in the world – whose company is less than five years old and has $30 million in funding.  Aaron is the visionary behind Box’s product and platform strategy.

His article “Building the Simple Enterprise” drives home some strong lessons we need to adopt, and has broader implications on the success of all credit unions in the future.

http://techcrunch.com/2010/11/07/building-the-simple-enterprise

Social networking has evolved to the point where you cannot neglect utilizing this growing force.  While the younger generation began this social phenomenon, all generations are using the social networking available online and it is critical to get your organization’s presence established in this cyber world the right way.

The link http://blog.kissmetrics.com/facebook-marketing/ will connect you to “Facebook Marketing:  A Comprehensive Guide”.  This article will provide an introduction to using Facebook (the largest social network in the world) as a proper marketing tool.  It gives simple and straightforward instruction on how to use pages, ads and groups as a part of your marketing efforts.

Now is the time to make the effort to learn the “ins and outs” of social network marketing – Don’t get left behind!

Few modern day platforms have created the exposure delivered by Apple’s iPhone.  It’s a tool itself, and a vehicle for distributing what’s “in” – including some of the hottest games.  Among them is the game sensation Archetype that hit the U.S. market in July.

The game is a model of innovation and effectiveness that financial institutions can learn from.  A multiplayer, first-person shooter game, Archetype was Apple’s “App of the Week,” chosen as the one application featured on iPhones and Apple’s website.  Produced byVILLAIN and developed by MunkyFun, the game hit #6 in “Top Paid” apps and #3 in “Top Grossing” apps, out of ½ million applications offered.  It is an elegant meld of software, the interactive web and the art to produce a runaway hit in its market.

Timothy Nice (son of Ron Nice of Nice Enterprises, Inc.) is Art Director at MunkyFun and took time from his busy schedule to share what’s behind the game’s success.  His insight has import into how credit unions can win in the electronic world and beyond:

FOCUS

Do one thing amazingly well. Game development is a high risk, high return endeavor.  Either a game is a hit and everyone wins, or it’s not and everyone loses significant money, time, and reputation.  As such, doing one thing amazingly well is essential.

Archetype is rigorously focused on one thing.  The game is an archetypal, multiplayer first-person shooter game, adapted to the controls and environment of the iPhone.  It is a community-only game:  Gamers play on a five-person team, competing against another team for wins, points, and medals.  Game statistics are posted and players advance as they’re promoted from Cadet, up through 35 ranks, to 1st Circle Dreadnaught, based on their performance.

The visuals are fantastic, game play is solid, and the game is well built.  In fact, when the iPhone 4 launched, with a much higher resolution screen only weeks before the game’s launch, the team made adjustments to the game but not wholesale changes.  Both the game and team were robust, so the team could adapt quickly.  How good the game looks on the iPhone 4’s Retinal Display is now a major selling point. Archetype nails its category, plays well on older iPhones, and is absolutely amazing on the iPhone 4.

What was most difficult about making the game?  “The last 20%,” states Timothy Nice.  “Starting was easy.  Moving through game development was easy.  But polishing and testing were a big challenge.  They’re also the added touch that made Archetype strong enough to win mass audiences and profitability.”

Application: Your organization needs an arena for R&D that drives innovation.  It may be led by marketing, member service, technology, or a cross-functional team.  Decide who it will be in your organization.  Next, they need a laser-like focus.  Should they create a new delivery channel, a new approach for member experience, or a new product offering?  Be sure the team’s “charter” is incredibly well defined, focused, and written.  Launch them with the task of doing one thing amazingly well.

More broadly, now more than ever FIs must focus.  Most of the credit unions with high profitability consistently have a great degree of focus in their business model and strategic plans.  The models include technology-intensive models, rigorous-adherence to specific target markets, and/or uniquely different models for engaging members.  In fact, you could argue these leading CUs do one thing amazingly well. Are your plans and offerings extremely focused?  To test this, just ask stakeholders at many levels of the organization.  If they all identify the same focus, it’s probably real.  If they don’t, it’s time to get serious about applying focus that changes everything about your organization.

Be sure everyone can answer the question in the same way:  What is the one thing your organization does amazingly well?

When you’re rolling out a new offering or convenience tool, how much attention and focus do you place on perfecting the last 20% (the finishing, polishing, marketing, user interface, etc.)?  In our experience, few financial institutions apply the needed attention to the last 20%.  Often, some IT guy builds the action plan and nails his area of implementation.  Everything technology-related is detailed out in the plan.  The marketing folks hate action planning, so there are few bullets in their area, which are often limited to “build marketing plan” and “implement marketing campaigns.”  Operations and HR may include a bit more detail such as “schedule training,” “ensure frontline understands new offering,” etc.

This is the unfortunate reality, that last 20% is almost always under-done.  It is like taking the time and effort to cook an elaborate, gourmet meal and then serving it on paper plates and realizing you forgot to invite over your friends and family.  More forethought and rigor are needed for the last 20% of new products, new technology and automated delivery tools, new branches, new promotions, public relations, etc.  The organization as a whole needs to “nail” the last 20%.

It is incredible how many “me too” offerings there are in financial services.  It seems like organizations are always saying, “We need that too.”  But they don’t take the time to do it well.  They roll out the same old thing…  Same average online banking.  Same average marketing promo.  Try again. Nail the last 20% by tailoring the offering and interface so it is notable and better than other providers.  Do it amazingly well, or don’t do it at all.

MARKETING

Marketing blitz. In addition to ascending the success lists, Archetype sold 160,000 apps in the first week of U.S. sales.  What has made Archetype so successful, and why so quickly?  In addition to ensuring the game’s focus, VILLAIN effectively positioned and marketed the game.

Archetype targets the market of original Halo players.  It converts the magic and game play of that game-console classic into the iPhone environment.  To get user input and create pre-launch buzz, Archetype originally launched in the Czech Republic.  This gave them the opportunity to work through the normal start-up challenges in a live, but market-safe, environment.

For the U.S. launch, marketing was incredibly strong and focused.  Most of the marketing dollars spent was in a three day period near the launch date.  Compared to similar games, the marketing budget was large.  The extensive spend focused on gaming thought-leaders and communities.  Much of it was invested in advertising on gaming forums, technology blogs, and iPhone websites.

It worked.  The game quickly reached opinion leaders in the gaming community and created editorial accolades.  The game climbed the charts even before being highlighted as APP OF THE WEEK by Apple, which isn’t common.

The iTunes distribution model is attractive and the market is huge:  Apple sold 24 millioniPhones in 2009 alone.  Apple may sell over 40 million iPhones in 2010.  And the cost of distribution of a game through iTunes is better than other platforms.  Paying Apple 30% is cheaper than the costs for other consoles, and is far lower than creating your own delivery system.

The game’s value proposition is strong.  The developers set out to create a console-caliber experience on the iPhone.  The value proposition is based in equal parts on content, technology, and price.  It nails all three (like Halo did), and there are no holes:

• The content; the game itself, is one of the best.
• The technology; the iPhone, works well as the platform, using the touch screen “joy stick” for moving and turning your player, with vivid screens and audio feedback.
• The value; unbeatable (at $2.99) when compared to games on other platforms, and is in the range of competing games on the iPhone.

For the game’s back story, tactics, and related information visit the Archetype Wiki.

Application: Unfortunately, our industry has few highly successful marketing professionals and marketing organizations.  While some select credit unions do excel in this area, it’s not the norm.  Our industry’s history is with core sponsors and clearly defined (and connected) groups.  This led to our widespread strengths in service and relationships, but it also led to marketing weakness, since historically, we didn’t need much marketing.

Today, marketing plays an essential role toward numerous outcomes – to spark word-of-mouth, create a loud public “splash,” or to win over thought-leaders in your membership.  Marketing must be laser targeted on a specific market and purpose.  It is essential that everyone in your organization (including marketing) know the key “pressure points” that will make your current or upcoming product launches successful.  What are they for your organization?  It is also essential to know when and how to “blitz market” in order to build major awareness.  How strongly is that built into your competencies and plans?

TALENT

Know your strengths and weaknesses. The game’s developer, MunkyFun, is a small team of gaming industry veterans who collectively contributed to over 60 games, including the hit console game, Star Wars:  The Force Unleashed.

As a team of AAA content developers, they know their strengths:  Creating great games.  But they also know and addressed their weaknesses by outsourcing the rest. To match their developer talent, they searched out the best talent for other aspects of the project.  To do this, they went online and found the best deliverables in the categories they needed.  This included contracting with experts to make the game’s introduction movie and itswebsite.  It wasn’t cheap, but getting the best in each area added needed polish and contributed to “the last 20%”.

Application: It’s essential to know thyself, so you can play to your strengths and find others who fill your weaknesses.  Too often, credit unions take the extremes of either doing a new endeavor all in-house – where projects can take way too long and results are sub-par – or fully outsourcing the undertaking – where a vendor drives the entire offering and drastically cuts into its long-term profitability to the organization.  Find the balance by knowing your strengths.  If your organization is strong in member service and technology development, do that in-house and find key contractors to lead other aspects like marketing and user interface.

Is your organization and its leaders strongly self-aware of its strengths and weaknesses?  If so, list out a concise statement of what those strengths are:  That’s where you should be putting your energy.  Next, list out the areas that are not your strengths:  That’s where to outsource.

For example, if one weakness is online banking and your e-branch, then task several team members to scour the Internet for “best-in-class” organizations who have achieved great results in those areas.  Contact them, find out who developed their e-channel, and hire them to contribute to your web offering.  To be clear:  Don’t just find a good CU website and hire your same old CU vendor to do your job – unless you are sure they are the missing link in your development continuum.  In our experience, many of the top-tier (technology) offerings are not being created by the traditional CU providers.

AND BEYOND

Innovate around the core. Archetype’s current game is focused:  A multiplayer, first-person shooter.  They nailed their core deliverable and quickly created a name for the game.  But there’s more to come that will leverage the game into a franchise.

Players are continually asking for more and the team is egger to deliver.  Some logical extensions are new maps and downloadable content.  This builds the franchise, extends and reinforces sales and provides additional revenue streams.

The game will have legs well into the future.  As shown in Jim Collins’ findings, the best companies keep innovating around the core.  That is what’s planned for Archetype.

Application: It is essential that you keep innovating around your core.  In a member-experience model, this can mean experimenting with new ways to engage and please members.  In a technology-driven model, this can mean experimenting with new efficiencies, creating greater simplicity and self-service options.  Challenge your group to answer the question:  How can your organization or department innovate around its core?

Let’s say you’re rolling out business services.  You won’t likely nail every top tier attribute in your offering in the first phase.  Instead, find one aspect of your business offering that will make a big splash – one thing to do amazingly well.  Make the most out of that attribute – with a marketing push, member feedback, etc.  As you progress from there, find another way to make the offering stand out – another “one thing” – that relates to the core, but creates additional momentum for your product line.

The underpinnings of Archetype’s success can spark innovation in our sector.  Take a break from worrying about regs, corporate assessments and your current ROA in order to invest in your future through focus, marketing, talent management, and beyond.  We challenge you to become an archetype of effectiveness in our industry.

Check out Nice Enterprises’ podcast “Become Fishers of Success – Friday, 2/27/09” for more about the difference motivated people can make in an organization.

Unfortunately, finding motivated employees and/or developing motivated employees, often proves to be a difficult task.  According to the Gallup Organization, 74% of American employees are disengaged clock watchers.  That needs to change.  Faced with that statistic and our desire to produce successful and thriving organizations, we can’t rely on artificially “pumping up” our employees.   We must make the effort to discern where motivation comes from and how we can encourage its grow.

Discovering what motivates employees is critical because motivated employees are far more productive, better fulfilled, deliver better service quality, and contribute more significantly to their organizations.  (For background click employee engagement.)

To better understand motivation, let’s start with a quiz:  If I offered you either of two jobs that you had to do for the rest of your life, which would you choose?

1. Being an architect for $75,000 per year, or
2. Working at a toll booth for $100,000 per year

Interestingly, over half of the people posed with this question will choose architect, even though the financial incentive is lower.  That uncovers what’s been missing from conventional views about motivation…

Conventional Views

Traditionally, there have been two views.  The first view focused on basic motivations:  People are motivated by fear, primal desires, etc.  The second view, most common in businesses today, is of extrinsic motivation (incentives or “carrot and stick” motivators).  The boss links rewards to doing what he wants done and links penalties to doing what he doesn’t want done.  This ensures employees are motivated, right?.

While if-then motivators do work in many situations, there is more…

Monkeys, Puzzles, College Students, and Incentives

Consider a third view:  The power of intrinsic motivation, the innate motivation from the work itself.  In his book Drive, Daniel H. Pink compellingly argues that most companies miss the power of intrinsic motivation.

Conventional views say you shouldn’t want to do work unless you have an external reason to do it.  But studies indicate otherwise.  When puzzles are placed in the cages of lab monkeys, they solve the puzzles, in spite of there being no extrinsic reason.

The same is true of college students.  In lab studies, they choose to solve problems without an external incentive.  Equally interesting, after students are given incentives to solve a puzzle, they no longer solve subsequent puzzles unless incentives are offered again.

Understanding Intrinsic Motivation

People can be motivated by the intrinsic attributes of their work and jobs.  As leaders, there are three factors to look for that strongly contribute to work being intrinsically motivating:

1. Autonomy: People want to have control over their work.  They want to know what is theirs to do and have the freedom to determine how to do it.

2. Mastery: People want to get better at their work.  They want to overcome challenges.  They want to be better today than they were yesterday.  They want to grow and improve.

3. Purpose: People want to be part of something bigger than they are.  They want to contribute to something larger than themselves.

Being Creative

Google creatively taps intrinsic motivation:  They offer “20% time” where employees are free to invest one day per week on any project they feel is valuable.

Similarly, an Australian software company Atlassian holds a quarterly “FedEx day” where each employee can collaborate with others on any project they feel is important.  They invest the day (and often much of the night) accomplishing their project.  It’s called a FedEx day because they have to deliver something overnight: The following day, each team presents what they produced.

Risk of Extrinsics

Intrinsic motivation brings traditional tools into question.  For example, if-then incentives are helpful only for certain “algorithmic” tasks.  There are two types of tasks: algorithmic and heuristic.  Algorithmic means a logical sequence of steps or rules for solving a problem, while heuristic means a process of thinking and arriving at a solution through experience, trial and error, or creativity, rather than a set of rules.

Incentives do speed productivity in algorithmic work, but they often slow results in heuristic work.  This is because incentives make you focus in on the specific task and speed up, which is the opposite of what’s needed to prompt out-of-the-box thinking and creative problem solving.

We must take these task types into account when considering incentives.  When we want to encourage creativity and an openness to change and grow, we need to highlight and promote the intrinsic motivation of a task or position by providing employees the opportunity to achieve autonomy, mastery and a sense of purpose within that role.

Here are tips that help promote (and not derail) intrinsic motivation:

• Separate “if-then” motivators: For example, if you give your child an allowance for being part of the family, also give your child chores for being a part of the family.  Don’t give your child an allowance if he does his chores.  If you do, he will expect to get paid every time you ask him to do something.
• Catalyze creativity: Don’t offer incentives for the person who can devise the most creative marketing piece.  Do offer pizza if the team can stuff all of the mailers by 3pm.

Remember, 74% of employees are disengaged clock watchers.  You can help change that by tapping intrinsic motivation.

It probably won’t even take ten years…

Historically, IT has meant “those guys in the back room” administrating servers, networks, and applications.  They purchased hardware that ran software, which were maintained, configured and updated by IT.  System end users experienced big bursts of stress when a manual update or patch caused an outage or a new software version caused an intense learning curve.  The IT department held the ultimate control of what happened when, and as such, it was usually the most backlogged department in most organizations.

Fast forward a few years…

All you need is the onramp to your centralized applications located in the cloud.  Your interface device (PC, smart phone, etc) is a portal to the application and data which might be stored across the country at a professionally managed datacenter with massive scale, redundancy, and efficiency.  No longer is the internal IT department the key.  End users can now deploy and customize what is needed to run your business in real time.

Cloud Computing: According to an IBM study, by 2011, 25% of software will be deployed across the cloud.  Cloud computing is changing how technology is acquired, used, maintained, and updated.  Popular on-demand solutions like Salesforce and @task offer distinct advantages, and few risks.

No expensive servers, so no maintenance or replacement.  Patches, bug fixes, and updates are applied by the provider in real time, so no holding onto old software, no bulk updates or IT issues that must be managed.

The primary difference and advantage of cloud software is that anyone in an organization can deploy and maintain robust cloud applications.  Instead of the “back room” controlling when you add that new field in the database, the end user, who actually needs it, can log into the cloud system and change what he/she wants.

Their Tool, My Apps & Our Community: A provider builds a system, like Apple’s iPhone, Salesforce’s CRM or Google’s Android and Google Apps.  Third parties create applications that interface with the system.  A community emerges.

For example, Salesforce has an extensive community and hundreds of applications.  Some are truly incredible and highly practical:

• Conga Composer: Automates and outputs custom documents from fields in your Salesforce database.  We use it to convert a 45 minute process into a one-minute click stream.  (And it is very cool.)
• Youcalc or Boomi: Integrates information from Salesforce and other applications, so you can see all of your organization’s performance data and monitoring information in one spot.  Imagine one dashboard that automatically updates and contains key metrics from your core system, MCIF, CRM, NPS, project management system, etc.  In the new reality of the web and cloud computing this sort of integration can be cost-effective and time-efficient.

Try Before You Buy, & Sometimes, Don’t Buy at All: Cloud solutions enable consumers to try a product before they buy, and consumers are increasingly demanding this from all providers of electronic solutions.  Salesforce offers a free trial, considers it the company’s best sales tool, and says it’s essential to have in the “on-demand world.”  If consumers can try before they buy, they are happier and you will sell more online offerings (and sell them more efficiently).

Some companies, like Google, even give away their applications.  In this free economy consumers are using advanced applications that don’t cost them a dime.  Through advertising and other means of revenue generation, companies like Google have built empires based on giving away 95% of the products – talk about a different type of business model!

So why can’t a member try your online banking before they buy it?  There is great potential for those who can break the mold of traditional banking and really harness the technology models that are out there, can anyone say “Mint?”

Merchant Services are Easy: A small venture capital backed company, called Square, recently launched a tool that allows merchants to accept payments anywhere.

It uses a small, square input device that conects to the headphone jack on your iPhone, iPad, or Android.  The customer swipes his credit card past the reader, signs with his finger on the phone, and he is done.  He leaves with his purchase and walks away while receiving the receipt by email or text.  There is no upfront cost for the merchant or the consumer.  No hassle for anyone.

Technology is moving quickly, so quickly in fact, that by the time most CU’s get one technology service implemented for the member / customer it is already out of date.  You can see this in the world of mobile banking.  Many organizations have started to develop and implement iPhone apps (which is great), but now there is the whole new market of Android apps.  In this new technology world you have to move faster and at less cost.

The scale and speed at which technology is changing requires a completely new breed of IT.  It requires people who understand the business in which they work and who can consistently find solutions that can be tailored to its specific needs.  You need to be able to implement solutions that increase efficiency without months of implementation and without having to setup a complex infrastructure of servers, software, and networks.  These solutions must also have a focus around the end user (employee or member / customer).

Does your IT department actively find solutions that fundamentally change your business for the better?  Do you listen when they do?  Are you too caught up in protecting (or putting up with) the status quo?

Now is the time to build a different kind of IT department, one that finds and utilizes innovation and new technology.  We need to hire visionaries who can see how cloud software can be tailored to improve our businesses and propel us forward.

http://www.fastcompany.com/video/why-change-is-so-hard-self-control-is-exhaustible?partner=homepage_newsletter

The Balance Sheet Approach

Randy Komisar is Managing Director at venture capital firm Kleiner Perkins Caufield & Byers, where decisions mean either funding the next great company (like Google) or losing millions of dollars.  In an interview with McKinsey, Komisar offers a simple balance sheet technique for making better decisions.

Compile the group of people responsible for deciding whether your organization will pursue an opportunity.  To start the meeting, say “Tell me what’s good about this opportunity.  Tell me what’s bad about it.  Do not tell me your judgment yet.  I don’t want to know.”

In this way, participants can freely explore all angles, offer contrarian views, and uncover the underlying merits of the opportunity.  Often they gain a more fully-informed perspective on the opportunity and sometimes change their opinion regarding whether or not it should be pursued.

Plan B

The data shows that for large undertakings, the initial plan, “Plan A,” often fails, so you need an approach for determining a Plan B, C, D, etc. The Plan B approach helps you make the most of a new undertaking.

As a simple example, let’s say your organization used the Balance Sheet approach to determine it will roll-out a new product.  Now comes the planning process.  You create your plans (business case, goal statement, project plan, etc.).  That is “Plan A.”

But in reality, you cannot anticipate everything.  Plan A is likely flawed and may be built on faulty assumptions.  So you need to identify how you will get to Plan B, based on data you gain from outside your organization and as you implement.  Plan B is not a “contingency” or a “scenario” plan A, but rather a way to identify the larger questions and the assumptions, which must be identified and tested to find the underlying value in the business plan.

To create your method for reaching Plan B, first “dashboard” the assumptions of your Plan A.  List the underlying assumptions for why you are pursuing the opportunity and what you perceive must be true for it to succeed.  Many of these assumptions can be validated or refuted based on secondary data from other organizations that have completed similar undertakings.  The most important ones to list are those that are leaps of faith (those for which there is no existing data).  These need to be the assumptions that are the most closely monitored.

Now, create your assumptions dashboard.  This can be as simple as an Excel sheet, with columns for “Assumptions,” “% Validated,” “What evidence validated or refuted assumption” and “Plan for moving forward if not validated.”  Use the dashboard to find Plan B by regularly testing and modifying your assumptions.  When assumptions change, you should change your plans and model.  If you cannot find a Plan B, you should scrap the project early.

Companies, such as Intuit, that have used the Plan B approach find that project owners are more effective at either scrapping projects early or delivering better results, because it is easier to see what’s working or failing in individual assumptions (rather than the project as a whole) – while there is still time to course-correct.

Three Candidates

Anne Mulcahy, Chairman of Xerox, recommends this approach to force the hard people-decisions.  Make it your organization’s policy that leaders must have three good candidates for each job.  She calls it your “people portfolio.”

It challenges hiring managers to look beyond their typical sources to find candidates.  It also provides the substance for good debates – because instead of saying, “Can Mary do the job?,” leaders debate, “Which of these candidate will best fit the role and our overall direction?”

She also says teams need the essentials of courage and listening.  The best teams have both:  The courage to passionately disagree and audacity to take unpopular stands, combined with openness to learn and really listen to others’ opinions.

Great leaders and team members have courage and listen, which leads to the right conversations, learning, and growth.  When used properly, the “Three Candidates” approach can help build this kind of effective team.

PreMortems

We’re all familiar with the valuable practice of project postmortems.  After a project fails or is brought to completion, best-practice says do a postmortem or after action report.   Identify what worked well and what you will do differently next time.  Document and share your findings so your organization will better execute on future undertakings.

Premortems, as devised by behavioral psychologist Gary Klein, are similar, except they’re done before the project begins.  In the planning phase, gather your project team (and sponsors, if appropriate) and perform a premortem.

Say, “Assume I have a crystal ball.  Looking into the future, we know this project fails.  Take two minutes and list out why it fails.”  Based on these results, you won’t likely scrap the project, but you will most likely change your plan.  Often leaders can anticipate holes that may result from key risks, organization tendencies, faulty assumptions, or anticipated future situations.  But without a premortem, often these issues go unaddressed.

Each of these expert decision-making approaches are invaluable.  Take time now to determine the settings in which your organization will use them.  For more, contact us at (303) 980-8100 ext. 202 or rich.scholes@trynice.com or ext. 102 or ron.nice@trynice.com.

Please download the assessment tool that accompanies this article.

“What is your business model?”  This is an important question that can be difficult to answer.

Every business needs a clearly defined, rigorously tested, and aligned business model – especially amid the challenging environment most organizations face today.  Taking a systematic, design approach to your business model will improve your organization and its performance.  According to Wikipedia, “A business model describes the rationale of how an organization creates, delivers, and captures value – economic, social, or other forms of value.”  Your business model is the “big picture” for your business, the context for making decisions, and the focus for where to improve your organization.

When diagnosing where to improve your business, business model assessment tools provide valuable data on whether your leaders have clarity on the business’ needs – and whether your leaders, managers, and employees are in agreement on where to improve the business and its current status.

When building your business, taking a design approach and using a business model blueprint enable you and your leaders to see the big picture of your organization.  They provide the framework for having the hard conversations without making them personal.

When delivering organizational improvements, a business model blueprint provides a visual for ensuring all areas are contributing to the organization’s direction, periodically assessing progress being made, and keeping everyone on the same page with the “big picture” of the business.  It helps everyone rally around where the organization is headed.

Business Model Areas

Documenting your business model involves defining the organization’s philosophy, value propositions, strategies, focuses, and measures.  In fact, a well designed business model includes strongly-aligned elements in each of the seven business model areas shown: Each area has a specific role:

• Philosophy creates purpose and enduring filters for decision making.
• Emotional Context creates the “connection” to our members/customers and employees.
• Strategy and direction provide tangible inspiration for what’s ahead, clarity on our uniqueness, and shows generally how the organization will get results.
• Alignment links the organization’s strategic direction to its delivery.
• Focus & Measures define where we’ll invest money and time and how we’ll gauge success.
• Delivery converts all of the rationale, direction, and uniqueness into results.

“Mediocre companies rarely display the relentless culture of discipline—disciplined people who engage in disciplined thought and who take disciplined action—that we find in truly great companies. A culture of discipline is not a principle of business; it is a principle of greatness.” Jim Collins

A business model blueprint is best viewed starting from the core and moving outward.  Inner areas nearer the core are deeper and more timeless, whereas outer areas are more flexible and changing:  For example, your Philosophy should stay constant over the years while your Delivery is likely to be changed (and improved) regularly.

Business Model Areas Assessment

To evaluate your business model, take the Areas Assessment survey included in tab 1 of the Excel surveying tool.  It will highlight the status of each of your business model areas.

See image of the Areas Assessment sheet below.

What areas exhibit your organization’s strengths and needs? Please list them below…

• Strengths (9s and 10s):  _________________
• Needs (7s, and 8s):  ____________________
• Major needs: (6s and below): _____________

In the final section of this article, you will compare the results from the Areas Assessment to the responses of your peers and your answers on the Complete Assessment below.

Complete Business Model Blueprint

With your areas of strength and needs identified, now gain understanding on the individual elements that comprise each business model area…

Review the complete Business Model Blueprint above for where each element fits in the overall business model.  To achieve a deeper understanding of each element and more completely assess your organization’s elements of strength and need, take the Complete Business Model Assessment included in tab 2 of the Excel surveying tool.

See partial image of the Complete Assessment sheet below.

From Assessment to Improvement

The results of these two assessments will expose key areas for learning and organizational development.  Following are several basic ways to review your scores.

1. Do You Have Clarity?

How clear are you on your organization’s strengths and weaknesses (in general and specifically)?  After reviewing your scores, answer these questions:

1. Strategic Clarity: Were your score results from the two assessments the same?  Specifically, do your Areas Assessment scores match the corresponding Complete Assessment AVERAGE row for each area?  The degree to which they match is your degree of strategic clarity.  Circle one:  Low – Medium – High
   
2. Operational Clarity: Do you know, specifically, what needs to be done and how to do it, in order to move your organization forward (i.e., to improve your organization’s assessment scores)?  Was it crystal clear which elements need improving and why?  The degree of your understanding of these issues, is your degree of operational clarity.  Circle one:  Low – Medium – High
3. Political Clarity: Are you clear on how individual departments and frontline employees would answer these questions?  (Maybe you should find out by having them take the assessment.)  Likewise, do you have a strong employee engagement survey or other tools for appraising the organization’s current culture and people alignment?  These answers and resources determine your degree of people/political clarity.  Circle one:  Low – Medium – High

2. Do You All Agree?

Do you and your fellow leaders agree on your organization’s strengths and weaknesses?

• Compare your Area and Complete Assessment scores to those of your coworkers.  How do the scores compare?  Discuss where the scores agree.  Then discuss where and why the scores vary.

3. Do You Have Outside Perspective?

Do you have outside perspective?

• Have your strategic planning consultant or a knowledgeable strategic partner fill out the Complete Business Model Assessment on your organization.  How do their scores reinforce or contrast with yours?  Why?

4. Do You Know How to Improve?

The fourth review involves creating a focused and time-oriented organizational development plan.

• What are the key areas and elements that your leadership and Board agree should be addressed?  In what order?  What will be the specific tactical plans implemented to address them?  Over what period?

Your answers to these questions are the beginning of your organizational improvement game plan for the next nine months to three years.  For more advanced reviews and to convert these results into organizational development plans, or for other guidance on improving your business model, contact us at (303) 980-8100 ext. 202 or rich.scholes@trynice.com .

There is a big difference between “doing service” and “delivering experiences”.  If members/customers are not consistently taken aback and surprised by how great your experience is, then you are simply doing service rather than delivering an experience that will set your organization apart.  This leaves you with an important decision… either change your core strategy to emphasize convenience, price, or information/marketing – or make plans to revamp your experience so it is unparalleled.

Harvard Business Review published the top 10 management trends of the past decade.  See the post for yourself.  In related commentary they surmised that while the past decade may have been “the decade of the shareholder” – what’s just begun may be “the decade of the customer.”  There are strong signs that this is true – both as a backlash to the short-term profit mongering we have seen and in response to the overemphasis placed on shareholder value.

Get ready for lots of activity (and competition) as companies focus heavily on the member/customer value proposition.  If you choose to stick with a strategy focused on delivering great member/customer experiences, you’ve got an important question to answer:  What structures and workflow will help make your member/customer experience unparalleled?

Here are practical approaches taken by other organizations:

• Learn from other leaders.  Interview several CEOs who have built organizations that are ahead of yours; ask each of them the same questions.  Learn what they emphasize as important – and share them with your Board and management team.
• Go to the customer. As CEO or another executive, move your office into the lobby of a branch, where members/customers can stop by and interact with you.  See for yourself how unparalleled (or antiquated) your member/customer experience really is.
• Measure intangibles. Establish a high priority on monitoring and measuring member/customer experiences, staff productivity, and employee learning.  Integrate reports and dashboards for these metrics into the workflow of your ongoing, monthly meetings.
• Document workflow. Visually document all of the steps in your major member experience processes.  Be sure there is a box for every process step, then time several member service representatives actually completing the entire process.  Now go back (as a process team) and cut 30% to 50% of the average time (and member/customer hassle) out of the process.

As a rule, here’s the general progression for improving your business:  strategy… structure… workflow.  Establish a clear strategy, create structure for it across the organization, and create aligned and efficient workflow to implement.  Build in that order, then implement with measures – and you will get results.

For more resources, read the post Customer Experience Is Not About Coffee or dig in to books like The Experience Economy and The Loyalty Effect.

1) Short newsflashes about best practices and new approaches from credit unions and other companies, like how Lexus stays customer focused, sent frequently

2) Short ideaflashes about interesting ideas and online resources, like how new mashups can improve technology integration, sent frequently

3) Full articles, like you’ve received in the past, that explore business topics in depth, sent periodically

4) Other media like podcasts that provide unique commentary on issues that you face, sent selectively

In this Nice Podcast, uncover the focuses, practices, and relationships that will build your leaders of tomorrow – today.

• Learn what these three important strategic planning initiatives are…  and how to apply them in every credit union, regardless of size or sophistication
• Discover the actions you can take to effectively address these initiatives
• Understand the results that these initiatives will produce

In this Nice Podcast, discover the simple and practical formula to create real cost savings in your organization, regardless of size.

Listen to the examples of the formula in action, all while increasing employee and member satisfaction.

Listen to Nice’s inaugural 12 minute podcast and learn about the application of these four principles in building a $150 million credit union during these unsettling economic times.

In addition to the podcast, download the one page overview:  Nice’s Business Model of Success.pdf , which graphically highlights the flow of the success principles and the results you can achieve.

Few of us would refute that there are many good reasons to be a great organization. You and your people gain the joy of being the best and the passion that comes with giving something your all. It’s rewarding to be on the path where you’re growing as fast as you can, personally and professionally, and creating that same opportunity for every employee, and every member. As Solomon said in Ecclesiastes 3:12-13, “There is nothing better for them than to rejoice and to do good in one’s lifetime… that every one sees good in his labor – it is a gift.”

In addition to the obvious benefits, there’s also the reality that in today’s competitive environment, CUs must strive to be their best in order to assure their future viability. Over 300 CUs a year are disappearing for a reason. The financial sector is profoundly competitive. Market realities, like never before, are selecting for the strongest, best built companies.

But the most important reason to be the best is for your membership – to create for them the highest possible value. They are your owners, your suppliers and your customers. Striving to be the best for them is simply the right thing to do, and the fundamental reason we, as credit unions, exist.

A Full-Spectrum, High-Performing Organization
Unfortunately some organizations are great at a few aspects of the business, and others are OK across the board, but only a select few CUs have the critical mass of greatness throughout the organization.

This isn’t because most organizations would choose to be less than great; it’s just that a majority simply don’t understand what to do to be great, or are lacking the motivation, drive and discipline to make it happen.

We were recently asked by a CEO, What has made xyz credit union (a well-known CU) so successful? He was clearly expecting an answer that was short and all encompassing.

If the answer must be concise, here’s what makes a CU great: A great organization has a strong, disciplined consistency across all performance areas and has exceptional strengths in several aspects of its performance. Really answering the question requires significantly more detail.Categorically, here’s what it takes to be great… Great performance requires greatness in vision, process, results, quantity and quality.

Great Doing Vision, Process and Results. As Ken Blanchard said, focusing on results alone is like watching the scoreboard while playing a game of tennis. It just doesn’t work. But the opposite is also true. If you focus only on process perfection, you won’t produce the results you’re looking for.

Clear vision, with articulated desired results, must be established in advance. Amid implementation, process is critical, but results must also be kept in mind. If process actions are not reaching targets, the organization’s people must dig deeper (be more creative, inventive, disciplined, etc.) in order to rise to the level of their desired outcomes.

Great At Achieving Quality and Quantity. We all know that quality is the path to greatness. But quality is not enough. You could have three members, all of whom receive the highest quality process and results, but that wouldn’t be enough to ensure greatness for your organization. If everything is done with quality, but there’s insufficient quantity, the organization won’t prosper.

The Definitive Performance Checklist
Over the past quarter century we have studied credit unions and identified the following 17 performance areas that together represent high quality and quantity of vision, process and results, and comprise the definitive performance checklist for CEOs, Managers and Boards.

To become great, CU leaders must gain the broad perspective of knowing what constitutes greatness (this checklist!)… then be motivated enough to prioritize CU development needs, determine immediate areas/items for improvement, and gain the valuable resources to rapidly move your organization toward reaching its highest potential.

Using the Checklist. Being the best for your members requires concrete and substantial performance in all of the categories and items of the checklist as outlined, as well as rising to excellent levels of performance in several of them.

To use the checklist, first review each checklist category (in gray) (e.g. Membership) and each item that comprises the category (in white), gaining a solid understanding of each one.  Next, rate your organization on each item (e.g. Sufficient Market Potential) using the scale of 1 to 10 as represented below.

Then, based on your ratings of all the items in each category, rate your credit union on the overall gray category (e.g. Membership) using the same scale, based both on a whole number average of all the items in the category and based on the results indicated in the category norm.

Once you’ve noted your initial ratings, adjust them as appropriate based on significant input from other leaders within the organization, so you can assure your ratings reflect the true status and level of success your organization is currently experiencing in each underlying item, and therefore, category.

The Definitive Performance Checklist – CLICK HERE

Continuing Your Dynamism & Victory…
Once you’ve rated your organization in each item and area, underline every item in which you scored 8 or above. These likely represent where your CU is currently dynamic (i.e. where you’re rapidly improving) and/or where you’re a victor (where you’re winning). Continue building on the path of victory and positive change in these items/areas. (Noting these strengths within the internal assessment and/or core competencies sections of your business plan and discussing them with staff will help perpetuate these strengths going forward.)

Developing Beyond Your Current Ratings…
A wise man once said, “It doesn’t matter where you start, it only matters where you finish.” The next two steps (listed below) are the most important part of the evaluation process. Be sure to complete these in a timely manner. By doing so, you’ll be able to identify the items/categories your organization needs to create overall improvement in, and determine those items which must be addressed immediately.

Number the areas from lowest to highest. Circle each item and/or category area that you rated a 7 or below. Starting with the lowest rated item, write a number next to each one (in the “Priority” column) , beginning by placing “1″ beside to your lowest rated item, then “2″ beside to your next lowest item, etc. and continue until you have a numerical prioritization for all items 7 or below.

Prioritize for development. Prioritize these items based on where you can make progress within the next 12 months. You should generally start by addressing your lowest rated item, but the specifics of which items you prioritize also depends on your overall development needs and how the needed development items best interrelate. This also must be reviewed in light of your strategic plan, business plan, and specific action planning, before you have complete alignment throughout your organization. Nice Enterprises, Inc can assist you in creating your performance development game plan.

Implement Improvement
Whatever you do, don’t get stuck simply thinking/talking about your development needs. You must prioritize your needs into a clear development plan and start the process of making progress. Remember, “Insanity is defined as doing the same thing over and over again, but expecting different results”. Don’t be insane… Making your organization great is simply too important to put off.

It’s time to secure the necessary input, guidance, resources, knowledge, skills and motivation to make your credit union a full-spectrum, high performing organization. Whether you move from good to great is up to you. Now you know the array of key performance areas/items. Are you one of the key leaders in our industry who is motivated enough to build a great organization?

Contact us with your completed checklist in hand and we’ll help you create a success strategy for moving your credit union from good to great. Please call or email Ron at (303) 980-8100; ron.nice@trynice.com (ext. 102)

The right mergers enable CUs to acquire more talent, improve purchasing power, expand services, and advance member convenience. C. Alan Peppers, CEO of Westerra Credit Union articulates the benefits well, “More and more credit unions are recognizing that they can strategically position themselves to better serve their members through mergers. The credit union can gain the ability to expand with more branches, build capital, attract and retain quality staff and leadership, enhance buying power, and offer additional products and services for members—positioning the combined credit unions for greater success than each could achieve individually.” With good reason, the trend is toward intentionally selected mergers that increase member value.

Likewise, mergers are the fastest way to gain larger economies of scale which is even more important than previously perceived. Having analyzed the top 200 credit unions by size compared with the rest of the industry, the differences are staggering: The larger CUs as a group consistently deliver much better growth rates, efficiency, profitability, etc. over time. Here’s just one typical year showing how much better the larger CUs perform:

Implementation Is Lacking. The potential of good mergers is high, but unfortunately, of the over three hundred CUs merging every year, many don’t reach their true potential or desired outcomes. In fact, fifteen business studies done between 1965 and 1997 indicate 55-77% of all mergers fail to deliver the financial promise announced when the merger was initiated. More recent studies indicate merger failure to be between 80-86%. Many other explored mergers in credit unions, in spite of their high prospects, fail to ever progress. Most CU mergers that fail do so because mistakes are made in the merger process – especially in the people aspects of the merger. These failures are most commonly caused by poor communication and culture clash.

Accessing Resources Is Difficult. The existence of resources alone is not solving the problem. For almost thirty years, mergers have been a significant force reshaping the CU marketplace. Over time, the merger experience-base and resources available to CUs have grown, but most of them are limited in scope and hard to access. CEOs across the country can offer war stories, but they can only invest limited time, given their management responsibilities. Much of the expertise that CUs can access is unfortunately “a mile wide and an inch deep.”

Strategy and Implementation. In 2006, Nice Enterprises, Inc. and Westerra Credit Union began discussing this critical need. Nice had been helping CUs at various stages of the merger process for years – building strategy, bringing together merger partners, aligning Boards, etc. Westerra had recently become the only credit union to successfully complete two major mergers of healthy credit unions over $100 million in assets in the same marketplace within a 20-month period. They succeeded in the ultimate test of a CU’s merger ability: Anyone can merge once, but only a CU that builds a great reputation during the first major merger will be chosen by subsequent merger partners.

In early 2007, the two organizations became so compelled by this critical need that Nice and Westerra decided to combine their complementary bases of experience and expertise to build the Merger Kit. The following merger guidance is drawn from Westerra CU and Nice Enterprises’ experience, as excerpted from the Merger Kit…

Merging is like mountain climbing. The best prepared and strongest succeed, while others fail to reach their objective.

In 1953, John Hunt led the ninth British expedition through Nepal to Mt. Everest. The team began the season’s only attempt on the 29,000 foot mammoth, and would become the first to summit the world’s largest mountain.

The team invested weeks ascending its dangerous ice fields and chutes, to its high base camp at the 25,900 foot high South Col. On May 26, the climbing pair of Tom Bourdillon and Charles Evans donned their packs and oxygen and climbed onward. The two were able to reach the South Summit (300 feet short of the peak), but during the climb Evans’ oxygen system failed. Becoming exhausted, the duo abandoned the climb and were forced to return to base camp.

For two days, wind and snow pounded the base camp at the South Col, where the expedition’s second pair of climbers waited out the storm.

On May 28, New Zealander Edmund Hillary and Nepal’s Tenzing Norgay began their famous final ascent. They climbed hard throughout the day before pitching their tent at 27,900 feet. The next morning, with 30-pound packs in tow, the twosome climbed toward the summit. The final challenge faced them – the imposing 40-foot rock face now known as The Hillary Step.

On the morning of May 29, 1953 they successfully bested The Step, and at 11:30am the climbers reached the summit of the world’s highest peak. They’d reached the highest point on the planet, and done so early enough in the day and in weather that would allow them to descend alive. After only fifteen minutes atop the world, they headed back down. Being windblown, their foot prints had filled with snow so the route was difficult to follow. They carefully chose their way back to base camp. The rest is history.

Climbing Waypoints
Merging is like mountain climbing. It involves careful planning, intentional preparation, and expert execution. Like the many base camps in mountain climbing, there are discrete “way points” to reach in the merger process – both in the ascent toward the peak (which is the positive member vote), and in safely getting back down the mountain (to where both organizations are integrated). The journey’s eight critical waypoints are shown below…

At any stage during the process, you are working toward the next waypoint, which provides clarity to your required actions and diminishes what can seem like an overwhelming task. The waypoints provide more approachable “staged” desired outcomes. Each waypoint shows “what” you’re working toward. “How” you reach each waypoint is described in the 27 separate sections of the merger process.

Three Phases
To reach each waypoint, and eventually “Integration Completion”, the steps or sections of an effective merger process should be followed in order within the three distinct phases of a merger. The 27 sections encompassed by the three phases each have clear desired outcomes and proven approaches. By sectioning the process with this granularity, CUs have a better chance of fully reaching all of the desired outcomes of the merger – especially the critical people-related outcomes – and as a result, create the highest value for the membership. The steps are broken into the following three merger phases…

I. Building Relationships:
The merger process begins with the six stages of Phase I, Building Relationships. In this phase, the CEO assures that the CU creates its Board-blessed merger strategy, then the focus progresses to building the key relationships required to create merger success. This generally always begins CEO to CEO.

During this phase, many CUs require expert guidance and deliberate action in launching potential merger relationships in the right way, with the right potential partners, and the right individual parties. Many high potential mergers fail in this stage because relationships aren’t well built, or because the magnitude of such a venture causes personal discomfort or lack of vision. You must navigate these “crevasses” or obstacles in Phase I of the merger. Success in each stage of Building Relationships culminates into reaching the first waypoint: The two credit unions’ CEOs reach a “verbal yes” about the potential merger.

II. Merging:
Phase II, Merging, involves thirteen stages of methodical progress, that work toward achieving the key waypoints of Board approval, completed due diligence, and conditional regulatory pre-approval. Then comes the single most significant waypoint in the merger process; the positive member vote. Gaining the positive member vote is like reaching the peak of the mountain, and reaching it warrants significant celebration. Next comes “getting off the mountain safely” which includes the stages of aligning the CU’s strategy and both Boards, and receiving final regulatory approval. This concludes Phase II of Merging.

In Phase II you must assure you reach each stage’s desired outcomes in order. Qualitatively this stage is “made or broken” by how well you “win the hearts and minds” of numerous constituencies. It is extremely important that Directors, management, employees and the membership are clear and convinced about the benefits of merging, and are comfortable in their enduring relationship with the organization.

III. Integrating:
The final phase of the merger process is Phase III, Integrating. The nine stages of this phase are composed of the operational integration of every functional area of the organization. CUs too often rush ahead to this phase because it’s tangible, but doing so causes you to miss the critical work to be done in the first two phases, relationship building and merging. This third phase must be an extension of the strong relationships and merging work the emergent CU has already completed. If you’ve created success in all previous stages of the merger process, this phase will involve the deliberate, distributed, but appropriately coordinated “coming together” of the operational aspects of the CU.

The Complete Approach
In each of the 27 stages of the merger process, beginning with Develop M&A Strategy and extending through Integration Completed, there are five essential areas of focus. Be sure to consider each critical focus amid every section of the merger process…

1. Align Culture / Build Agreement: What are the cultural and people-related goals of each stage of the merger process? Who are the key constituencies that play roles in that stage? Which parties need to build what agreements during each stage? What must be done to ensure excellent execution?
2. Align Strategy: How, in general terms, will you succeed in each stage of the merger process? What critical strategic decisions must be made, and why are they important? What must be done to integrate the two CUs’ strategies so they’ll serve the emergent membership in a stronger way than they individually have in the past?
3. Align Operations: What are the operational considerations during each stage? What tactical integration should be done, and when? What specific steps must be concluded in order to create merger success, and in what order?
4. Investment of Time / Dollars: What scope of investment should the CU make during each stage? How much time and expertise will be required, and by whom? What magnitude of dollar investment can you anticipate?
5. Resources: What resources and best practices are available at each stage of the merger process? What presentations that already exist need to be given? What forms must be completed? What roles should outside advisors, consultants, accountants and attorneys play in each stage? What existing templates can you draw from to efficiently document your agreements, develop your strategy, and plan for the integration of your operations?

These five subsections should be considered in each of the 27 stages or steps, so you’re sure to complete the entire merger process without alienating people, losing strategic direction, disrupting operations, wasting time or money.

In each subsection, there is extensive expertise and resources that will help you drive the merger forward while staying increasingly connected with the people throughout both merging CUs. Culture, strategy, operations, investments, and resources are the types of tools you need to use in “climbing the mountain” to merger success.

Don’t Miss This
Once the Merger Kit is available, it will be the cost-effective merger “library” that’s a “no brainer” investment for any CU that’s considering mergers. But for those CUs that are merging in the meantime (while we compile and polish the Merger Kit), be sure you don’t miss this…

If you were to ask a roomful of CEOs, “What’s most important at your CU?”… you’d expect them to say something like, “The CU’s membership and employees”. What’s most important (and should be) are people and relationships, and the value you deliver to members through those relationships. Ironically, in assessing and undertaking mergers, this accurate perspective is often lost, wrongly replaced by a focus on tactically integrating the CUs’ operations.

Don’t let this happen to you! Until the full product is available this Fall, here are five key recommendations drawn from the Merger Kit that will help you put people first in the merger process…

1.    Keep Every Conversation Focused On Creating Member Value: Be sure everyone (including Directors, CEOs, managers, and employees) begins and ends their conversations focused on what value the merger (and its many decisions) will provide to the membership. Too often, other factors distract from this primary focus. Don’t let the deathtraps of employee self-interest, Director discomfort, or politics derail the member value proposition that a merger can offer.

As quoted in CU Times, Bucky Sebastian, President/CEO of GTE Federal Credit Union frames this topic well: “Focus on the member. If you focus on the institution, you’re focusing on the wrong thing… It’s a far better avenue to merge with a credit union voluntarily when you’re healthy and strong rather than wait until there’s too acute of a problem.”

2.    Build Your Merger Strategy With The Board: Move beyond hearsay and learn the facts about mergers. Based on real-world examples, performance comparisons between CU size tiers, etc., build your CU’s merger strategy, which should document in general terms, the CU’s posture toward mergers, why the CU is interested in them, the types of mergers that interest you, as well as other factors defining what you want for your membership from mergers. Also include clear commitments you may have (e.g. taking care of all performing employees from both CUs). Too often, leaders in the industry only know what they hear about mergers through the “CU rumor mill”. This can be especially true (and dangerous) for CU volunteers, since they don’t have much time each month to sort out the facts.

In some circles the rumors are good, and leaders like the idea of mergers. In some circles the rumors are bad, and leaders dislike the idea of mergers. Move beyond hearsay and base your merger strategy on the facts about mergers.

3.    Seek Merger Partners With “Complementary Tangibles” and “Common Intangibles”: The rule of thumb is this: the more economic differences the CUs have, the more positive potential a merger has (and the more risk). It’s wise to take more risk on the tangibles of the business, and less risk in the intangibles (since intangibles are the most difficult and important to integrate).

For example, complementary tangibles include finding a CU whose branches cover a different but complementary geographic area to your branches. Common intangibles include finding a CU whose values are similar to yours and whose historical culture is also complementary. A commitment to honesty and integrity as well as demonstrated trust are examples of common intangibles.

4.    Be Sure You Gain Best Practices And Expert Advice Early: Contact “those who know” in the industry early on in the Building Relationships phase of the merger process. Learn what common mistakes are made and how to avoid them. Understand the role of the Board and CEO in each phase, and what issues should be addressed by each. Be prepared to address the relationship “fumbles” and “hot issues” that are a part of any potential merger, and that too often derail mergers.

5.    Follow A Clear Timeline: Be sure you follow a clear timeline that prioritizes the “intangibles” of the business. Don’t succumb to the temptation of seeing a merger as primarily a combination of operations. Be sure you understand what needs to be done operationally and when, so it can take an appropriate “backseat” to the real work of cultural integration.

For example, in the relationship building phase if you spend more than a paragraph’s worth of discussion on “having the same core system”, your focus is in the wrong place. Ensure every key constituency is fully aware that mergers succeed or fail depending on how well you combine the cultures and people of the two organizations. Focus your efforts on “winning the hearts and minds” of everyone involved, through servant leadership (See the May 2003 issue of The Strategist).

Begin The Climb
We encourage you to begin moving your organization forward in its ability to serve members through mergers. Know that it will be a challenging mountain to climb, but if done correctly, the benefits you can deliver to members may exceed all of those it took you decades to build on your own. To help your organization forward, here’s a list of recommended next steps:

1. Build Understanding: Access those in the industry that have done the “leg work” to gather resources and experience on mergers. Be sure to gain understanding on the right goals and proven processes, instead of “re-creating the wheel”. This information ranges from statistics and presentations about the benefits CUs experience through mergers, all the way to what documents should be executed, at which stage of the process.
   
2. Be An Early Adopter: Contact us to get on the “early adopter list” for the Merger Kit. Email Rich at rich.scholes@trynice.com for exclusive information and special pricing in the pre-release stage of the Merger Kit.
3. Gain Guidance: Before (and once) the Merger Kit is released, feel free to contact Nice Enterprises (rich.scholes@trynice.com) or Westerra Credit Union (dweeks@westerracu.com) for guidance on your merger. We’re glad to provide you with some no cost expertise and, as needed, additional cost-efficient presentation and consulting options based on your needs.
4. Enjoy The Journey: As you “climb the mountain” be sure to enjoy the scenery, appreciate the amazing undertaking that you’re part of, and cherish your fellow travelers. As the saying goes, “Life is what happens when you’re on the way somewhere.”
   

Be sure you’re taking the journey for the right reasons, then you can enjoy the journey as you rigorously assure you’re making the most of mergers for your membership.

You must assure that your CU’s value to members is stellar, but “the rest of the story” is in how you promote your CU and its offerings so that people are interested in what you have. This is the “magic” of ethically influencing people. It’s about how to make a good case, well.

Common intuition about relating with others can let us down, but Dr. Robert Cialdini (pronounced “Chaldini”) of Arizona State University has built his career on discovering what actually works. As the most cited living social psychologist, he has researched and observed the dynamics of people interaction and persuasion for decades. He has identified underlying principles that expose what people actually respond to, and why.

See What You Think…?

Begin by testing your knowledge about persuasion: See what you think works by answering these four intriguing influence questions…

• If you have a product, service, or idea with strengths and weaknesses, when should you present the weaknesses, early or late in your presentation?
• Is it better to tell prospects what they stand to gain by moving in your direction, or what they stand to lose if they don’t?
• If you have two options to present to a client, which should you present first, the most costly or the less costly one?
• After someone has praised you, your product, or organization, what is the most effective thing you can do immediately after you have said ‘thank you’?

You’ll be surprised by the answers to these questions, and impressed by the underlying reasons why.

Remember When…
Cialdini recalls an illuminating story. A while back he ran across a headline that described a gift of money that went between Mexico and Ethiopia. At the time, Ethiopia could lay claim to the most dire conditions in the world, so the headline seemed understandable: Mexico had simply joined the leagues of countries providing humanitarian aid to Ethiopia. Or had it?

He read on, and became confused: It was actually Ethiopia, amid its widespread affliction, that had given thousands of dollars to Mexico. That made no sense, so with perplexity in tow, Cialdini researched the situation and found a second journalist who had covered the story. The man had interviewed the Ethiopian government, and asked the very question at hand: Why had the Ethiopians, amid their national plight, made this gift to Mexico?…

The answer to this question exposes deep realities about how people influence one another. The answer was found in the two countries’ history. Decades earlier, Italy had invaded Ethiopia, and at the time, Mexico had come to Ethiopia’s aid. The country never forgot it. Ethiopia remembered Mexico’s favor, and repaid it when Mexico was hit by a natural disaster. To repay a favor, Ethiopia sacrificed in its time of great need, to help out Mexico. This is the principle of reciprocity at work.

Reciprocity: Do Unto Others…
Cialdini and his fellow social psychologists uncovered this “Rule for Reciprocation” that casts light on ancient truths and explains aspects of our social system.

The Golden Rule. ”Doing unto others…” is the foundation of reciprocity. It’s interesting to note that many (maybe all) major religions have some form of the golden rule. The most well known may be the Christian ethic of “do unto others as you would have them do to you”. Judaism, Confucianism, Buddhism, and Islam also have forms of this ethic (although some are phrased as “don’t do to others what you wouldn’t want done to you”.) The prevalence of this ethic casts light on the deep importance of reciprocity.

Indeed, “doing unto others…” is the foundation of reciprocity. But many of us haven’t taken it far enough. We’ve limited its full potential for good(will). Commonly we see this edict simply as a guideline for decision-making: I might say to myself, “Is this action something I would want done to me?” If so, I might do it. In this “responsive” form, the ethic is helpful, but there’s more power here.

Initiate Reciprocity
Cialdini’s findings show the Golden Rule is actually the “proactive” basis for creating goodwill. If you want to gain influence with another person, the best thing you can do is do them a favor. If you walk into a room and say to yourself, “I’d like to have influence here”, the best thing to do is find out who you can help.

How this plays out is interesting. Consider this case: your family receives a Christmas card from a friend or even an acquaintance. Aren’t you likely, when you send out your next Christmas card, to include them on your mailing list? Why… because the law of reciprocity is at work.

Cialdini sites reciprocity as the most compelling principle social psychologists found that under-girds our social system. In fact, researchers at Brigham Young University randomly selected people from the phone book and sent them holiday cards. Then what happened? You guessed it, many of these complete strangers reciprocated by sending the researchers holiday cards in return.

Other studies agree, including one done on graduate students who were presenting their doctoral dissertations. The doctoral candidates who brought cookies for their review board panelists gained more favor than those who didn’t. This is especially interesting, because it worked even though the panelists knew exactly why the candidates brought the cookies. We are wired to reciprocate.

This is a beautiful reality about people dynamics: Whoever needs help, time, etc. can call on other members of the group to send them resources, because they are not sending the resources away. Instead, they get “a credit”. This makes complete sense, and yet is utterly illuminating. It explains many things, including why servant leadership works so powerfully (as described in the May 2003 issue of The Strategist): because when we as leaders serve and sacrifice for our employees, they reciprocate by doing what is good for us and our organizations in return.

Reciprocity In Sales

It truly is better to give than to receive. This is true for altruistic reasons and because it initiates a “relationship” of giving. Many salespeople know to do this. Consultants employ this principle by giving away content and guidance that has real value to clients, as an investment in the relationship, then clients subsequently invest in the consultant’s services.

Just this week we had a painter give us a quote. Intuitively knowing this rule of reciprocity, he provided helpful tips on a side project we had underway. By giving us his expertise (for no guaranteed return), he created the goodwill that has us interested in utilizing his services. He went from offering a business transaction to initiating a beneficial relationship. Will the painter’s investment in us guarantee he gets our business? No. Will his approach of investing in potential customers guarantee he gets more business than he would? Yes. This is what credit unions must do if we are to continue and increase being true leaders in delivering value: provide value before members make buying decisions.

The bottom line: You can improve the future for yourself and the people around you by initiating good(will), first. In a very real way, it’s the gift that keeps on giving. This principle is also the basis of the new book “The Power of Nice” by Linday Thaler and Robin Koval.

Reciprocation of Concessions
Interestingly, reciprocation applies to concessions as well. Researchers found that, of the people they talked with in public, only 17% agreed to volunteer for a one-time charitable cause when asked directly. But of those who were asked first for a more time-intensive, ongoing volunteer commitment, 50% committed to the lesser, one-time charitable cause (and none agreed to the more time-intensive commitment). In both cases the one-time charitable cause was the same, but in the latter case, almost three times as many people chose to act. When someone has just said no to an offer, they are much more likely to accept a less costly option.

A good rule of thumb is to over-estimate what a customer may be interested in, and have a fallback option available if they say no to the first. Immediately following “no”, you have a great opportunity to win the sale. Studies show this is a “moment of power”; don’t wait until later to make the lesser offer, because the person will feel you’re making a new offer and will become annoyed.

Scarcity and Exclusivity
One of Cialdini’s doctoral candidates performed an interesting real-world study in the meat industry. A meat supply company contacted many of their supermarket customers offering Australian meat. They divided the salespeople into three groups. The first group simply told markets about the offer, and 10% bought meat. The second group of salespeople told markets about the limited supply of meat (which was true), and 24% of those markets bought meat. Finally, the third group of salespeople called markets and told them about the scarcity of the meat and shared exclusive information they’d gained from the Australian weather service that there would be upcoming weather conditions that would limit the supply of Australian meat (which was true). An impressive 61% of that group bought meat.

By communicating scarcity, the salespeople sold twice as often, and by also communicating exclusivity, they more than doubled again their sales. People respond to offers that are scarce and exclusive to them.

Remember what happened when “New Coke” came out? In blind taste tests, many people preferred its taste over the old Coke, but in spite of that, there was a public outrage because people wanted old Coke and could no longer get it. After much upheaval, old Coke again replaced new coke, and people’s scarcity-driven mania ended.

We want what we can’t have; and so do members. Describe your offerings to members in ways that convey how they are unique or hard to find. If you have exclusive information about industry trends or opportunities, be sure to tell people. Every time you learn something exclusive (maybe about a new offering in your marketplace) pick up the phone and tell people. With new information, be sure to communicate it is new before you tell them what it is.

Merging Ideas
Let’s apply these principles in the real world context of merger discussions. Many mergers offer real potential for benefiting the membership. The challenge is that mergers also involve “winning the hearts and minds” of the parties involved.

This is by no means an exhaustive list of ideas (those are contained in the Merger Kit that we’re building with Westerra Credit Union), but see if you can identify the principles at work in the following ideas of how to improve your chances of consummating a successful merger.

Go out of your way to do other CEOs favors that represent real value to them and their organizations. Be a “big brother” to a smaller local credit union that’s struggling, for instance, with compliance challenges. (A credit union in the northeast has done a great job of initiating CU relationships in this way.)

Invest extensive time up front getting to know the other CEO. Identify similarities in interests, aspirations, and history. Invest time together in social settings and other events outside work.

Describe the challenges your CU has had, and the strengths your CU has created over the years to overcome them. In presenting why your CU would be a good fit, communicate why other credit unions chose to merge into your CU in the past. If you’re a larger CU, convey how many members have chosen your CU, and how strongly the membership affirms their satisfaction.

Be very intentional in exploring and reinforcing what their membership will lose if the merger doesn’t come together. Create a shared picture of the future that both CUs could create together, that will never be if the merger doesn’t happen. Convey how the other CU’s existing member commitments, staff commitments, plans, and strategies fit with the direction your organization is headed.

In negotiations, as you work toward a “CEO verbal yes” and formal Board approval, be sure to have multiple options to offer. Always offer the more costly one first, and follow “no’s” with a less costly counter-offer.

Practical Actions
Drawn from the ethical persuasion principles (summarized at the end of this article), here are seven actions that you can implement today:

Following ‘Thank You’, Say…: When someone thanks you for going out of your way for them (when you’ve done them a favor, for example), what you say is important. Many of us say, “Your welcome” or “It was no big deal.” Sometimes we diffuse the complement by saying, “Oh, sure.”

But the best thing you can say is this, “I know you’d do the same for me.” Or you can say, “I know if the situation were reversed, you’d do the same for me.” Saying this calls them to the higher level of serving others, it diminishes entitlement, it appropriately validates the real work you did, and it reinforces the reciprocity that under-girds our social system.

Present The More Costly Option First: When presenting various options to members (or coworkers), present the more costly option first. Always start with the larger request, which frames later options and makes them more reasonable.

If you present a more costly option and the person says “no”, immediately follow-up with a less costly option. This drastically increases your chances of winning the opportunity to serve them with the less costly option.

Convey What They’ll Lose: Communicate what people will lose if they don’t buy your services. Use “lose instructions”.
This is more powerful than telling them what they stand to gain. For example, it’s more effective to describe your CU’s minimal fees by comparing them with typical bank fees. You might tell a potential member, “If you go with another provider like a big bank, you might be OK until you make a mistake. Then watch out, because they will rake you with nasty fees and charges. As one example of this principal, a CU member, upon switching to a CU credit card, told us how Capital One had charged him fees for two months in a row because he accidentally paid the wrong amount on one bill, even though the member quickly fixed the mistake. If you don’t go with our card, you’ll lose money to hidden fees.”

Communicate Consistency: People want to take actions that are consistent with what they’ve already chosen and done. If they previously chose a checking account from Wells Fargo, telling them it was a bad choice won’t help your cause. Rather, communicate why that was a reasonable option, then convey why your checking account is better… “Our online offering is as good as Wells Fargo’s, but you won’t keep losing $3 every month on Quicken download fees…”

People will act in ways they feel are consistent with what they’ve done in the past. To the point, one restaurant found a way to significantly cut down on “no shows”, those who’d made a reservation but failed to show up. Each time a customer called to make a reservation, the hostess would end the conversation by asking, “Will you please call if you need to reschedule?” This request conveyed that this would be the action most consistent with what the customer had already done, and it really worked. Show people how taking action will be consistent with their past decisions.

Build Authority Through Weaknesses:
We trust those who are experts. One way to convey authority and build trust is to “lead with weaknesses”. Present weaknesses first, which builds trust, then communicate why your strong points overwhelm those weaknesses. For example, you could use this to your advantage with a potential member: “We’re not a big bank. Those guys are all over the place, with bank-owned ATMs on every corner. If that’s what you’re looking for, you’d be better-off with them. But if you’re looking to keep your money locally, so it feeds the local economy (not the New York City economy) we might be a good fit. Also… here, you don’t have to pay for all those ATMs through bank fees and higher rates.”

Communicate Consensus: Consensus is the “power of the crowd.” People want what others think is valuable.
For example, if your HELOCs are selling really well, be sure to mention this amid conversations with members. “I just want to be sure you know about our HELOCs… we can barely keep up with all the people who want them. Everybody seems to be calling us to get one…”

Be Likable: This one should go without saying, but people too often miss it. People respond to people they like. Liking flows from positives, similarities, compliments, and cooperative efforts. If they feel you are like them, they are more likely to buy from you. People buy from those they like.

The Answers
In case you didn’t catch the answers to the four questions on page one, here they are…

1. Always present the more costly option first. You will drastically increase your chances of getting the answer you want (sometimes on the more costly option), especially on the less costly option you present second.
2. Communicate what people have to lose if they don’t move in your direction. This powerfully influences people much more.
3. Present the weaknesses of your product, service, or idea early. It will convey your expertise and build trust. Then follow-up with why the strengths overwhelm that weakness.
4. Immediately after someone has praised you, your product, or organization and said ‘thank you’, reinforce reciprocity by saying, ‘You would do the same thing for me.’

The Principles
As described in Cialdini’s books, including Influence: The Psychology of Persuasion, here are your “Cliff Notes” on principles that under-gird ethical influence:

Reciprocation

People give to those who give to them.

Be the first to give them service, information, and concessions. You’ll gain influence, and their service, information, and concessions.

Scarcity

People want what is rare.

Highlight genuine scarcity, unique benefits, and exclusive information.

Authority

People believe experts.

To gain expertise trust, be professional, convey industry knowledge, share your credentials, and communicate knowledge of ideas/products by describing their weaknesses (first) and strengths (later).

Consistency

People act consistent with their existing commitments.

Start by affirming their past choices and build on them. Begin from public positions and move toward this decision, in light of why it’s consistent with what they’ve already done.

Liking

People are influenced by people they like.

Find similarities, give genuine compliments, and find ways to cooperate.

Consensus

People want what others want.

Share responses of many others, past successes, and testimonials of others who are similar to them.

We are called to be people of ethical influence because we owe that to our members, Directors, coworkers, bosses, subordinates, neighbors, and families. Please use these recommendations to promote what is good, helpful and right. Others, at many banks, used car dealerships, and check cashing shops, are using similar tools with bad intentions. Don’t allow them to be the only people influencing your membership.

You must assure that your CU’s value to members is stellar, but “the rest of the story” is in how you promote your CU and its offerings so that people are interested in what you have. This is the “magic” of ethically influencing people. It’s about how to make a good case, well.

Common intuition about relating with others can let us down, but Dr. Robert Cialdini (pronounced “Chaldini”) of Arizona State University has built his career on discovering what actually works. As the most cited living social psychologist, he has researched and observed the dynamics of people interaction and persuasion for decades. He has identified underlying principles that expose what people actually respond to, and why.

See What You Think…?

Begin by testing your knowledge about persuasion: See what you think works by answering these four intriguing influence questions…

• If you have a product, service, or idea with strengths and weaknesses, when should you present the weaknesses, early or late in your presentation?
• Is it better to tell prospects what they stand to gain by moving in your direction, or what they stand to lose if they don’t?
• If you have two options to present to a client, which should you present first, the most costly or the less costly one?
• After someone has praised you, your product, or organization, what is the most effective thing you can do immediately after you have said ‘thank you’?

You’ll be surprised by the answers to these questions, and impressed by the underlying reasons why.

Remember When…
Cialdini recalls an illuminating story. A while back he ran across a headline that described a gift of money that went between Mexico and Ethiopia. At the time, Ethiopia could lay claim to the most dire conditions in the world, so the headline seemed understandable: Mexico had simply joined the leagues of countries providing humanitarian aid to Ethiopia. Or had it?

He read on, and became confused: It was actually Ethiopia, amid its widespread affliction, that had given thousands of dollars to Mexico. That made no sense, so with perplexity in tow, Cialdini researched the situation and found a second journalist who had covered the story. The man had interviewed the Ethiopian government, and asked the very question at hand: Why had the Ethiopians, amid their national plight, made this gift to Mexico?…

The answer to this question exposes deep realities about how people influence one another. The answer was found in the two countries’ history. Decades earlier, Italy had invaded Ethiopia, and at the time, Mexico had come to Ethiopia’s aid. The country never forgot it. Ethiopia remembered Mexico’s favor, and repaid it when Mexico was hit by a natural disaster. To repay a favor, Ethiopia sacrificed in its time of great need, to help out Mexico. This is the principle of reciprocity at work.

Reciprocity: Do Unto Others…
Cialdini and his fellow social psychologists uncovered this “Rule for Reciprocation” that casts light on ancient truths and explains aspects of our social system.

The Golden Rule. ”Doing unto others…” is the foundation of reciprocity. It’s interesting to note that many (maybe all) major religions have some form of the golden rule. The most well known may be the Christian ethic of “do unto others as you would have them do to you”. Judaism, Confucianism, Buddhism, and Islam also have forms of this ethic (although some are phrased as “don’t do to others what you wouldn’t want done to you”.) The prevalence of this ethic casts light on the deep importance of reciprocity.

Indeed, “doing unto others…” is the foundation of reciprocity. But many of us haven’t taken it far enough. We’ve limited its full potential for good(will). Commonly we see this edict simply as a guideline for decision-making: I might say to myself, “Is this action something I would want done to me?” If so, I might do it. In this “responsive” form, the ethic is helpful, but there’s more power here.

Initiate Reciprocity
Cialdini’s findings show the Golden Rule is actually the “proactive” basis for creating goodwill. If you want to gain influence with another person, the best thing you can do is do them a favor. If you walk into a room and say to yourself, “I’d like to have influence here”, the best thing to do is find out who you can help.

How this plays out is interesting. Consider this case: your family receives a Christmas card from a friend or even an acquaintance. Aren’t you likely, when you send out your next Christmas card, to include them on your mailing list? Why… because the law of reciprocity is at work.

Cialdini sites reciprocity as the most compelling principle social psychologists found that under-girds our social system. In fact, researchers at Brigham Young University randomly selected people from the phone book and sent them holiday cards. Then what happened? You guessed it, many of these complete strangers reciprocated by sending the researchers holiday cards in return.

Other studies agree, including one done on graduate students who were presenting their doctoral dissertations. The doctoral candidates who brought cookies for their review board panelists gained more favor than those who didn’t. This is especially interesting, because it worked even though the panelists knew exactly why the candidates brought the cookies. We are wired to reciprocate.

This is a beautiful reality about people dynamics: Whoever needs help, time, etc. can call on other members of the group to send them resources, because they are not sending the resources away. Instead, they get “a credit”. This makes complete sense, and yet is utterly illuminating. It explains many things, including why servant leadership works so powerfully (as described in the May 2003 issue of The Strategist): because when we as leaders serve and sacrifice for our employees, they reciprocate by doing what is good for us and our organizations in return.

Reciprocity In Sales

It truly is better to give than to receive. This is true for altruistic reasons and because it initiates a “relationship” of giving. Many salespeople know to do this. Consultants employ this principle by giving away content and guidance that has real value to clients, as an investment in the relationship, then clients subsequently invest in the consultant’s services.

Just this week we had a painter give us a quote. Intuitively knowing this rule of reciprocity, he provided helpful tips on a side project we had underway. By giving us his expertise (for no guaranteed return), he created the goodwill that has us interested in utilizing his services. He went from offering a business transaction to initiating a beneficial relationship. Will the painter’s investment in us guarantee he gets our business? No. Will his approach of investing in potential customers guarantee he gets more business than he would? Yes. This is what credit unions must do if we are to continue and increase being true leaders in delivering value: provide value before members make buying decisions.

The bottom line: You can improve the future for yourself and the people around you by initiating good(will), first. In a very real way, it’s the gift that keeps on giving. This principle is also the basis of the new book “The Power of Nice” by Linday Thaler and Robin Koval.

Reciprocation of Concessions
Interestingly, reciprocation applies to concessions as well. Researchers found that, of the people they talked with in public, only 17% agreed to volunteer for a one-time charitable cause when asked directly. But of those who were asked first for a more time-intensive, ongoing volunteer commitment, 50% committed to the lesser, one-time charitable cause (and none agreed to the more time-intensive commitment). In both cases the one-time charitable cause was the same, but in the latter case, almost three times as many people chose to act. When someone has just said no to an offer, they are much more likely to accept a less costly option.

A good rule of thumb is to over-estimate what a customer may be interested in, and have a fallback option available if they say no to the first. Immediately following “no”, you have a great opportunity to win the sale. Studies show this is a “moment of power”; don’t wait until later to make the lesser offer, because the person will feel you’re making a new offer and will become annoyed.

Scarcity and Exclusivity
One of Cialdini’s doctoral candidates performed an interesting real-world study in the meat industry. A meat supply company contacted many of their supermarket customers offering Australian meat. They divided the salespeople into three groups. The first group simply told markets about the offer, and 10% bought meat. The second group of salespeople told markets about the limited supply of meat (which was true), and 24% of those markets bought meat. Finally, the third group of salespeople called markets and told them about the scarcity of the meat and shared exclusive information they’d gained from the Australian weather service that there would be upcoming weather conditions that would limit the supply of Australian meat (which was true). An impressive 61% of that group bought meat.

By communicating scarcity, the salespeople sold twice as often, and by also communicating exclusivity, they more than doubled again their sales. People respond to offers that are scarce and exclusive to them.

Remember what happened when “New Coke” came out? In blind taste tests, many people preferred its taste over the old Coke, but in spite of that, there was a public outrage because people wanted old Coke and could no longer get it. After much upheaval, old Coke again replaced new coke, and people’s scarcity-driven mania ended.

We want what we can’t have; and so do members. Describe your offerings to members in ways that convey how they are unique or hard to find. If you have exclusive information about industry trends or opportunities, be sure to tell people. Every time you learn something exclusive (maybe about a new offering in your marketplace) pick up the phone and tell people. With new information, be sure to communicate it is new before you tell them what it is.

Merging Ideas
Let’s apply these principles in the real world context of merger discussions. Many mergers offer real potential for benefiting the membership. The challenge is that mergers also involve “winning the hearts and minds” of the parties involved.

This is by no means an exhaustive list of ideas (those are contained in the Merger Kit that we’re building with Westerra Credit Union), but see if you can identify the principles at work in the following ideas of how to improve your chances of consummating a successful merger.

Go out of your way to do other CEOs favors that represent real value to them and their organizations. Be a “big brother” to a smaller local credit union that’s struggling, for instance, with compliance challenges. (A credit union in the northeast has done a great job of initiating CU relationships in this way.)

Invest extensive time up front getting to know the other CEO. Identify similarities in interests, aspirations, and history. Invest time together in social settings and other events outside work.

Describe the challenges your CU has had, and the strengths your CU has created over the years to overcome them. In presenting why your CU would be a good fit, communicate why other credit unions chose to merge into your CU in the past. If you’re a larger CU, convey how many members have chosen your CU, and how strongly the membership affirms their satisfaction.

Be very intentional in exploring and reinforcing what their membership will lose if the merger doesn’t come together. Create a shared picture of the future that both CUs could create together, that will never be if the merger doesn’t happen. Convey how the other CU’s existing member commitments, staff commitments, plans, and strategies fit with the direction your organization is headed.

In negotiations, as you work toward a “CEO verbal yes” and formal Board approval, be sure to have multiple options to offer. Always offer the more costly one first, and follow “no’s” with a less costly counter-offer.

Practical Actions
Drawn from the ethical persuasion principles (summarized at the end of this article), here are seven actions that you can implement today:

Following ‘Thank You’, Say…: When someone thanks you for going out of your way for them (when you’ve done them a favor, for example), what you say is important. Many of us say, “Your welcome” or “It was no big deal.” Sometimes we diffuse the complement by saying, “Oh, sure.”

But the best thing you can say is this, “I know you’d do the same for me.” Or you can say, “I know if the situation were reversed, you’d do the same for me.” Saying this calls them to the higher level of serving others, it diminishes entitlement, it appropriately validates the real work you did, and it reinforces the reciprocity that under-girds our social system.

Present The More Costly Option First: When presenting various options to members (or coworkers), present the more costly option first. Always start with the larger request, which frames later options and makes them more reasonable.

If you present a more costly option and the person says “no”, immediately follow-up with a less costly option. This drastically increases your chances of winning the opportunity to serve them with the less costly option.

Convey What They’ll Lose: Communicate what people will lose if they don’t buy your services. Use “lose instructions”.
This is more powerful than telling them what they stand to gain. For example, it’s more effective to describe your CU’s minimal fees by comparing them with typical bank fees. You might tell a potential member, “If you go with another provider like a big bank, you might be OK until you make a mistake. Then watch out, because they will rake you with nasty fees and charges. As one example of this principal, a CU member, upon switching to a CU credit card, told us how Capital One had charged him fees for two months in a row because he accidentally paid the wrong amount on one bill, even though the member quickly fixed the mistake. If you don’t go with our card, you’ll lose money to hidden fees.”

Communicate Consistency: People want to take actions that are consistent with what they’ve already chosen and done. If they previously chose a checking account from Wells Fargo, telling them it was a bad choice won’t help your cause. Rather, communicate why that was a reasonable option, then convey why your checking account is better… “Our online offering is as good as Wells Fargo’s, but you won’t keep losing $3 every month on Quicken download fees…”

People will act in ways they feel are consistent with what they’ve done in the past. To the point, one restaurant found a way to significantly cut down on “no shows”, those who’d made a reservation but failed to show up. Each time a customer called to make a reservation, the hostess would end the conversation by asking, “Will you please call if you need to reschedule?” This request conveyed that this would be the action most consistent with what the customer had already done, and it really worked. Show people how taking action will be consistent with their past decisions.

Build Authority Through Weaknesses:
We trust those who are experts. One way to convey authority and build trust is to “lead with weaknesses”. Present weaknesses first, which builds trust, then communicate why your strong points overwhelm those weaknesses. For example, you could use this to your advantage with a potential member: “We’re not a big bank. Those guys are all over the place, with bank-owned ATMs on every corner. If that’s what you’re looking for, you’d be better-off with them. But if you’re looking to keep your money locally, so it feeds the local economy (not the New York City economy) we might be a good fit. Also… here, you don’t have to pay for all those ATMs through bank fees and higher rates.”

Communicate Consensus: Consensus is the “power of the crowd.” People want what others think is valuable.
For example, if your HELOCs are selling really well, be sure to mention this amid conversations with members. “I just want to be sure you know about our HELOCs… we can barely keep up with all the people who want them. Everybody seems to be calling us to get one…”

Be Likable: This one should go without saying, but people too often miss it. People respond to people they like. Liking flows from positives, similarities, compliments, and cooperative efforts. If they feel you are like them, they are more likely to buy from you. People buy from those they like.

The Answers
In case you didn’t catch the answers to the four questions on page one, here they are…

1. Always present the more costly option first. You will drastically increase your chances of getting the answer you want (sometimes on the more costly option), especially on the less costly option you present second.
2. Communicate what people have to lose if they don’t move in your direction. This powerfully influences people much more.
3. Present the weaknesses of your product, service, or idea early. It will convey your expertise and build trust. Then follow-up with why the strengths overwhelm that weakness.
4. Immediately after someone has praised you, your product, or organization and said ‘thank you’, reinforce reciprocity by saying, ‘You would do the same thing for me.’

The Principles
As described in Cialdini’s books, including Influence: The Psychology of Persuasion, here are your “Cliff Notes” on principles that under-gird ethical influence:

We are called to be people of ethical influence because we owe that to our members, Directors, coworkers, bosses, subordinates, neighbors, and families. Please use these recommendations to promote what is good, helpful and right. Others, at many banks, used car dealerships, and check cashing shops, are using similar tools with bad intentions. Don’t allow them to be the only people influencing your membership.

We got it. We must change. But what’s missing is clear knowledge and practical direction on what this means. Stratospheric mantras are fine, but we need “ground level” direction for leading our people through the phases of change. We need a unified approach to change management.

For credit unions, major essential changes come in many forms:

• Building a sales culture
• Merging credit unions
• Converting your data processor
• Revamping your CU around a clear core strategy
• Overcoming compressed margins through operational efficiency

In order to address these and all significant changes, every stakeholder (from Director down to frontline employee) needs a distinct understanding of what’s ahead and clear guidance through the process. To succeed you must thoughtfully and boldly guide your people through change in ways that minimize their fears of the unknown and failure, while simultaneously providing the highest probability of achieving lasting success.

This requires you to first manage and drive the dynamics of change, most importantly the people dynamics, and second, to empower people with tools for driving the change themselves.

The J Curve of Change
Dr. Jerald Jellison of The University of Southern California has invested his career in observing businesses and assessing what does and does not effect lasting change. In our competitive industry, with endless competition and special challenges like compressed margins, we need this insight. We must understand the phases of change and learn how to actively lead our people through each of these phases.

Productivity/results from every change initiative follow a “J” shaped curve as shown on the next page. The J Curve consists of five distinct phases that every stakeholder will go through. This includes members, Directors, Supervisory Committee members, CEO’s, senior leaders, junior leaders, and staff. Each stakeholder will move through the phases at different speeds.

As an overview, people begin with the status quo, where there is neutral performance (pre-change). Then their productivity decreases as stakeholders grapple with the change. Finally, if successful, the change results in significantly improved performance. It is critical to acknowledge the early phases of the J curve (decreased performance). They are often overlooked by leaders, (who are further along the curve) to the detriment of the CU and membership.

The five discrete phases of the J curve are shown in the figure and described below:

Œ1: The Plateau:
Employees follow established patterns and are comfortable with routines.

• Standing at the plateau and anticipating the change, people grow increasingly afraid.

2: The Cliff: Individuals actually step into the abyss and try to do things in new ways. As a result, performance drops sharply because they are doing something that’s unfamiliar, and resistance to the change intensifies.

• Employees make errors, use inappropriate tools and can’t remember new procedures, which reinforces a growing resistance to the change.

3: The Valley: During this phase, errors aren’t as frequent or large. Some of the basics are mastered. Tasks are completed more successfully. During the first half of this phase, net performance is still decreasing while during the second half, performance is beginning to achieve some consistency and improvement.

• Things begin to get better and there is less negativity.

4: The Ascent: Employee performance improves dramatically. The upward curve rises almost as rapidly as the earlier plunge. Individual and organizational success becomes self-reinforcing.

• Significant and rapid improvements in performance boost employees’ emotional/physiological states.

5: The Mountaintop: Performance now surges well past the historical plateau and continues to climb as success builds on success. Positive change has been achieved.

• As performance and motivation climb and reinforce one another, confidence becomes rampant.

The J curve is both commonsensical and insightfully profound. Take time to digest it and its implications. In the process, be sure to grasp these important principles about change:

Key Principles of Change

• Everyone must go through the J curve
• Understanding the J curve will give employees a “sense of belonging and purpose”
• Be sure everyone sees the valley coming
• Each party will move through the J curve at different speeds
• It’s critical to recognize where people are on the J curve
• To determine someone’s exact stage, pay attention to their performance, thoughts and feelings; be sure to probe deeply if they say everything is fine
• Some leaders move rapidly to phase 4 while other leaders and most staff are still in phases 1 and 2
• Remember what it was like at “their” phase of the J curve
• People in phases 1 and 2 need intensive coaching and positive encouragement
• Those in phases 4 and 5 are more self-sufficient and can help coach those lagging behind

Change, From Beginning To “End”

Where Change Fails
To avoid the common pitfalls, it’s critical to expose the two aspects of the change process in which organizations typically fail. Either the critical mass of stakeholders fail to adopt the change (don’t go through the J curve) or the team doesn’t perpetuate the change in a lasting way:

1. The change never gets fully launched. The leadership and staff get stuck between “good idea” and “implemented change” and the CU never gets to results. An industry CEO recently described their experience with this first type of mistake: “We’ve been ‘launching’ a sales and service culture for the past five years.”
2. The change doesn’t last. The leadership and staff lose the enthusiasm and focus required to perpetuate the change. The value and momentum don’t last. Describing the second type of mistake, another CEO recently said, “We do a great job launching [a change] but stink at keeping it going.”

Be sure to launch well and perpetuate the enthusiasm and focus required to generate the ideal outcome long term. At the highest level, change is about:

I.    Activating The Change,

II.    Building Real Momentum, and

III.    Building Sustainable Accountability…

I. Activation

Launching change well requires “activation”, which is different than persuasion. Typically leaders try to convince employees to adopt change, which doesn’t work well. Richard Pascale was right: “We’re much more likely to act our way into a new way of thinking, than to think our way into a new way of acting.” In learning something new, the feet move first, then the mind follows.

More effective is making clear the actions that people should take, then guiding them to make them. The learning follows. Activation (changing behavior) is how to start your change, and how to get those who are wayward going the right direction.

Activation’s 8 Keys:

1. Action Plan. Break the change into small/approachable pieces that are easier to assimilate.
2. Front-Load Rewards. Affirm the earliest signs of progress and provide rewards to help people through their initial fears.
3. Make Mistakes OK. Be sure people understand the J curve and know mistakes (phase 2) are part of the process.
4. Provide Coaching and Training. Learning, combined with positive experiences, give people confidence and a sense of control.
5. Encourage Involvement. Give employees ownership over helping define the small steps they will take to implement the change.
6. Sympathize With Frustration. Listen to people’s negative feelings. It will be disarming and enable them to get on board.
7. Make Starting Easy. Make the first steps the easiest, especially for resisters.
8. Stay Committed. Stay the course through all phases of the J curve, or it won’t succeed.

To effectively “activate”, each of these keys must be personalized for your organization and people. Many of the keys overlap but together they lead into the necessary elements of continuing the momentum of change.

ll. Momentum Through The Phases

Once “activated”, you must lead your people to create momentum. Jellison notes, “Managing change through the J curve requires embracing three seemingly contradictory realities”. As a leader, it is critical to excel in all three…

1: The leader must believe in the benefits of being in phase 5

• You must be supremely confident the results are worth the work and that your organization can get there

2: The leader must maintain awareness that change is a process and people must go through the phases of the J curve before success is achieved

• Plan for these phases and don’t be disappointed by setbacks… they are supposed to happen

3: As the leader, you must mentally put yourself in phase 1 and 2

• Draw from your experience to understand and empathize with people’s doubts and resistance, and help them over the emotional cliff and through the challenges

“Moving among those three realities, then, you can be part of, and yet remain above, the daily ups and downs of the change process. You will be astounded at how well and how quickly people can scale the seemingly impossible mountain of change.” (Jellison)

While embracing these three realities, you must implement the following “focuses” to manage the people dynamics and maintain momentum through the various phases of the J curve:

For All Phases

The Leadership Process. As a leader, your overall directive is to provide your people the education, followed by a chance to practice. Then, give them feedback on their performance and additional chances to practice and refine their abilities.

Leading With Questions. Ask questions lavishly instead of making statements. Questions will help others seek out answers and to mentally engage in the difficult conversations necessary for creating the change.

In Phase 1

Set Milestones. In phase 1, set milestones both for individuals and for the entire change process. Be sure everyone knows what represents 25% completed, 50% completed, etc. and intentionally celebrate successes throughout the process. Action planning makes this easier.

In Phases 2, 3 and Beyond

Reward Early. Be sure to reward people early for progress made. Especially in phases 2 and 3, people need rewards in order to feel the change will be positive, since it doesn’t feel that way. This may include tangible rewards, but must certainly include the intangible rewards that everyone wants, including the “positive feedback” described in the November 2005 issue of The Strategist.

Identify Personal J Curves. Acknowledge that there are “multiple J curves” at work throughout the organization… “a strategic J curve” representing an organizational or departmental change initiative, and “personal/tactical J curves” related to specific issues/challenges individuals are confronting. If people seem stuck, work to understand and identify their personal J curves.

Drive Creativity. Be sure to encourage practical creativity. Implementation (not planning) is where most change initiatives fail. Be sure everyone understands the importance of creativity within execution.

Cross-Fertilize. Encourage cross-fertilization. As described in the February 2004 issue of The Strategist, most innovation happens through novel combinations of people, ideas and objects. Be sure to create and encourage settings in which different groups of people share ideas, especially across departmental/functional lines.

Lead With Energy. It’s critical that you maintain your energy throughout the change process because the team’s enthusiasm will reflect your own. You’ll want to list and focus on what energizes and motivates you, and be sure to review your list regularly, especially as the organization is struggling through the early phases of the J curve.

Embracing these realities and enacting these essential focuses are the critical elements needed for creating and continuing the “people momentum” of your change initiative.

To further drive and solidify your change initiative, you must also empower your staff. By applying the principles of continuous improvement, you can effectively support this empowerment. These principles improve quality, empower employees, and are the essential principles that Japanese companies embraced to move from being low quality providers to market leaders. W. Edward Deming in his book Out of the Crisis highlights these principles…

Focus on Quality. It’s essential that everyone involved in the change process is committed to achieving high quality results.

Process Check. A process check is a simple but powerful tool for adjusting course and improving results. It can be done following any meeting, work process, sales call, or service interaction. When done in a group setting, the person facilitating the process check simply draws a line down the center of the flipchart, writing on one side a plus sign, and the other the Greek letter delta (symbol for change or variation). Then the group lists what’s working well in the process (beneath the plus), and lists the things to change (beneath the delta). By listing the positives, it motivates the group and perpetuates those successes. By listing the change items, the group gains constructive feedback and clarity on where to focus improvement. The process check is a key tool for guiding everyone toward continuous improvement and practical creativity. Another variation on this “debrief” process check is described in the August 2001 issue of The Strategist

Know Causes of Variance. Truly focusing on quality means you must seek out and eliminate mistakes and errors (variance). Understanding the two very different causes of variation is critical. Special causes are those that arise from a process but that are uncommon, while common causes are repeated regularly. It is critical to determine which type of cause is resulting in the variances you identify. Too often, someone mentions “a member was mad about the phone system” and we assume the issue has a common cause (when it was actually a special cause), and then the CU goes to great lengths to change its process/system to address the variance when it is not necessarily required. First identify the type of cause for a variance, then, address it appropriately.

lll. Sustainable Accountability

Accountability is the final step in perpetuating results long term. It is required to maintain the new way of doing things. Too often action plans aren’t fully implemented and the change never delivers its full potential. There are seven key aspects to creating a culture of accountability. They involve the actions described at length in the April 2006 issue of The Strategist and they must be personalized to your organization, leadership and staff to be effective.

Rewarding Results

Understanding the J curve and applying these approaches to activation, momentum building, and accountability will supply a tangible and unified approach to change management. This process builds the momentum of change, enables your people to adapt to and own the changes, and will move your organization through all the phases of the J curve, ensuring success.

Study these recommendations closely, because they will enable your stakeholders to embrace the valley of adopting the change and climb the impressive mountain of implementation… to the place where you crack open a bottle of champagne and celebrate the rewarding member results.

Unfortunately, Generation Y is generally misunderstood and downright ignored, especially by many financial service organizations. It’s good news that when strategic planning most credit unions now list “Younger Members” as part of their target market. But, few CUs have the needed understanding and detailed tactical plans to effectively reach Gen Y. Fewer still are successfully reaching these invaluable young members. As an industry we’re acting like a procrastinating college student who knows the final exam is coming up, but keeps putting off studying. In fact, CUs have fewer young members than in the past: According to CUNA, in 2002, 18-24 year olds represented 10% of CU membership; by 2006 it had dropped to 6%! Credit Unions are losing their loan “core”.

Your credit union must reach Generation Y, or it will not succeed. Stop giving this priceless generation lip service. Get serious about acquiring, serving and keeping Y-er members…

Misconceptions Regarding Generation Y
CUs have ignored this sub-group because of misconceptions about Generation Y. Organizations assume that Y-ers are irresponsible and not worth the CU’s time and effort, or they feel Y-ers are too unpredictable to be reachable. To attract this essential group, these misconceptions must be challenged and overcome based on the facts about Y-ers…

“They don’t represent enough business”
Many CUs still feel that to pursue Gen Y is to “invest in the future” – at best – seeing little tangible opportunity for significant member relationships now. Not true. In addition to being one in four Americans, Y-ers boast these impressive statistics that speak to the roots of our industry:

• By 2010, Gen Y will comprise 25% of vehicle sales
• By 2020, Gen Y will comprise 40% of vehicle sales

Generation Y represents a sizable and growing business opportunity. Without serving this huge market, by 2016 your CU will be declining. By 2020 it will be dying. By the year 2020, everyone in the primary borrowing years (ages 25-44) will be in Generation Y. While the rest of us will be saving, and contributing little to interest income, Gen Y will be eagerly borrowing to buy homes, cars, etc. We must continue serving older members, who we know how to serve, and we must learn to effectively serve this younger generation well.

“They’re irresponsible with money”
This common misconception about Generation Y frightens CUs away. Although there are “bad seeds” that have, for instance, major credit card debt and don’t plan on paying it off, these individuals are not the overwhelming majority. Just as there are bad seeds in older generations, they’re in Gen Y too, but we mustn’t let that keep us from reaching out to this profitable market.

Let’s review telling statistics about this generation’s level of high responsibility:

• 37% of Gen Y-ers expect to start saving for retirement before they reach age 25, with 46% of those already saving. (Was our generation that responsible?)
• Among those eligible, 70% of the Gen Y workforce already contributes to 401(k) plans.

Statistics like these are hard to ignore. Generation Y isn’t as irresponsible as many have believed. In fact, many Y-ers are proving themselves to be driven and highly responsible.

“They are a financial risk”
Although anyone lacking a significant credit history is a potential risk, credit unions need to creatively enable Y-ers to become members, acquire products and build their credit. There are real opportunities to do this while effectively managing risk. For instance:

• Start them off small, give them a credit card with a $300 limit and show them how their limit can expand with responsible use of the credit card.
• Make it a point to search for responsible Y-ers: Look to universities, corporations, etc. Y-ers in these groups often have their act together. UWCU, a CU heavily focused on student loans, says “95% of charge-offs for members without a credit history were due to non-students.” They also say that, “about 1,500 students sign up for their student credit card each school year, and the numbers show that students are a good credit risk.”
• Find creative ways to gain transaction histories: Look at bills if they have any, or checking account statements, etc. Also consider “references” from other responsible Y-ers.
• If they don’t have any of these, find easy and respectful ways to get a co-signer.

Remember, in these early interactions with young members, you’re establishing their impression of you… as difficult and disrespectful, or respectful and easy to work with. This is a critical stage: Go out of your way to meet their needs.

“They don’t care what anyone thinks”
Every young person has his/her rebellious stage, but this doesn’t necessarily mean that they don’t listen or care about what their seniors say. In fact, it’s quite the opposite. In a survey of 375 college undergraduates, Celent Communications found that 65% of them ranked parental recommendations as “important” or “very important” in choosing a financial institution. That percentage only grows when they’re talking with peers and friends. Y-ers rely heavily on referrals from friends and family.

Take a moment to reflect on these misconceptions and the relevant facts. Which myths does your organization embrace? Actively demolish these misconceptions throughout your CU by passionately teaching employees the realities of Generation Y.

What Y-ers Want: The Three “C”s

With these misconceptions behind you, it’s critical to understand what Generation Y members want. Fortunately, it’s simpler than most of us think. Through extensive study, research and firsthand experience we’ve identified the three primary categories that Y-ers look for in any business, especially a financial institution. They are the “Three C’s”: Community, Customization and Convenience. It’s important to understand each, and to put them into action at your credit union…

Community:
Y Definition:
“I (the Y-er) look to friends, parents, and peers for where I should bank, what I should buy, and what I should do. I want people to care about and for me, and I want to know I’m accepted just as I am in whatever I’m doing. I need to know I’m respected. People show me respect by treating me right… by treating me like a rock star.”

Overview:
Fitting In: This reality is consistent: in anything they do, Y-ers look for community. They don’t want to be alone, whether that’s in ideas, activities or even finances. There’s nothing scarier for this generation than feeling like they’re in something by themselves. A great illustration of this is www.myspace.com, a popular website devoted to simply connecting people. My Space has over one and a half billion hits per day, and its growing. This generation is looking to fit in and for a place where people value their opinions.

Network-Reliance: Young people constantly look to each other to see what to do next. When we polled Y-ers on how they ended up at their current financial institutions, they repeatedly answered, “because a friend or family member recommended xyz bank or credit union”. This reliance on social networks exists in personal and virtual relationships. Just look at the proliferation of online blogs: The online blog search engine Technorati tracks about 1.2 million new blog posts every day. Both person-to-person and online, Y-ers heavily rely on referrals.

Respect: When a young adult walks into a business, he/she wants to feel accepted exactly as they are when they walk through the door. No exceptions. They may look, talk and even act differently, but they want to feel accepted and respected. This doesn’t mean you have to like or even understand what the young person does, but it does mean you must give them the respect they expect and feel they deserve. This is critical. Based on it’s assessment of Y borrowing behavior, the Filene Research Institute determined, “Credit unions should consider the needs and preferences of young members in all aspects of the [loan] process. If young members feel the credit union fails to respect them or their opinions, they may not come back.” Unlike with other generations, respect is not tied to anything tangible (e.g. income level, status symbols, etc.). For Gen Y respect is a foundational, universal expectation. Y-ers view themselves as just as important as anyone else, and they expect to be treated that way.

For Example:
Imagine yourself as a 49 year old, successful, married business man or business woman. Now imagine yourself in a business suit walking through the doors of a downtown techno nightclub. You step into the dark environment, and the music pulses around you. People are dancing everywhere. Youngsters are dressed in baggy clothes; tie-dyed hair; pierced eyebrows. How would you feel?… Maybe a bit out of place?

That’s how many young people feel when they interact with CUs. The CU world doesn’t feel out of place to you, because the financial world was designed by you, for you. But for the Y-er, walking into a typical CU is something he/she will purposely avoid. It just doesn’t feel right.

Things To Remember:
Word of mouth is key in Generation Y: Members of Gen Y talk with each other and share both positive and negative experiences. Treat them right and they will tell their friends. (Treat them badly, and they’ll tell everyone they know.)

Atmosphere plays a big part in making a young potential member feel accepted:
Atmosphere is anything a potential member interacts with: A billboard on the street, a member service rep, the organization’s website, a printed brochure, how employees are dressed, etc. All of these elements say something to the potential member, and you must ask yourself, Through our products, marketing, facilities, etc., what messages are we sending to young potential members?

Customization:
Y Definition:
“Make products and services specifically for me (the Y-er). Tailor your organization for me. I should always feel like I’m being taken care of, and that you care about what I do.”

Overview:

Personalization: Look around at the companies that Gen-Y thinks are cool and, more importantly, where they spend their money. There are companies like Nike where you can customize and design your own shoes and clothing online, or Scion where the car is built custom to fit your “style” (and, it’s a car you can afford).

Why is customization such a draw? Because it makes the product the consumer’s own. Generation Y loves to say they created it. It adds mountains of value for them to know they played a part in creating something that is, or looks, cool, or practical, or whatever.

Cool, Not Weird: What Gen-Y views as “looking cool” is often misunderstood by older generations. When someone says, “Make your image fit the Gen-Y culture”, organizations automatically think that means having a Goth look or a totally off the wall, non-traditional approach. Those things aren’t bad, and many Gen Y-ers do think those looks are cool, but that isn’t what we are talking about here. We are suggesting creating an atmosphere and image that Gen Y can easily relate to.

Beyond Y-ers: Because CUs are afraid of alienating their established members, many organizations shy away from marketing to younger members. But CUs can create a look/feel that attracts Y-ers and pleases other generations. When we say, “make your image Gen-Y acceptable”, you can make an image that most everyone likes and finds relatable.

For example, every generation likes easy to navigate websites that are clean, concise and professional. (Can you say Google?) Yet most CUs’ websites are cluttered, inconsistent, hard to navigate – and let’s face it – downright ugly, especially to the Y-er. In trying to include everything on a website, many CUs end up defeating the very purpose they are trying to achieve.

With Community: Customization and look are very integrated with community. Remember the example of the 49 year old walking into the downtown night club? What made it uncomfortable? It was the sounds, lights, decoration and colors; every element in that club wasn’t theirs. It was counter to what he/she knows and feels comfortable with.

Tapping into these same senses with aspects of your products and locations, and with marketing directed to the style and taste of the Y consumer, you will help them feel safe and comfortable with your organization… and, with those realities eventually comes loyalty.

Your Message: What most credit unions don’t realize is that they’re screaming to the Y-er that they are not welcome and that there isn’t a place for people like them within the credit union community. CUs are doing this through their websites, printed materials, locations, products and services, the language they use, as well as countless other areas. When you don’t offer products like checking and credit cards for people without a credit history, and easy, clean online account access, you’re telling the young person that you don’t care about them and what they need. As a result, they will go somewhere they feel cared for, somewhere like Citibank that’s priding itself on reaching young customers.

Every CU needs to ask itself these questions:

• “What are we customizing for potential younger members?” and
  
• “What can we let them tailor for themselves?”
  

These questions will start you thinking along the right perspective to serve younger members in the customization realm.

Examples:
A Gen Y associate of ours experienced a great example of customization not happening. The CU branch was close to where he lived and he’d heard from family members that it was a good organization with good prices. He went into the branch to open a checking account. After spending about 45 minutes trying to get his account set up, the representative informed him that he could not open a checking account because he didn’t have a high enough credit score. (At the time he just didn’t have any credit established.) He then explained to her that he’d had a checking account and debit card at another CU since he was 14, and that he’d had a perfect track record with it. She still refused to set up a checking account for him because of the credit score, and explained that all he could open was a savings account. Then, after an extended period of time, he could get a checking account.

What happened here is all to common. The CU representative was just “following policy”, but what she communicated to the young adult was that the organization didn’t trust him with something as simple as a basic checking account. The CU also communicated that it didn’t care enough about his business (or him) to find a way to accommodate his needs. As a result, he is adamant to never do business with that CU, and he vocally advises anyone he knows to do likewise. He pursued the CU for a service he wanted, and instead of getting his needs met, he felt he had his character judged and was told that “his kind” didn’t have a place at that institution. Although that may not have been the CU’s intent, that was the outcome the CU created.

Things To Remember:

Never say no: Whatever you have to do, don’t say no to a Gen Y-er. That will immediately alienate the Y-er (and most likely all of his/her friends). Find creative ways to give them options and get them what they need/want.

Tailor your marketing: This seems like it should be obvious, but it’s amazing how many CUs skip right past this point. You must tailor your marketing materials (website, printed materials, ads, member service reps) to Generation Y if you expect to get and keep them as members. If you hand a Y-er a brochure on what to do when they retire, they’ll be turned off.

Convenience:
Y Definition:
“Banking is the lowest priority on my (the Y-ers) list and therefore I want to spend the least time possible working on it or even thinking about it. It is a ‘must do’ not something I ‘want to do’.”

Overview:

Convenience is something that CUs often pay lots of attention to but we must approach it from the Y-er’s perspective.

Undisruptive: The Y-er’s definition of convenience is completely based around time and mental effort. In the Y-er’s world, this is directly connected to the web. Most Y-ers do their account and business activities after 10pm, sitting in a chair, at home. This is where the world is going… the more that younger members can take care of at home (or anywhere they have their laptop) and on their own timetable, the better. The Y-er would rather go out and meet a friend for coffee than spend time stopping by the “bank” to make a deposit. Credit unions have to start thinking outside the box. How can you make things much more convenient for the Y-er?

Online: Look at ING. They’re an online bank that’s excelling with young people, and making a lot of money in the process. Their website (www.ingdirect.com) is extremely straightforward. You can sign up online, all of your account activity can be setup to transfer automatically, and, oh, did we mention they have good rates? Now they may suffer in giving great customer service, but what it comes down to is a Y-er can set up his/her account in 10 minutes, online, at any time they please. It’s easy, it’s quick, and you don’t have to think about it anymore; it’s all automatic.

ING excels at convenience for the Y consumer. That’s not to say that you have to abandon branch locations or that you shouldn’t have ATMs available. What it does mean, is that you always need to be considering how much time you’re requiring of your young members. The Y Generation doesn’t even like stopping for gas, let alone spending time on their finances.

Simple Messaging: CUs must consider ways to educate potential young members in quick, simple, straightforward ways about what their organization is and why they should join. The way things are currently, most credit unions aren’t even close to convenient for young potential members because Y-ers don’t even know what credit unions are. When we interviewed Gen Y-ers, their understanding of credit unions was telling. Here’s a summary of their responses:

• Most Y-ers don’t know what a credit union is
• A minority of them had a good understanding of how a CU is different
• Some think a CU is like an S&L, and aren’t sure how, or if, there’s any difference
• Others think CUs are like banks, but offer less products, although with better rates

First of all, Y-ers need to learn what a credit union is, and then, why they should invest the time and mental energy to join, when they could just go to a Chase location down the street. They know what Chase does and what it offers. What do they know about your organization?

Examples:
ING makes things extremely easy for anyone. It takes 10 minutes to set up your account online, and you can set up auto transfers so you never have to think about it again.

Things To Remember:
Make it easy: In everything from the website, brochure content, to setting up accounts and loans, make it quick and easy. Don’t force members to fill out their address several times. (In fact, institute a policy that members should only fill out their address once unless they move. That should get your staff thinking!) Through your actions, make it known that you’re easy to work with. This will give you a great competitive advantage. Keep in mind, if you can say what you want to say in two bullets, as opposed to two paragraphs, do it. Simple makes a huge difference.

Online is key: A potential young member should be able to find everything they need on your website in two clicks or less. Make it simple, lay it out well and make your site easy to navigate. Most of all, make sure they can do EVERYTHING online… from change of address, to joining your CU, to applying for a loan. You can’t compete with banks on locations but you can compete via your website.

Make yourself known: You must actively educate young members on who you are and what you do. Get creative and try to relate to them on their turf. Go to schools, go to skateboard parks, go to beaches, and most of all, make sure that you reinforce, in everything you do and in every piece of marketing, exactly what you do. (For instance, in every permutation of your logo, is it clear what you do?)

Marketing to Y-ers:
There are many general and specific opportunities that CUs can capture in marketing to younger members. Here’s an array of ideas to get you thinking…

Simplify:
Start by simplifying your content. We’ve already discussed how Y-ers don’t want to spend time dealing with their finances. Make it so they don’t have to. This applies to any and every mode of communication. For your website, make sure it’s clean and easy to use, as well as pleasing to the Y-er’s eye. For a billboard or print add, make sure it’s to the point and concise, and make sure you’re selling a product that will interest Y-ers.

Create “Creative” Promotions:

Think about offering creative promotions. “Things” are worth ten times the actual cash value to this generation. A Y-er would much rather get five free iTunes songs instead of $5 cash. Consider this… offer an iPod if a Y-er takes out a large loan. If it gets a potential member to join and take out a loan, its well worth the $100-$200 investment. Figure out what the “in” item is, and give it away as a premium. Harness what Y-ers are already into.

Actively Reach Out:
Youth members won’t just come to you, you must go to them. Reach out to groups of Y-ers. Schools and universities are a great place to start, but you must go even deeper. Go to their hangout spots, get into their lives. Hire staff that are in the age group of people you want to reach and send them out to places where you might be able to connect with groups. As we mentioned before, Y-ers congregate in groups, both online and in the real world. Get one member in a group and treat them right. He/she will tell his/her friends and you will soon have the domino effect. Enter into their groups.

Stay Mobile:
Y-ers are a mobile cohort, and they are in a very transitory time in their lives. This can be detrimental to organizations that don’t accommodate it. Make address changes easy (and secure).

Why would a student join a home town credit union if he/she is leaving town to go to school next semester? You must be mobile with them. The Internet provides this opportunity. Make your services usable anywhere, so if the young member moves, you will still able to provide for all of their financial needs. Do things like offering creative ways for members to move their money. Paypal does it and is very successful. As far as check deposits, find ways to get around the snail mail crunch that no Y-er is going to want to deal with. (Even core systems like Symitar now offer ways to do this.) Get creative and stay mobile.

Be Vocal:
Doing only one or two things to reach out to Gen Y just won’t cut it. If you’re serious about acquiring young members, it will take some significant effort, and it will pay off. Never let yourself get caught in just renaming your standard checking account to “youth checking”. Ploys like that won’t get you very far. Be vocal and say what you want to say, in many different ways, using many different avenues.

Use Strategic Partnerships:
Think about partnering with organizations and products Y-ers already use. Find ways to get into places like Starbucks or fast food restaurants. Get inside the places they already go. The average Y-er is generally overwhelmed and busy, so make your organization so integrated with services they already use so it will just make sense to join with you. In the online realm, thousands of young people get on and use things like eBay and Amazon every day. Are there ways you can make using those services even easier and more cost effective? Find out what they use and make it “better” and easier.

Be Creative:
Finally, start doing and thinking some unconventional things in order to reach out to this group. Learn from companies who are winning with Gen Y. (For instance, learn more about the impressive product positioning and creative marketing success of the stylish and fuel-efficient Toyota Yaris.) If you can’t be creative in reaching out to Generation Y, find someone who can and hire them. Obviously, CUs’ traditional methods haven’t been working since the average CU member age keeps going up. Apply proven services-marketing approaches, like those found in the book: “Selling The Invisible” by Harry Beckwith, but focus every principle on Y-ers. Start finding new ways of reaching out and new ways of thinking about your products, services, delivery channels and marketing. A great example of this is Apple’s current commercials. See them at: www.apple.com/getamac/ads

Your Next Steps:
Reaching Generation Y is no small task, and it must become much more than a single bullet in your strategic arsenal. But many organizations don’t even know where to start. To address this huge, strategic, and unmet need, Nice Enterprises, Inc. has launched a new division called Relevant Design Group that is exclusively devoted to helping organizations reach young members. RDG is headed by Daniel Nice, Ron Nice’s Gen Y son, who has an accurate, insightful and “actionable” perspective on gaining and servicing young members.

Relevant Design Group is unique because it actively leverages both Nice Enterprises, Inc.’s 24 years of credit union experience and Daniel’s distinct Gen Y perspective and experience in graphics and computer-aided design. As a result, RDG will give your organization the perspective and information you need to get new young members to walk through your doors. Tell us where you want to be with Gen Y and RDG will get you there.

Reaching Young Members:
Relevant Design Group will enable you to attract more young members: We teach you who this market is and what Y-ers want, in addition to building marketing strategies that bring in new young members. RDG helps you…

• Understand the need: Presenting the realities of Gen Y and statistics on why your organization needs them now and over the next ten years
  
• Learn what Y-ers like: Gain new perspective and detailed insight into what Y-ers want from your credit union
  
• Know how to reach them: Learn how to make your products create demand in the youth market. Determine whether Y-ers want what you offer, and if not, how you can change your offerings so they do. Learn the value of certain promotions and how to capitalize on “life timing”. See how your content should read to a young person. Learn how to market where the Y consumer is and how to reach groups of young people.
• Change your organization to serve them: Make your services easy to use for the young consumer. Discover what message you are sending to young people and how your organization can change that message for the better. Take the necessary steps with your staff so they can effectively serve young people.
• Stand out among other financial institutions: Apply the multi-factor approach required to be unique to Gen Y in a huge and competitive industry.

Resourcing You:
To enable you to gain, serve and keep young members, Relevant Design Group delivers the right mix of services, completely customized for your credit union’s success:

• Through A Facilitated Program, you will gain:
• Expert Direction and facilitated guidance on gaining younger members
• A Concrete Plan on how to move forward over two years to reach out to young people
• Through A Brand/Marketing Audit, you will receive:
• Thorough Assessment of your current marketing, products and delivery channels based on how effective they are for Y-ers
• Detailed Recommendations on what changes need to be implemented in order for your CU to succeed with young members
• Through Brand/Marketing Redesign, you will receive:
• Website Redesign that effectively attracts young members and delivers what they expect from a high caliber online retailer (like eBay or Scion)
• Logo/Tagline Redesign that positions your image to be relevant, interesting and clear to young members
• Brochure Design that clarifies the messages you’re sending so they’re inviting to Gen Y

As Michael Hanson said, “To will is to select a goal, determine a course of action that will bring one to that goal, and then hold to that action ’til the goal is reached. The key is action.”

For a strategic plan to be more than good ideas, it must be turned into tactical plans and enduring action throughout the organization. Business planning and performance improvement are the path to making this happen…

In Detail – The Business Plan
Business planning is the extensive and detailed documentation that gives the strategic plan “legs”. Business planning is the formalized discipline of documenting the impact of the environment and the financial allocation or re-deployment of resources based on the direction identified in the strategic plan.

The business plan describes how the organization will work toward its vision, reach its desired future, enhance its strategy, and systematically allocate its resources. The business plan details how the organization will achieve its strategic plan. Your business planning process should include ideological conflict, rigorous teamwork, detailed planning, and intentional self-assessment that combine to thoroughly create the following four building blocks:

• Organizational Goals
• Action Plans
• Pro-Forma Financial Projections
• FILM (Financial, Internal, Learning, and Membership) Metrics

Organizational Goals

• Represent the key steps in implementing strategic initiatives and direction
• Define who will do what by when
• Each has a clear outcome and measurement of success

Goals are the concrete action outcomes that are critical to the achievement of your organization’s vision. Each goal documents who will achieve what result by which date.

For goals to be effective, they must contain all six characteristics. You must determine your desired result, and set a norm or standard for judging success. A deadline date must be set, responsibility assigned for overseeing the goal, and the goal must be both realistic and understood. Generally organizations miss the most important part of good goal setting, that of defining a specific norm or standard for judging success. The ability to measure a goal is the essential first point in assuring proper goal execution.

Together, the goals in the business plan should effectively implement the organization’s strategic initiatives and direction. The timing and content of the goals should be tiered over time to enact the organization’s very real “waves of change”, with the goals playing out in groups that establish the psychological and tangible results required for real organization-wide growth.

During implementation, each individual goal is a critical point of accountability from the CEO to the management team member (the “goal owner”). The CEO should assure that everyone is on track with achievement of the goals. This is important because achieved goals are the milestone accomplishments that move the organization toward its desired future and long-range vision.

For Example:
Consider an organization that is focused on expanding its locations and increasing performance accountability. One relevant goal would be: The VP of Branch Operations will assure that the Northwest Branch is profitable, with total branch-specific income exceeding total branch operating costs, by May 31, 2008 (2 years from when the branch opened).

A set of goals that provide full-coverage for your strategic direction are a critical asset for identifying and monitoring, in detail, how you will progress and for assuring that the right outcomes are achieved in your implementation.

“A goal without a plan is just a wish.”  Antoine de Saint-Exupery

Action Plans

• Document the steps required to achieve each goal
• Each step within an action plan is assigned to a person and has a due date
• One action plan per goal

Action plans document the individual steps you will take to complete each goal. Each goal must have an action plan for its accomplishment. Each action step within the plan describes who will take what action by what date. Together all of the action steps produce the desired result of the goal.

Action plans serve a critical role in management-to-staff accountability. Each individual action step is an essential commitment that a staff person makes (to conclude that step), and is a key item on which the “goal owner” should hold the staff person accountable. This is essential because action steps are the individual (or day-to-day) strides the organization makes to achieve goals, and as a result, its desired future.

For Example: To implement the “Northwest Branch profitability” goal listed above, the following might be three of the forty action steps required:

• The VP of Accounting will generate a “snap shot” of the Northwest Branch’s current financial situation, including a full branch-specific income statement, balance sheet and key ratios, by July 31, 2006.
• The Northwest Branch manager will propose a “branch profitability plan” for the next three years, including all underlying assumptions, for review by the VP of Branch Operations by August 31, 2006.
• The Northwest Branch manager will communicate the “final branch performance plan” to the branch staff, and begin holding them accountable monthly for those results starting October 30, 2006.

Creating action plans assures that the implementation steps are thought through ahead of time, and that the organization will take all the actions required to achieve its organizational goals.

Pro-forma Financial Projections

• Full 5-year financial projections
• Project the cost/benefit of pursuing the recommended business plan
• Show the recommended re-deployment of resources for Board approval

Pro-forma financial projections show the detailed cost-benefit assessment of why a business plan makes sense. They are monthly or quarterly projections for the next five years of the CU’s income statement, balance sheet, and extensive ratios, in order to show what management anticipates will happen if the organization puts the entire business plan into action.

This planned redeployment of resources is critical because it forces the management to truly think through the costs and returns of each goal (and all associated action steps) and the major resultant future changes that will occur in the organization’s financial statements. It also highlights the key variables in what’s ahead for the organization (both what’s controllable and uncontrollable by the CU), so the entire Board and management team are on the same page.

Critical Approach: The approach for creating the projections is critical and must include two key steps that are often overlooked by credit union staff:

1. Individual “goal owners” must determine the “goal impact” for each goal they are responsible for which helps them learn to think in terms of cost/benefit and provides critical information to the individuals who are creating the financial pro-formas.
2. Those who create the financial pro-formas must not fall into the trap of over-generalizing. They must individually project the anticipated changes in the line items themselves (e.g. new auto loans) rather than simply projecting changes in statement categories (e.g. total loans). This level of detail is required to thoroughly think through the underlying issues and create viable projections.

Pro-forma financial projections are necessary so the management can anticipate the cost/benefit of the business plan and show the Board what it will really require in terms of financial resources.

FILM (Financial, Internal, Learning and Membership) Metrics

• How “success” is objectively defined as metrics
• Measures used by all Directors and staff to monitor organizational success
• The scorecard that is used for determining incentive pay

As the old adage goes, what gets measured gets done. It is critical to establish measurements of success. Without putting a measurement model in place, it is impossible to gauge the progress that is being made on goals and your strategic plan will be abandoned in favor of the immediate demands of the day.

That is why it is essential to pre-determine what key measures the organization will use in order to monitor success. In today’s business marketplace, the need for accurate and balanced measures are a given. The balanced scorecard includes financial measures that tell the results of actions already taken and it complements those financial measures with strategic operational measures on customer/member satisfaction, internal processes, and the organization’s innovation and improvement activities. These are generally the operational measures that are the drivers of future financial performance.

Based on over two decades of experience, we have developed a measurement system specifically for credit union organizations, measuring four primary areas: Financial, Internal, Learning, and Membership, or FILM. These areas reveal what has been done in the past, how the credit union is doing currently, and how prepared the organization is to achieve their desired future. FILM tells the story of the CU’s strategic plan by turning abstract strategies into quantifiable outcomes or measurements.

Disney On Measurement
At its theme parks, Disney estimates an average of 72 contacts occur each day between a front-line employee and guests.  Disney calls these contacts “magic moments.”  Each is an opportunity to make a positive impression on a guest – an opportunity to create magic.

If Disney were to measure financial performance alone, they would have a good picture of where they have been, but the magic moments are more likely to tell them how well they are doing today, which will drive future financial performance.  Further, non-financial information is much more effective in driving, influencing, and changing employee behavior – since that is typically what it measures.

For Example: Sample measures are listed below for each of the four FILM areas:

Financial

• Loan Growth
• Share Growth
• Return on Assets
• Capital to Assets

Internal

• Automated System “Up-Time” (DP System, ATM’s, Phone, Audio Response, etc.)
• Average Number of Member Contacts, Per Employee, Per Month

Learning

• Number of Individual or Organizational Goals (or Action Items) Completed Per Period
• Level of Overall Employee Satisfaction

Membership

• Level of Overall Member Satisfaction
• Net Number of Members Acquired Per Month
• Number of Products Per Member or Household

FILM metrics are important because they provide ongoing clarity for how actual results compare to planned outcomes.

Together, these components of intentionally developed organizational goals, action plans, pro-forma financial projections, and FILM metrics are the core content of a solid business plan.

In Detail – Performance Improvement
In the face of an aggressive strategic and business plan, many Boards and management teams realize they must improve their individual and organizational performance to achieve their goals. Performance improvement is the fuel for creating improved results.

Based on formal or informal assessment of your organization and people, performance improvement is focused on enhancing both individual and organizational strengths and elevating areas of weakness that require change. The form that performance improvement takes is unique to each CU’s specific needs.

Organizational Performance

• Focused on improving the performance of the organization
• Aimed at improving performance within employee/volunteer’s roles
• Includes Board Governance & Policy Development, Organizational Assessment, and Sales & Service Training

Every progressive organization must have a solid culture, right policies, and strategically aligned processes, systems and roles. Organizational performance development is focused on delivering clear solutions that improve organization-wide results.

For The Board.
At the highest level, organizational performance requires productive Board performance. Board-level performance development includes interactive education focused on improving Board governance. It incorporates the detailed documentation of strategic Board governance policies that define and clarify the Board’s role, relationship with management, management limitations, key focuses, and Board processes.

For The Organization.
At an organization-wide level, many CU’s radically benefit from assessment of their operations as a whole. Most businesses grow incrementally over time, and “add on” additional departments, people, processes and systems as they grow. While having grown significantly over time, most organizations continue “doing it like we’ve always done it” rather than “stepping back” and globally reassessing a function or the entire organization, based on what it is there to do and its true potential. Sometimes it involves approaches to reinventing the business, such as what Gamal Aziz has termed “working backward”: literally starting with the “perfect world” and then saying what would we have to do to achieve that future? The results are amazing.

Organizational performance improvement is key, because it elevates your success within specific roles and it realigns your resources to best serve your members.

Individual Performance

• Focused on making individual leaders and teams all they can be
• Includes Leadership Development, Teambuilding and Executive Mentoring

Individual performance development involves that unique combination of assessment, interactions, coaching, and development plans that will move a high potential leader or team forward. Ongoing individual performance improvement is required when implementing visionary plans. The development process happens in the settings of:

• Leadership development which focuses on assessing and elevating an individual’s leadership competencies;
• Teambuilding which provides direct and constructive guidance to the leadership team in order to unify the group around intensive communication, solid commitment, and true accountability; and
• Executive mentoring interactions that bring together leading CEOs for intensive peer interaction, challenge and in-depth community building.

Individual performance development is critical because it enables the CU to invest in its most important (and most expensive) asset: its high potential people. It elevates the personal performance of key employees, which in turn raises the level of the organization as a whole.

Implementing For The Road Ahead

As Benjamin Franklin said, “Drive thy business, or it will drive thee.” Business planning and performance improvement are essential responsibilities of the CEO and the management team. You must make the most of them in order to create real progress.

Together, the strategic plan, business plan, and performance improvement create that ideal and unique combination of the what, why, how, and the fuel that sets winning organizations apart from those that merely survive.

Which type of organization will you be? Will you create the inspiration and discipline that separates your organization from the competition, or simply be an “also ran” that never reaches its’ potential.

In July 1999, Lance Armstrong captured the world’s attention by overcoming the odds and winning his first Tour de France. As a person, he’d overcome the misery of cancer and rehabilitation. As an American, he’d overcome tradition by out-competing the massive tide of European competitors. As an athlete, he’d combined the numerous factors required to become the best in his sport.

His victories were hard won. Headed by team Director Johan Bruyneel, Armstrong and the entire US Postal Service Team (now Team Discovery Channel) assembled the right combination of amazing, complementary riders. They partnered with Trek Bicycle Corporation, Hewlett Packard, Gyro Helmets, and others to radically improve the team’s equipment. The riders pushed the limits of physiological ability, with ridiculous training schedules. They pioneered in diet, team tactics, and dozens of other areas to combine the essential building blocks required to be the best cycling team in the world. The outcome is inescapable: they placed Armstrong on the winner’s podium an unprecedented seven Tours in a row.

The Building Blocks of Organizational Success
Like cycling, being the best financial institution for your members requires innovation and discipline in all the essential organizational building blocks. It requires robust planning and focused action. It entails a smart strategic plan, a deliberate business plan, and people who are strong leaders and experts in their roles.

There is a real need throughout our industry for these sorts of strategically-integrated plans and actions. Too often, credit unions focus on what’s right in front of them – the urgent – and fail to address what’s truly important: bettering ourselves and our organizations. In the competitive financial services environment, with consumer expectations constantly rising, you must step back and designedly reassess what’s ahead for your organization.

The 16 Planning and Development Building Blocks provide the structure and outline to effectively move your organization forward and comprise the “pyramid” of your organization’s success.

Planning & Development Definitions
This listing of definitions is your “planning and development cheat sheet”, which we recommend reviewing multiple times prior to your next planning session.

Strategic Fixtures

• Values: the critical, deeply-held beliefs shared throughout the organization.
• Vision: where your organization is passionate about going – your ultimate destination.
• Mission: what your organization and every person within the organization is here to do.

Future & Strategy

• Long Range Desired Results: where the CU wants to be in 3-5 years, and why.
• Sustainable Competitive Strategy: how the CU will differentiate from the competition.
• Supporting Strategies: statements that clarify your strategy for implementation.

Focus

• Thematic Objective: the CU’s short-term theme around which all leaders rally.
• Defining Strategic Initiatives: the organization’s major focuses for creating near-term progress.
• Critical Operating Initiatives: the ongoing operational priorities.

Advanced Plans

• Scenario Plan: how the organization will respond to major, potential future events.
• Innovation Plan: the thinking and “launch points” for innovations that propel the CU forward.

Tactics & Accountability

• Goals: establish clear desired outcomes, deadlines, and accountability points for staff.
• Action Plans: detail the timed-out steps individuals will take to achieve each goal.
• Pro-forma Financial Projections: expose the cost/benefit of implementing the plan.
• FILM Metrics: the means for monitoring whether actual results meet planned expectations.

Performance Improvement

• Organizational Performance: better role-implementation & strategic integration within the business.
• Individual Performance: develops your people’s leadership, teamwork, & strength of character.

In Detail – The Strategic Plan
Your ideal strategic plan is a robust combination of inspiration, vision, and pragmatism. It’s a living document that articulates what can be. It says, within the grander business context, what you will do and why. It draws us back to all that is important in the bigger picture, amid a schedule of urgency.

“Strategic planning is that style of thinking and method of planning which first focuses on what the business should be in the future. It evaluates and determines where the business is presently, and then systematically concentrates resources to reach that predefined future.” Ron Nice

Together the strategic planning building blocks will produce the passion, high-level direction, and strategic focus that enable your organization to deliver the highest possible lasting value to your membership now and into the future. To create these outcomes, it’s important to understand and correctly develop each individual planning building block…

Values

• Our core beliefs
• What we care most about
• Our decision-making filter

Organizational values are the core beliefs that every employee and volunteer should live out. They are what’s most critical to enact throughout the organization. Values are what your organization “states” are important, and they should be treated as important, modeled through behavior, and reinforced through confrontation of value-inconsistent actions.

Values define our organizations. They remind us who we are and what we stand for in todays and tomorrows competitive marketplace. They are the rudder that directs all actions and the compass that guides all thought. They give meaning to our vision, mission, and strategies.

Values are critical because they position our priorities in the right place. They are what assure we’re all committed to a higher path in our everyday actions. They serve as the essential decision-making filter. When facing a decision, you should say: Would that action be consistent with our values?

For Example: One of Walt Disney’s core beliefs is that all customers be treated like honored guests.

Your organization needs values that place importance on what you truly value most.

Vision

• What can be, not what is
• Is deeply meaningful and measurable
• Your ultimate destination

Vision is the ability to see the world as it could be, rather than as it is. Vision is “out of the box” and transformational in nature. It is exciting, compelling, and often, very intimidating. Vision is difficult to establish because few people are truly visionary. The vision describes where the organization desires to arrive.

Vision should be a magnifying glass that creates focus, and a bridge that draws us from the present to the future. It provides a target that beckons us both mentally and emotionally. Vision defines the ultimate desired destination and thereby always points us in the right direction. Vision both points us and magnetizes us toward new and uncharted territories.

Questions To Ask:
As you reflect on the vision for your organization, examine it closely and ask yourself these questions. Does it contain a specific target or destination? For example, is your vision something that is specific enough that you can crack open a bottle of champagne twenty years from now and say, “We did it!” Is it almost impossible, but attainable in your wildest dreams? Does it actively motivate and compel you and your employees to perform far beyond expectations? Is it measurable? If you answer “no” to any of these questions, it’s time to revisit your organization’s vision.

Mission

• Concise statement of what the company does
• The road your organization is traveling on
• What you’re here to do today and every day

Your mission is the road that your organization is traveling on and what every individual in the organization is there to do. It needs to clarify, in a single statement, what the focus of all activity should be. It represents “what” the business does.

Clearly, a short and simple mission statement that accurately reflects your organization’s deliverable is an essential asset, an essential “strategic fixture.”

Avoid The Traps:
Don’t fall into the common “mission traps”; be sure your mission statement is neither wordy nor generic…

“… satisfying the needs and expectations of our customers with quality products and services.” This was the mission statement of Levitz Furniture. It is a generic statement that could have applied to almost any company, in any industry. Levitz is now bankrupt and one of the big reasons is the lack of focus and direction apparent at the top.

To assure you overcome the common traps, be sure to honestly ask and answer these questions about your mission… Does your mission statement contain real “meat” or “teeth”? Does it focus the organization on a concrete and specific purpose? Does it describe what you are there to do?

Long Range Desired Results

• What we envision the organization being and doing in the future
• Where the organization wants to be in three to five years
• Why the organization wants to be there

Long range desired results are those major items that outline your organization’s desired future. Without this component, the power of strategic planning will fall flat. These “results” statements or bullets indicate what you want to accomplish at least three to five years into the future, and why. These long-range results must be clearly defined in writing, and fully understood and agreed to by all parties. The more specific the definition of the long term desired results, the better.

The long term desired results provide the “strategic content and context” from which your organization must set its specific short term strategic initiatives. They provide a clear picture of what specific destination your organization wants to arrive at, within a certain time frame.

The Right Questions:
Long range desired results should answer to the following questions…

• Who will be the targeted customer/member, and why?
• What will be the portfolio of products and service offerings, and why?
• What will be the range of delivery mechanisms we will use to deliver our products and services, and why?
• What will be our approach to pricing those products, services and delivery mechanisms, and why?
• What will be the strategy, media and mediums used to effectively communicate those products, services and delivery mechanisms to your targeted customer/members, and why use those?
• What type of organizational and individual development will be required to achieve the items above?
• What are the expected organizational financial growth results?
• What will be the external and competitive environment you will face in the future, and why?

In order to make them compelling and appropriately actionable, be sure your desired results include answers to these essential questions.

Sustainable Competitive Strategy

• Where we will stand out from the competition
• How we will be different and better
• Where we will focus our resources in order to excel

Your sustainable competitive strategy is the organization’s approach for standing out or apart from competitors. It defines how you are different. It comprises the different and better value you deliver to members. It should be the content of your core sales and marketing messaging.

In addition to the contributions of Crawford and Mathews, Nice Enterprises, Inc. has identified what we believe to be the essential content of core strategy – the five universal elements that apply to every financial transaction: product, price, convenience / access, service experience, and inform / communicate / educate / market. The most successful companies dominate in only one of these five areas, are differentiated from their competitors in one other area, and work hard to be on par with (or equal to) their competition in the other three areas.

Overcome the Myth:
The economic and competitive realities of today’s marketplace require businesses to actively make trade-offs of one kind or another. The Myth of Excellence is that most businesses believe that they must outshine their competitors in all five areas. Most companies allocate too much time and too many resources trying to win on every playing field, instead of focusing those limited resources where they will really make a difference in the hearts and minds of their consumers. A number of highly successful companies are following this philosophy and maintaining their focus. It is working: Wal-Mart, Southwest Airlines, Lexus, Eddie Bauer, and Dell all have a distinct strategy.

Will your credit union determine and continually build upon a truly sustainable competitive strategy and become one of these success stories?

Supporting Strategies

• Clarify and extend your sustainable competitive strategy
• Eliminate misunderstandings about the strategy
• Clarify implications for how the core strategy will affect business implementation

Supporting strategies are further detail statements about the sustainable competitive strategy that add clarity and make it more specific and actionable. They add meaning and further detail to the organization’s core strategy. They point out what it means and better extend it into CU operations. Supporting strategies can also clarify something that was not addressed in the core strategy, and/or elaborate or extend what exists in it.

For Example:
Consider an organization whose sustainable competitive advantage includes being the best in the Service Experience. An appropriate supporting strategy might be “Every employee will embody our organization’s theme through their daily action to create a consistently compelling member experience.” (Note: Creating an enduring organization-wide theme is described in the May, 2006 issue of The Strategist, Delivering Member Experiences in the Coming Economy (Part I).

Supporting strategies are important to continually design, document and refresh, so that your sustainable competitive strategy can be wholly implemented throughout the organization, on an ongoing basis.

Thematic Objective

• What the near-term future is about
• How you describe the “focus” of this phase of the organization’s “life”
• The “compelling focus” of the next 4-16 months

A thematic objective defines what your organization’s short-term future is all about in a single phrase. It documents what will permeate both the strategic and operational focus of the credit union for a certain short period of time. It is the rallying cry of the entire organization short-term, and it encapsulates all the CU’s strategic initiatives.

Often organizations create organization-wide focus only when forced to by crisis. A major disruption like losing a key sponsor, poor profitability, or a natural disaster causes everyone to take notice and rally to make the needed changes.

A thematic objective creates this sort of focus and urgency without a crisis, by defining the “cause” around which everyone should focus their energy. It says to all volunteers, managers and employees, “rally around accomplishing XYZ!”

For Example:

• Reestablish ‘normal’: Following a traumatic headquarters move and organizational restructuring, “Reestablish normal” might be an organization’s 6-month thematic objective… meaning that everyone will focus their energy to “land” on the processes, system and infrastructure changes, scheduling, etc. required to be highly productive in the new work environment.
• Extend the brand to every corner of the organization: Following the successful launch of strategy-based branding, this might be an organization’s 1-year thematic objective… meaning that all volunteers, management and staff will do their part to understand the brand and extend it throughout their specific spheres of influence.

Establishing a thematic objective is important; pulling all departments and individuals together around the top implementation focus.

Defining Strategic Initiatives

• Our major key focuses for the next 12-18 months
• High level items on which we need to focus in order to make progress

Defining strategic initiatives flows directly from the organizations long term desired results and competitive strategy assessment, and are the “meat” of the thematic objective. The purpose of strategic initiatives is to provide the immediate points of focus or major key issues that will concentrate the entire organization’s energy and resources. Short term strategic initiatives generally have a 12 to 18 month timeframe, and form all the basic components of the vehicle that your organization will use to “travel” down the road toward your long term desired results and ultimate vision. From these broad statements flow your specific organizational goals.

Take Action:
We all know those individuals that carry on with an abundance of enthusiasm about their proposed adventure or dream, but never get around to accomplishing it. There is always one more idea they want to incorporate, one more detail to check out, plans to be redrawn. Don’t let this happen to you or your organization. Once the dream has been built and communicated, belief has been clarified and embraced, and the potential risks have been understood and calculated, action must be taken.

Defining strategic initiatives provides the focus and clarity required for building your business plan.

Critical Operating Initiatives

• The focus of ongoing operations
• What you do to maintain solid operations
• These seldom change

In contrast to “progress-oriented” strategic initiatives, critical operating initiatives are the major focus of ongoing operations. Operating initiatives are broad statements about the key factors that must be perpetuated in order to maintain safety, soundness, service, and sales. Critical operating initiatives are ongoing and seldom change. They are considered institutionalized, but no plan should be without them.

For Example: A CU’s critical operating initiatives might be:

• Maintain member satisfaction
• Manage operating expenses
• Continue transaction accuracy
• Make our growth numbers

Establishing critical operating objectives helps the leadership to continue to focus employee efforts on the most important areas of ongoing organizational implementation.

Scenario Plan / Innovation Plan

• Two forms of “advanced planning”
• Imagine potential “probable” events and determine how you’d respond
• Drive “out of the box” product, delivery and service innovation in your organization

Beyond strategic planning, advanced planning approaches such as scenario planning and innovation planning can better prepare your organization to create new business opportunities and excel in the future. These forms of advanced planning should be undertaken only after a solid strategic plan base has been established.

Scenario Planning – Scenario planning is the future-focused approach that guides leaders to actively think about what major changes may be ahead for the organization, and what the organization will do should those events unfold. It establishes “future scenarios” that describe how the organization would capitalize on future opportunities and confront specific potential hardships. For Example: you might develop a scenario plan to address how your CU would respond to being taxed, facing competition from online-only providers, and confronting the reality of “attract younger members or fail”.

Innovation Planning – Innovation planning is the uniquely designed process of extending innovative thinking throughout a leadership team and applying the creative approach of innovation to create new-to-industry “inventions”. Innovation planning draws from the “case history of invention” to initiate and grow an innovative style of thinking within CU leaders. It enables leaders to recombine people, ideas, and objects in unique ways that generate new value offerings for the organization. For Example: amid the novel interactions of innovation planning, the management might create a start-up loan product for younger members that bases underwriting on relevant transaction histories, rather than credit history/scores.

Advanced planning offers your leadership “out of the box” approaches to actively generate new perspectives on the future of your organization and its value offerings.

Strategic Implementation
With a solid strategic plan in place, your organization and every CU leader within your organization will have clear direction and a well supplied “war chest” from which to draw when making implementation decisions. Once your strategic needs are addressed, it is critical that you take the following next steps:

1. Assure your employees understand each building block of the strategic plan and their respective roles
2. Extend your strategic plan into action through a detailed business plan (which is the content of “Part II” of this article)

Strategic planning is a rich, fulfilling, and sometimes challenging process, where we as leaders are inspired to see the future as it can be; we’re encouraged to build agreement on how we’ll reach our desired future; and we’re enlivened by documenting what matters most, what we can do to grow, and what we will all unify around as we move toward tomorrow. Your strategic plan is an invaluable asset. Be sure to build it right!

• ž Your people are rapidly growing so they can take on more responsibility
• ž Your employees fully understand what’s expected of them and where they stand relative to achieving it
• ž Your team is on a strong path to achieving their full potential

You can only achieve these results if you, your leaders and your entire staff deliver positive confrontations.

The interesting fact about confrontation
is that it can carry such negative connotations, but in fact, it can be such a positive tool. In his book People Skills, Dr. Robert Bolton states what most of us feel, “I hate conflict. I wish I could find a healthy way to avoid it or transcend it.” “But,” he continues, “Many of us are more aware of its perils than of its possibilities. Social scientists have discovered that love only endures when dissension is faced openly.” We must actively and positively confront issues and people if we want to build and maintain strong relationships. It is essential for working effectively together and achieving your CU’s full potential.

Positive Confrontation and Its Benefits
At its essence, positive confrontation is simply having a face-to-face meeting or a clash of ideas that is delivered with the best interest of the other person in mind. It is the personal process of “iron sharpening iron” where each party expresses what they think and feel, especially when it differs from others’ point of view. It often involves telling someone something that they may not initially want to hear. In any case, positive confrontation is when we say what was left unsaid or verbalize a stand out issue so you can improve the person’s future results.

Positive confrontation is often the missing link that drastically increases productivity. In the book Crucial Confrontations, Kerry Patterson et al show the impressive results of confrontation (or lack of it):

1. Organizations are losing between 20 and 80 percent of their potential performance because of leaders’ and employees’ inability to deliver key confrontations
   
2. When people improve their confrontation skills, their productivity routinely improves by 20 to 40 percent
   
3. After studying over 25,000 people over two decades and across dozens of organizations, what sets the best leaders apart is their ability to hold people accountable
   

Why So Few People Deliver Positive Confrontation
Clearly delivering key confrontations and delivering them well are essential for making your team and your organization live up to their high potential… but the reality is we usually refrain from delivering confrontation because of these simple reasons: a) we’re afraid of the process or its potential negative results, b) we don’t think we’re good at it, and/or c) it isn’t an accepted norm of behavior in our work setting or relationships.

As described in the December 2004 issue of The Strategist, overcoming these reasons is of critical importance for credit unions since we tend to be more “nice” than “real”. Establishing effective, positive confrontation skills is a holy grail for our industry.

When to Deliver Positive Confrontation
There are many instances when positive confrontation is the right action to take. In fact, within the organization the list of instances and settings is quite long, including when someone:

Where To Begin
Effective confrontation begins with you. You are the only one you can control. The way you approach confrontation is critically important, and your first step is to gain more self-knowledge. Every person has certain tendencies in how they approach confrontation. Dr. Robert Bolton exposes the following three types of behavior, which are ways of dealing with issues and communicating responses, including the delivery of confrontation. Since these terms can have different meanings in various settings, each is described below. See if you can identify your behavioral tendency:

Ask yourself… Do you tend to be submissive, assertive, or aggressive? You may be submissive or aggressive most of the time. Alternatively, you may find you’re assertive much of the time but tend to be submissive or aggressive when you’re challenged or in new situations.

As you approach delivering confrontation, it is critical to know your own behavioral tendencies and how to manage them in order to be assertive. For instance, if you tend to be submissive, you must assure that you acknowledge your feelings, identify the core issue and take action when you’re frustrated. Alternatively, if you tend to be aggressive, you should “choose your battles wisely” and tone down your delivery of confrontations. An excellent resource for positive confrontation delivery is Dale Carnegie’s book “How To Win Friends and Influence People.” This is a “must read.”

Taking The First Step
With increased knowledge about your tendencies, you’re ready to deliver effective confrontation by taking the first step: determining the central issue. This may be the single most important step in positive confrontation because in order to effectively deliver confrontation you must confront the right issue.

To do this, thoroughly think through what happened that frustrated you. Also look deeper to see what the real cause of your frustration is. Next, make a simple list of the various aspects of the situation or problem. Continue to assess the issue (and gain more information, if needed) until you clearly boil it down into a single sentence.

If there seem to be multiple issues, you must choose one. Select the issue that is most critical for you to resolve. This is very important. You must concisely state the issue in a single sentence before you can deliver constructive confrontation. Don’t let your emotions prematurely propel you into action.

For instance, one of your employees entered a loan application incorrectly in the core processor system. On the surface, the issue seems to be that they didn’t care enough to get it right. As you think through the issue further, you realize it’s not that they don’t care or that they have to be perfect, but that they did not follow the procedure for verifying the information once it was added to the system. The real issue is, You didn’t follow the known procedure and as a result you made an error in the member’s record. You could have identified several other core issues, but this is the one that is the real problem to you. Stated this way, the issue is clear and actionable.

Delivering CPR
Kerry Patterson et al have an excellent approach for delivering confrontation: CPR, which stands for content, pattern, relationship.

The first time you confront an issue, talk about the content. Focus on what happened in the single event.

If it happens again, talk about the pattern. Focus on how this has happened multiple times and interactively discuss the pattern you see. Clarify the history and how it may be affecting the person’s reliability.

If it happens again, focus on the relationship. Center the conversation on how the repeated instances may be undermining the relationship and diminishing trust.

This CPR approach appropriately escalates the issue and provides real feedback on how the unresolved issue is causing wider negative consequences.

Better CPR
In delivering CPR, make sure that you think through their intentions, your wants, and what else is missing…

Their Intentions. Assess their intentions. Are their intentions good? Do they want to make you look bad? Are they trying to test you and see what’s really important? If the intentions are relevant (and they often are) you must confront the employee on them within the context of CPR.

Your Wants. Your wants are another great way to clarify the real issue. Ask yourself, What do I really want? What don’t I want? This will clarify the issues and refine the result you want to achieve from the confrontation.

What’s Missing? When each of us observe something happen, we create a story to fill in the gaps. You see what someone does and then tell a story about why they did it. Instead of jumping to conclusions, it’s important to step back and ask, What am I missing?

When You Open Your Mouth
Once you open your mouth to deliver a positive confrontation, you only have a few moments and a couple sentences to set the stage. This will determine whether you succeed or fail.

Your Intent and Their Fears. You must convey your intent as well as the content of your message. It is important to note that confrontations usually go sideways because the person misunderstands your intent.

Likewise, anticipate what they may be concerned about, and contrast that with what’s really happening.

For example, you might say, “I see you as a good performer; I don’t think this is a huge problem but we do need to address it. You didn’t follow the known procedure and as a result you made an error in the member’s record.”

You must approach this with a servant’s heart. It is important to truly have the person’s best intentions in mind and a positive outcome as a goal. The words you choose are important; but likewise, your intentions will show through even beyond the words you choose. We’ve all had a conversation with someone where, on the surface, their words say they have your best interest in mind… but below the surface you can tell their intensions are selfish – through how they communicate and what they’re saying non-verbally. As Brian Tracy says, people today are built like human lie detectors. If your words and intentions are not in sync, the person you’re confronting will know.

Moving Toward Resolution
Clearly communicate the issue, in the right context and with the right intentions. Make sure they understand the consequences, patterns, and relationships related to the issue. Then invite interaction.

Ask them what happened. Gain their insight into what went on. Listen genuinely and actively ask questions so you understand their perspective. As you listen, search for the source of the issue or problem. Generally, you’re watching for whether a) the person lacks motivation or b) the person lacks skill, or c) the person lacks knowledge. Problems are generally caused by one or the other of these sources. You must let them communicate their story of what happened. This will help them buy-in to the upcoming action steps. It also gives you a more complete picture of the situation.

Skill Issues. If you identify it’s a skill issue, then you must together address the specific skill that is lacking and jointly develop clear development steps with the person.These may include personal development steps if the barriers lie with them or external changes if the barriers are from someone else or external issues. Don’t give quick advice. Ask for and listen to their development ideas; take time to explore the options. Then brainstorm underlying causes and the roles others can play in resolving the development barriers.

Concluding The Positive Confrontation
Before you conclude, be sure to establish the specific action plan that addresses both who does what by when, and follow-up steps. In this way, you will create shared agreement around when both the changes will be made and follow-up will be delivered. Follow-up must appropriately take into account the risk of failure, the level of trust, the degree of change and the current skill of the person. Here’s how these four factors affect follow-up timing:

Once you’ve established the action steps and follow-up plan, finish by asking the person a question that will confirm where they’re at, such as, “If we meet in two weeks, are you confident you will have followed the procedure and assured no member errors?”

Motivation Issues. Alternatively, if the issue is lack of motivation, it doesn’t mean you should deliver the conventional but ineffective remedies of more charisma, machismo or power to assure compliance. Rather, it means you should help them improve or change their set of expectations. People make choices based on what they expect will happen. Certainly their expectations exist at many levels, but collectively their bundle of expectations determines the choices they will make. They choose the path they think will deliver the best bundle of effects or consequences.

To help people make better decisions, help them see effects that they aren’t currently seeing. As you experiment with helping them see these effects, you will learn which ones mean the most to them:

• Longer-term effects: People often see short-term benefits like pleasure or leisure; help them see more substantial long-term effects like reputation and greater opportunities
• Their values:
• Communicate relative to what they value and link it to the desired outcome
• Delayed gratification: This is the single best predictor of lifetime success; help them see the long-term benefits of taking the right action
• Outside perception: Help the person see how others may be seeing them as a result of their actions; help them see how various actions affect coworkers
• Connect to benefits: Help them see how various actions will deliver benefits such as more challenges, influence, promotions, increased pay, etc.
• Connect to consequences: help them see how various actions will affect consequences such as lack of trust, demotion, boring work, etc.

This effective approach to confrontation relies on collaborative problem solving. It hinges upon you staying “connected” to the person and on them providing honest input on what happened and what will change. Positive confrontation is one of the greatest investments you can make in a person – and one that you can make today.

How-To Resources:

Applying Positive Confrontation

As you apply positive confrontation in your working relationships, you will bump into some common challenges. The challenges will come in many forms. As you practice positive confrontation, you will expand your base of experiences and learn to identify each of these challenges in yourself and others. Here are four specific examples that Dr. Robert Bolton points out you may face, along with our descriptions of how they happen and steps to resolve them. Overall, these are all barriers to effective communication and collaborative problem solving:

• Denial: The person may deny what happened or deny that the issue you see is really an issue. Conflict can be so threatening that the person just can’t admit the problem is real. People are more likely to do this when they haven’t been part of a culture where confrontation was a norm of behavior (e.g. in their family, past work experiences, etc.). They may believe, This can’t possible be true – I’ve always been good at what I do.
• You must move them through this by staying connected and enabling them to gain real performance feedback from multiple sources.
• Avoidance: The person may know there are real issues, but does everything they can to avoid them, especially if they are interpersonal issues. This may happen when the person tends to be submissive (as defined above) and/or they have had no past experiences with confrontation that they perceived as positive.
• You must make your positive intentions very clear, assure they know this isn’t a huge issue, and address the fact they seem to be avoiding confrontation. Work with them to make the confrontation experience positive, and “debrief” it afterward so they create positive expectations about how confrontation plays out.
• Capitulation: The person may quickly give in without ever saying what they need to say. They capitulate, and in doing so, harbor resentment. They don’t express what they need to express. In the short term, they think this is the best way to avoid damaging the relationship. But the person will be burying their real feelings, causing resentment, and they will pull away from the relationship.
• Calmly address what you see happening and encourage them to tell you their side of the story. Reflect back how you perceive they’re feeling as they tell their story. At multiple times, encourage them to tell you what’s going on.
• Domination: The risk of domination is that either you or the other person dominates the conversation and forces their solutions on the other party. Aggressive people (as defined above) tend to practice domination. This is a danger because it will breed lack of ownership by the other party. They will move increasingly toward bringing just their “hands” to work, instead of investing their “heart” and “mind” in what they do.
• If you tend to dominate, discipline yourself to actively listen. Ask questions that show you’re listening and pay attention to learning “the whole story” as the other person talks. Communicate that you hear what they’re saying, such as I see what you mean and That makes sense

In short, these and other barriers can derail positive confrontation by blocking communication and collaborative interaction. Telling the truth in love is the essence of initiating positive confrontation. Collaborative problem solving is the process of turning the issue or problem into tangible resolutions steps.

Go For It

When your organization improves its positive confrontation skills, the results will be impressive. As an example, here are results Kerry Patterson et al saw other organizations achieve:

• At a large telecom company, an 18 percent increase in confrontation skills led to an increase in productivity of 40 percent
• When an IT group increased confrontation practices by 22 percent, the impressive results were: quality improved 30 percent, productivity increased 40 percent, costs plummeted 50 percent, and employee satisfaction increased 20 percent
• Your results can be equally as great. Or greater!

Your Positive Confrontation Cliff Notes

Let’s review where you’re at…

1. You know the impressive benefits of positive confrontation.
2. You better understand your behavioral tendencies and choose to move through the discomfort of initiating the confrontation.
3. You take time to identify the key issue needing positive confrontation and communicate it along with the consequences of the issue in regard to content, patterns and relationships.
4. You allay the person’s fears by communicating your positive intent and contrasting the issue with what the person fears it might be.
5. You learn the rest of the story through your conversation, identifying whether the issue was caused by a lack of skill, knowledge, and/or lack of motivation.
6. You help them build more motivation by uncovering new effects / consequences with them, and you interact to develop a plan for improving their skills including follow-up steps.

As a result, you feel confident that you’ve done the right thing. Now you’re actively following up with them to assure they continue to develop at a rapid pace. The relationship is better for it. Your organization is better off. Your productivity is increasing, and you’re actively forming an invaluable new habit to employ with your peers, staff and family.

We trust you will make positive confrontation one of your essential habits. To begin establishing it, it’s time to ask what actions or results are frustrating you?… and what will you do to positively confront the crucial issue today?

But if you look forward in light of three specific opportunities, the future looks breathtaking! You and your people are the centerpiece of these opportunities.

These three priceless opportunities are in the areas of optimism – the ways we perceive life and deal with failures; self knowledge – the foundation of leadership; and culture – the fabric of your organization’s interpersonal environment. These opportunities, extracted from the minds of great leaders, are presented to you along with the key areas for implementation focus within each opportunity. Will you capitalize on them or will you let them fall into the gray backdrop, forgotten?

Capitalizing on these opportunities must begin with you in your daily and weekly routine. As John Maxwell points out, “You will never change your life until you change something you do daily. The secret of your success is found in your daily routine.”

These opportunities also apply to your teams, but only after you’ve personally embraced these opportunities and begun to model by example. As a leader, you must go first. Then you can lead your people to where you’ve already begun to go.

The Opportunity of Optimism
Think back to a major event in your life. Was it a positive event like getting married, having kids, or getting a new job? Was it a negative event like the death of a loved one or losing a job?

Now think about this… what affect did that event have on how you experience your life? Hidden in the answer to this question is the essence of a revolution in understanding yourself and other people.

In his book Learned Optimism, Dr. Martin Seligman recalls the genesis of his revolutionary findings. As a young psychologist on sabbatical in England he prepared to present his findings to an intimidating crowd, the dons of Oxford University. As he nervously organized his notes he looked out across the crowd and saw the daunting faces of Noble Laureates and leading psychologists of his time. The year was 1976.

Since then, Seligman has earned the respect of even his most stringent critics. Indeed, he has gone from the outsider at Oxford to the ultimate insider as past President of the American Psychological Association.

Seligman has led this revolution in modern psychology by succeeding to change the way we look at people. He has installed Positive Psychology into the mainstream understanding of human behavior, and with it, a new way of approaching leadership development in organizations. It focuses on developing competencies, which in turn limit emotional disorders.

His research shows that most people, following a major life event, return to the same experience of life within three months. They return to having the same types of emotional cycles and the same general outlooks on life (optimistic, pessimistic, etc.) that they had before the event. Humans have an amazing ability to adapt to their surroundings and experiences. But in many cases that adaptation puts them right back where they were before – as happy, positive, negative or lonely as they were.

Interestingly, though, Seligman found that a few people had a significantly different outlook on life following the event, and they all intentionally chose it. Out of the event, these people learned a new way of interpreting life’s events and internalizing them. This reality is the basis for Seligman’s effective treatment of people with depression (a condition for which 1 in 8 people may currently be under treatment) and development of people so they will rebuff this national epidemic. It is also a novel approach to overcoming mental models that create negative results.

You Will Believe What’s Ahead. Many of us bought the message of the inspirational leaders of 80s and 90s (most of us remember the Positive Mental Attitude genre). But most of us don’t really believe. Some of it just seemed too “out there” and idealistic. Preachers, speakers and self-development gurus professed things like “Your attitude determines your altitude… What you conceive and believe you will achieve… etc.” Many of us analytical and pragmatic types just found that a little too fluffy. But, much of it really is valid, and science is catching up and clarifying the key aspects of impactful optimism.

As Seligman points out, “Learned optimism is not a rediscovery of the ‘power of positive thinking.’ The skills of optimism do not emerge from the pink Sunday school world of happy events. They do not consist in learning to say positive things to yourself.” Rather, pessimism specifically is based in learned helplessness… but it is a changeable condition. One of the key factors in this is what Seligman calls your explanatory style – that is, your style for explaining what reality looks like and what’s happening around you. This paves the way for success or failure and it regulates how we see life. In some basic ways this is the old “half full or half empty” thing. But more specifically, it’s not positive self-talk or the like. Seligman points out that the key attribute of optimism is, in the face of failure, using the “power of non-negative thinking”. Notes Seligman, “Changing the destructive things you say to yourself when you experience the setbacks that life deals all of us is the central skill of optimism.”

Here are several key areas to uncover about yourself:

• What do you tell yourself when something bad happens? How do you interpret the event?
• What permanence do you place on the cause of positive events? On the cause of negative events?
• How capable do you experience yourself to be in changing what happens to you?

The answers to these questions will help you gain greater self knowledge about your level of optimism or pessimism. They will give you indications about your propensity for rebuffing depression, achieving success and staying physically well. If you choose to change, this level of knowledge about your life experience will enable you to develop learned optimism and create leveraged impact as you combine them with other areas of leadership self-knowledge…

The Opportunity of Self-Knowledge
Famous football coach Vince Lombardi is arguably the best football coach in history (and is unquestionably the best, if you live in Wisconsin). He took the Green Bay Packers from the bottom of the NFL in 1959 to the top of the NFL from 1961 to 1967. After only two years as their head coach, the Packers were atop the NFL. They won NFL championships in 1961, 1962, and 1965, as well as winning the first two Super Bowls in 1966 and 1967.

His son Vince Lombardi, Jr. uncovers the building blocks to Coach Lombardi’s leadership. In The Lombardi Rules, Lombardi Jr. establishes these foundational leadership capstones:

The first of these building blocks is self-knowledge. It offers modern leaders a priceless opportunity. It is a critical aspect of leadership, but one that is easy to miss in our fast-paced environment. Too often we focus on doing, while leaving the “being” and “knowing” aspects of leadership undeveloped.

You can develop this critical capacity of self knowledge in two ways: through intentional assessment of your strengths, weaknesses, blind spots and limitations; and second, through active thinking about and reflection on your experiences.

Intentional Assessment. Engaging in intentional assessment of your strengths, weaknesses, blind spots and limitations holds major potential for your leadership development. It requires humility, emotional fortitude and intentionally overcoming the greatest negative tendency of people – self protection. Self protection (defensiveness) will certainly come up when you do assessment.

With self protection on a leash, high potential self assessment actions include formal and informal self-assessment and peer or 360 degree input, as described in the “how-to” section. As a leader, the most important focus of your self assessment should be on identifying your strengths, weaknesses, blind spots and limitations in people interactions. The goal is to know your current people-related capabilities.

Thinking and Active Reflection. Amid our busy modern culture, we tend to do too little active thinking and reflection. There’s always a list of things to do and a mish-mash of problems to solve that are bouncing around in our heads. As people who have high responsibility, we seldom take the time and commit the focus to asking, what can I learn about my people capabilities by thinking about and then reflecting on today’s experiences? This is a shame because it is the very feedback loop that we need in order to grow as leaders. It opens us to the leadership lessons that are available to only those select few people who choose to learn them. Done regularly, active thinking and reflection on your experiences with people will yield priceless self knowledge.

This self knowledge, in turn, serves as the clarifier for knowing what competencies you need to develop and what skills you need to hire in the people around you. Knowing yourself is the solid foundation of leadership.

The Opportunity of Culture (Truth and Love)
Culture offers a landslide of opportunity if you will just tap it. As described in Are You Inheriting Your Culture?, the November 2004 issue of The Strategist, credit unions typically inherit their cultures, but you can step back and change your culture to make it a priceless organizational asset.

Let’s look at culture from a complementary perspective that offers us options for capitalizing on this opportunity.

Many organizations desperately want to change their credit unions to sales and service organizations. They want to improve and grow the culture. They want to make it a better environment for the employees and the members. While this does involve tangible changes in business “hardware” (systems, policies, processes, etc.), it is important to understand the flow of change and the essential trajectory of change within the basic ingredients of people interactions.

The Flow of Change. It is critical to understand that change never starts with the “hardware” alone. In fact, it needs to happen with the people stuff first and most. It flows in the following progression:

1. Culture – the organization’s beliefs and norms of behavior
   
2. Policies – the rules of what’s allowed
   
3. Processes – how we do our job functions
   
4. Systems – the “tools” we use and the capabilities they have
   
5. Organizational Structure – who you have in your roles; who reports to who
   

If done well, changes that flow in this direction produce high member focus and strong member results.

Where To Start Change. The critical initial lesson we learn from this flow of change is that it starts with people. In an organizational overhaul, it begins with hiring the right leaders. Jim Collins in his book From Good To Great points out “you must get the right people on the bus before you figure out where it should go.”

But short of major organizational overhaul, change begins in your culture. In their excellent book Execution, Larry Bossidy and Ram Charan share an invaluable definition of culture… “Stripped to its essentials, an organization’s culture is the sum of its shared values, beliefs, and norms of behavior.”

These essential cultural ingredients expose the key opportunities for improving our culture. Values should stay the same, but beliefs and norms of behavior are fertile soil for change. Cultural change results from changing the very beliefs of your people and their norms of behavior. If you change these, you change your culture.

Beliefs. Changing beliefs within your organization is the essential starting point of change. CEOs like Bossidy, consultants like Charan, leaders like Gandhi, psychologists like Seligman and writers like Covey have all pointed this out. Change begins with changed beliefs. The how-to section (at the end of this article) will show you one way to approach this.

Norms of Behavior. Norms of behavior are changed in two ways. First they change as a result of changed beliefs. If we truly believe we are a) capable of delivering high value and b) in a rapidly growing industry, we will take actions to rapidly grow our organization.

Second, changes in norms of behavior happen by establishing beliefs about what behaviors are ideal and then by actively integrating them into our individual and group lives. One essential behavior is speaking the truth in love. It was espoused by Jesus of Nazareth over 2,000 years ago and by endless others since.

Love incorporates caring, nurturing, encouraging, and watching out for other people. This love requires you to put others before yourself. Truth incorporates honesty, directness, assertiveness, and communicating reality, even when it will hurt.

Speaking the truth in love is the essence of building lasting relationships and success. In modern business lingo, aspects of speaking the truth in love include: affirmation, approval and disapproval; correction, creating a culture of acceptance; constantly bringing reality into the organization; and coaching combined with active accountability.

Here’s the essence of effective culture and the genesis from which endless business techniques flow. As shown in the table, various norms of behavior result from lack of love or truth, or from over-emphasis on either truth or love. But when we deliver major truth and major love together, we produce ideal behaviors. Reflect on the figure below. Where are you as an individual? Where is your organization’s culture? Are they at the same place?

Given its importance, we have reflected on this concept extensively ourselves and determined several basic implications it has for our industry:

• Many of the negative symptoms in credit unions result from a lack of truth
• Many credit unions can make the most positive impact by increasing in truth while maintaining love
• The best credit unions rely on their philosophical undertones in love and intentionally incorporate truth into their organizations
• Only by delivering significant love and truth can you truly deliver either truth or love

What This Means To You
What this means to you is there are three opportunities of unprecedented potential. You can capitalize on them by targeting your efforts in the key implementation focuses. If you do, you will pay the price of hard-fought change and will reap the refreshing rewards of personal development, satisfaction, and team growth. We hardily recommend that you pay the price to capitalize on these opportunities and you invest in the most valuable asset your organization will ever have – the people you’ve chosen to deliver value to your members.

How-To Resources:

Capitalizing On These Opportunities

With these opportunities of optimism, self knowledge and culture clearly established, let’s talk about how you can capitalize on these areas of vast potential.

Self Knowledge Through Leadership Assessment Great leaders invite and initiate interaction about self-appraisal. They discuss their strengths, weaknesses and limitations. They work to uncover their blind spots so they become known weaknesses (which are much less dangerous). They take part in numerous activities and interaction to promote self appraisal.

In addition to this informal and interactive self assessment, formal assessment is invaluable. One cost-efficient way to do this is to use the Leadership Architect Competency Sort Cards from Lominger Limited. They can be purchased online at www.lominger.com. These cards will enable you to force sort your 67 leadership competencies and determine where you need to focus your leadership development.

If other leaders in your organization use the cards as well, you will gain shared understanding and language for interacting around leadership strengths and weaknesses. To use these cards, we recommend the J, K, L, M sort, which we’re glad to tell you more about. Many of our credit union clients have found them very helpful in generating honest, 360 degree feedback.

Changing Beliefs and Norms of Behavior Personal change begins with changing how you interpret life and how you change your beliefs.

Changing How You Interpret Life. Changing the way you approach and interpret life, often called pessimism or optimism, significantly affects not just your interpretation of what’s happening around you, but also your propensity for depression, achievement and your overall physical health.

To develop your ideal approach to creating positive results and overcoming setbacks in life, we recommend reading Learned Optimism by Martin Seligman. It will also enable you to identify people in your organization who are effectively optimistic or detrimentally pessimistic.

Changing Beliefs. Changing beliefs for the better has two sides: making our beliefs more realistic and making our beliefs more aligned with positive future results. Following is one way to approach the key beliefs of your organization and to change them for the better. This approach is drawn from the book Execution, which we recommend you read.

Assemble your team and interactively discuss the importance of beliefs in the organization and its culture. With everyone bought into the concept, first ask, “What are the most critical beliefs that have shaped the organization’s view of itself over the past five years?” and “What are the beliefs needed now for the journey forward?” Have them work in groups of five to seven people, then as the whole group to identify the old beliefs and the new beliefs.

Once you’ve created the new list, use it to create attitude changes in the top leaders and throughout the organization. Do this in part by listing what implications the new beliefs have for our attitudes about the organization and its future. Over time, install these in every part of the organization’s “software” until they become the “rules of engagement” in the way people behave.

These three opportunities of optimism, self knowledge and culture exist at the most basic level of the organization and yet offer the organization amazing results in improved attitudes, beliefs and value to members and employees. With this high potential comes cost – and you will pay it by changing your beliefs and your daily routine as a leader. Pay the price to invest in these opportunities, and you’ll wonder how you ever succeeded without it. The choice is yours. If you choose to invest, it will improve every one of your relationships, and the results your organization produces.

In order to face these challenges, isn’t it about time you learned how to sell more effectively to this evolving market? As you’ve probably noticed, raw service only goes so far. If we remain passive and continue to merely take orders, we can never grow and succeed to the high degree we all aspire. We must identify, develop and actively meet our member’s needs. We must not only strive to gain, but also put into action, the processes and competencies that deliver effective sales.

Building on the strong foundation of the December 2003 issue of The Strategist, this extensive article will give you an in-depth view into how you can progressively increase your credit union sales. This newsletter presents the sales funnel as an ideal method you can use to systematically organize your selling processes and procedures. Because this article is “how” focused, it is longer than usual and contains a detailed “how-to” section that provides time-tested, proven methods for successful sales.

The Foundation of Selling
#1: Sales is a Culture. The first foundational idea we must understand is that sales is a culture. When done effectively, sales can extend throughout the entire organization; consequently, selling will then happen in a robust way in every corner of the credit union. You sell in the Board room. You sell on the front lines. You sell in meetings with peers, fellow managers and reporting employees. A culture of sales, persuasion and healthy, interactive debate is necessary if you wish to first engage a member and then continue to sell them the products and services they can benefit from.

#2: We Grow By Selling Value. The second foundational idea we must understand is that modern credit unions grow by delivering value. Credit unions still maintain a bygone, subconscious belief that affiliation is the key to growth. Let us state it once and for all. Affiliation, by itself, does not sell.

A credit union can no longer afford to merely expand its charter, open its doors and then expect the hordes of members to race in. A community affiliation or any other affiliation does not work in and of itself. Delivering value is what works. Delivering value is the key to growth. (How to create value differentiation is a separate topic that is fully developed in the February 2004 issue of The Strategist.)

The number one reason why a strong focus on value is essential for sales is that potential members will never receive the value you desire to deliver unless you can first sell them on your value. You must sell them from every angle. Sell potential members the credit union’s distinctives through the media. Sell them through word-of-mouth. Sell them in the CU lobby. Continue to sell them on your website. Sell, sell, sell! You must continually sell members and potential members on the value of your offerings. OK… now that we’re all on the same page regarding sales culture and selling value, let’s discuss how the sales funnel will systemize and feed your sales success.

Using the Sales Funnel to Promote Sales Success
Sales professionals in numerous industries use a valuable model called “The Sales Funnel” in order to better view the sales process. The sales funnel depicts the migration path of a potential customer toward buying a company’s product or service, then becoming an active partner (member).

A diagram of the sales funnel is shown below. Above the funnel are potential buyers and the water below the funnel represents actual buyers. On the left of the funnel are descriptions of the desired results from each stage (e.g. that a person would have “heard of us”). On the right side of the funnel are descriptions of what actions we need to take to produce those results (e.g. we “market” so people will have “heard of us”).

The Markets at the top of the sales funnel represent the entire set of markets that you could possibly service. As we move down the funnel, we see the progressive stages a potential buyer moves through as he/she moves closer to buying a product or service. The External describes each stage the buyer moves through, and the Internal describes what we must do in order to further advance our buyers through the funnel to an eventual sale.

The final result, once a buyer has moved through all the stages of the sales funnel, is the water droplet at the bottom. This represents a person who has purchased your product or service. The larger droplet symbolizes a full functioning member “partner” who maintains multiple accounts and represents a profitable member relationship to the CU. Scan down the sales funnel and take a look at how each stage represents an ever closer business relationship.

After the desired outcome of first selling an individual a product or service (the first water droplet), there is a second sales cycle that is required to make them a partner member. A partner member treats the CU as their primary financial institution.

The entire sales funnel and the accompanying “how-tos” are described in more detail in the final section of this article. Before moving on to the next section, thoroughly review the sales funnel and develop practical applications for how this sales tool applies to your situation at your organization… Here are several ways we see it applying to credit unions.

Lessons from the Funnel
There are many object lessons we can draw from the sales funnel, but three of them are key lessons we’ll explore in the remainder of this article:

Volume – This is the path to results and your continual refining (learning) of sales skills

Milestones and
Tracking – These are the tools needed to identify where potential buyers are in the sales funnel

Competency Resources – These are the “how tos” you need to apply at each stage of the sales funnel

You Need Volume
You Must Have Volume.
Sales volume is essential since it is the engine that will both drive your sales results and increase your organization’s sales capabilities. Having a high volume of sales interactions is the only way you can create significant sales results. It is also the only way your people will learn to improve their selling, confidence and competencies.

You Need Volume In For Some Volume Out. Understanding sales volume in regard to the sales funnel is simple. If you want a high volume of sales to flow out the bottom of the funnel, you must exponentially increase the volume feeding into the top of the funnel. This recognizes that not all potential prospects will be sold.

Identifying Your Funnel Taper To Plan Sales Results. The numbers of people, who, for what ever reason, filter themselves out of your funnel will determine your funnel’s amount of taper (i.e. how much it tapers in from top to bottom). For example, if you are losing a significant amount of people before they reach the bottom of the funnel, your funnel has a great deal of taper. Every organization’s sales funnel must be customized in order to fit the unique situation at that credit union. Specifically, you must identify the taper of your funnel by approximating the percentage of potential buyers that successfully move down through the funnel from each stage to the next. Through experience and tracking, you can determine the pertinent selling information such as the percentage of the targeted demographic moving from “heard of us” onto the “know about us” stage.

To help you determine your funnel’s taper, here’s an example from our experience selling consultation and facilitation in the credit union industry. Of the total CEOs we talk to about our services (which equates to the “know about us” stage), approximately 60% become prospects, 30% become hot prospects and 20% make a purchase. This is a good taper because it means 1/5^th of the people who “know about us” become clients. (This represents a high return sales funnel taper.)

Identifying your current (and your targeted) funnel taper will give you a clear direction as to the number of potential buyers you will need in each stage of the funnel in order to deliver the budgeted results you desire. For instance, let’s use the percentages in the previous example.

If we want 500 new buyers to emerge from the bottom of the funnel, how many potential buyers must enter the “know about us” stage of the funnel? Now that we’ve set the goal (500 buyers), the calculation is as follows (with X being the required number of potential buyers who “know about us”): 500 = 0.20X . Once calculated, our answer, with this taper, is that we need 2,500 people “knowing about us” in order to produce 500 buyers. By identifying your taper you can estimate how much work you need to do to create your desired sales results at each stage in the funnel.

Sales Volume Creates an Opportunity to Learn. Volume is also the path to greater sales knowledge. While Being, Knowing and
Doing (described in the December 2003 issue of The Strategist)
are very important for genuine sales development, having a high volume of sales interactions is an absolute must. Aspects of being and knowing can be developed (though more slowly) through action. The opposite is not true. You can’t develop action just by being and knowing. You must have sales experience in order to be good at sales. Stated another way, the best experience is gained by doing sales.

You Need Milestones and Tracking
Stage-Specific Milestones are Needed to Track Sales Progress. To use the sales funnel effectively, your organization must develop both general and specific milestones that indicate what stage the potential member is at in the sales funnel. In general, sales theory says a customer initially asks qualifying questions such as “Does the product offer (blank).” Then as the customer becomes more interested, he/she asks quantifying questions such as, “How much would (blank) cost?” These two types of questions – qualifying versus quantifying questions – provide general guidelines to correctly assess where a potential buyer is at in the funnel.

To more specifically identify where a potential buyer is at in the funnel, you must determine the discrete buying milestones that are at work. To do this, your organization must use its experience with its existing members to develop its own milestones that indicate where each potential member is at in the funnel. You’ll find the further down the funnel a potential buyer goes; the easier it is to place them within the funnel. As you work to determine the milestones that are right for your organization, here are some examples of a few milestones to assist you and your team:

• “Heard About Us”: Potential buyer
• received a clear value message from the CU
• “Know About Us”: CU staff has initiated some inquiry or potential buyer has talked with CU staff or has accessed the website
• “Is A Prospect”: Potential buyer talked to CU staff & communicated interest -and- CU has clear next step
• “Is A Hot Prospect”: Potential buyer indicates a buying decision he/she is going to make and articulated their clear next step
• “Is Closed / Sold”: The individual has made a decision, resulting in a purchase
• “Becomes A Partner”: Exceeds and maintains multiple products, creating a profitable PFI relationship

You must identify specific funnel milestones and their related processes that work in your market and for your organization, because this is the basis for how you will keep score and measure sales progress.

Measuring Your Process For Volume and Setting Goals. In addition to setting funnel milestones, you need to measure both your process and your closures relative to your closure goals. Your process measures will help individuals understand each stage, and if they are generating enough volume. Your percentage of closure goals at each stage of the funnel will insure the credit union team continues to strive in order to continually meet your sales quotas (thereby producing greater results).

You Need Competency Resources
For you to have an effectively functioning sales funnel that continues to generate significant results, you first need the discrete (but overlapping) marketing and sales competencies necessary for each stage of the sales funnel. In fact, it is so important to understand each stage’s specific competencies, actions and details that we have devoted the entire “how-to” section below to building your competency resources.

“How To” Resources:

What You Need at Each Stage to Sell

This section describes how to break-down the competencies and responsibilities intrinsic to each stage of the sales funnel in order to more effectively sell. Here’s what your people need to have, or rapidly develop, in order to make sales results a reality.

The sales funnel is shown again below for your reference. On the left of the funnel are the stage-specific desired results, and on the right are the stage-specific summaries of what your organization should do to achieve those desired results.

Your primary goal is to fulfill your responsibilities for that stage (listed straight across) and your secondary goal is to move potential members (or members) to the next level (listed one level down).

The question is “how do we do that?” To best answer this question, we have listed the competencies and actions involved in each of the sales funnel stages… Market, Solicit, Educate, Sell, Inform and Maintain.

Stage 1: Marketing
In the marketing stage of the sales funnel, the organization’s goal is to deliver a positive message about itself or about its increasing value to the public. This is done using methods such as passive posted messages like signage and billboards, and through active credit union marketing such as PR campaigns, community involvement and sponsorship of community events. The desired outcome is that, when asked, people will say, “Oh yes, I’ve heard of XYZ Credit Union” and have connected some positive association or thought with their recognition. This stage of the sales funnel involves high quantity activities (activities that reach many people). Examples of the marketing stage actions could include:

• Sponsoring a well-liked sports team
• Posting credit union signage in highly-visible locations
• Leasing billboards that communicate your organization’s strategy and values
• Gaining exposure on a local TV channel or radio station

To effectively deliver a positive message and further encourage people downward through the funnel, the organization needs to hire or internally develop the competencies to deliver the actions required at this stage.Examples of the marketing stage competencies and actions include:

• A strategic direction that determines who the organization wishes to reach (by age, region, etc. or combinations)
• An effective alignment of marketing, branding and advertising ingredients, including core values, strategy, branding motto, brand message, brand personalities, branding channels and brand icons
• An effective spokesperson(s) who embody the organization’s values and culture
• A creative event planning/sponsorship strategy
• A “how-to” understanding of how/where to post signage, billboard ads, etc.
• An involvement in community groups (where you’re planning to invest resources), including small business groups, clubs, business groups, consumer groups, etc.

In addition to delivering a positive message to the public, you also want to encourage people to advance from simply having heard into taking the next step of knowing about you…

Stage 2: Soliciting
The soliciting stage is generally overlooked in many credit unions… even in many sophisticated organizations. In the soliciting stage, the goal is to move people into the “know about us” stage. Therefore, the focus is naturally “how do we get people to know about us or know more about us?” Do this through member-segmented mailings, outbound telemarketing and visits to sites that house high potential member groups or segments. This includes hiring or developing the competencies necessary to:

• Have strong, assertive presentation and people skills (the most important resource)
• Have high
• self-esteem that enables the direct contact individuals to be OK with lots of “No’s”
• Use input from marketing leadership to focus direct contact on high priority member segments
• Have a robust tracking system to measure results and generate time or event based follow-up

The soliciting stage naturally and appropriately blends and extends into the educating stage and should be done by many of the same people. With that said, credit union clients of ours have found it very effective to have part-time inside sales people focused solely on soliciting. They make outbound sales calls and focus on developing a high volume of people, and then prepare them for the educating stage.

However you choose to do it, soliciting should generate a large volume of people who begin to feel connected to the credit union and who clearly understand the organization’s mission. These potential buyers are now ready for the educating stage…

Stage 3: Educating
In the educating stage, the goal is to identify and develop “Hot Prospects.” To do this, credit union representatives qualify each potential buyer. You have a direct interaction with the potential buyer by phone, e-mail or in person, educating them on a specific product or service and determining if they have a general interest. Continue the educating process until the potential buyer clearly understands the benefits of the product/service and either is or is not interested. If the person does not say absolutely no, the sales person must guide the potential buyer further down the sales funnel. To succeed at the educating stage, hire or develop the competencies necessary to:

• Clearly deliver an understanding of the benefits of the product or service
• Live out an engaging personality that represents the credit union well
• Transmit an effusive positive attitude in every interaction
• Develop “sales call scripts” that give the sales people ways to clearly communicate the benefits of each product or service in ways that appeal to potential buyers
• Develop key questions that sales people use to “qualify buyers” (i.e. uncover their interest or need)
• Have an array of unobtrusive questions to see if people have general interest
• Effectively transfer a caller’s experience & learning about a potential buyer into the next selling stage (e.g. through the contact tracking system)

The prospects generated in the educating stage are then transferred on through the funnel into the selling stage…

Stage 4: Selling
In the selling stage, magic happens. Here, the sales person and potential buyer really get into the heart of what the potential buyer is feeling, needing, thinking, concerned and excited about. The goal of this stage is to uncover or develop the member’s felt needs and desires, and then link them together with the credit union’s product or service. By doing this you close the sale and finalize the agreement by which you will deliver value to the member.

In this stage, the sales person must have a wide understanding about the product’s benefits, but even more importantly he/she must have strong sales abilities and people skills to tactfully overcome objections. The many competencies needed for this stage are listed in the December 2003 issue of The Strategist. The competencies needed to achieve the following should be hired and/or developed internally:

• Ability to identify the key benefit(s) that interests a buyer
• Ability & methods to validate objections (providing clarity on the buyer’s real issues/hurdles)
• Methods to overcome objections while maintaining cooperativeness & connection with the buyer
• Creativity & persistence to give the buyer benefits & details in multiple ways until they truly understand
• Persistence to keep at it until the buyer has confidence your product or service is right for them
• Courage to positively ask for business
• Use an effective follow-up system for contacting prospects/hot prospects until they buy or say no

The outcome of the selling stage is a member who has a product or service that clearly meets his or her needs. This transfers the member into the ongoing relationship stages of the funnel…

Stage 5: Informing
Once a person purchases their first product or service, the interaction must continue. Just because a person is now a member using a product or service doesn’t mean all of their needs have been met. In the informative stage, the goal is to sell the member additional products and services that will meet their needs. Assume the member is sold on the credit union. Help the member see other product benefits they may want. To do this you should hire or develop the competencies to:

• Write newsletters, send statement stuffers and e-mails that focus on product benefits, and help members assess their fit for a product that makes sense for that individual member
• Provide special member benefits that connect members to the CU and build interest in products
• Make personalized educational and follow-up calls to ensure the member knows they can take advantage of a product or service that might make sense for them

The focus should be on members who have the potential to become partner members. Once you make this determination, treat them as though they are already partners…

Stage 6: Maintaining
In relationship maintenance, the goal is to maintain the partner status of a member. You begin this process once the member reaches the minimum product per member or profitability level that designates partner status. The focus is on maintaining your partner standing with the member. If, while in the informative stage, you treated the members as if they’re already partners, in the maintenance stage you should treat them as royalty.To do this, give your partners special benefits and consideration and continue to maintain an exceptional level of service in every transaction. As an example… if an issue ever arises that causes a partner a negative emotion, elevate it to management or senior management. This increases the likelihood that you will immediately eliminate the negative emotion. In this way, you also communicate a high level of respect to your partner.

In the maintenance stage, similar to the informative stage, you should make educational or follow-up calls to the partner. But for “royalty” partners, you need to do research ahead of time to ensure that you can describe all the products and services that might interest the partner, in addition to describing how the products or services may complement or replace the partner’s existing products or services.

Just like Fed-X, you should make periodic calls to the partner member, at least once a year, which are specifically focused on verbally pampering your partner. This includes asking how the partner is enjoying their credit union relationship. This indirectly reminds the partner that their opinion is important to the credit union, it promotes an ongoing partner relationship and creates opportunities for further sales.

Marketing, Soliciting, Educating, Selling, Informing and Maintaining
Together we have evaluated what you need in order to achieve success at each stage of the sales funnel. Let us conclude with the competencies and focuses the organization as a whole must have for the entire sales funnel to function in an integrated manner.

These competencies and focuses must be comprehensively held and enforced by the senior management:

• Increase strategic understanding organization wide of how the stages of the funnel are inter-related
• Install effective sales tracking and monitoring systems
• Determine goals, accountability, & appropriate incentives for sales staff and sales teams
• Create role clarity & functional integration organization wide
• Obtain expert advice on establishing or fine-tuning your sales system and sales staff
• Select and/or hire employees for effective sales leadership
• Deliver practical staff development & training

We believe the sales funnel and the specific competencies and actions we have described in this article will significantly help you succeed in the great undertaking of effective selling.

We look forward to continue providing challenging, interesting and stimulating articles that clearly and succinctly address the issues that touch the heart of the credit union industry, its leaders and its members.

Investing In Innovation

From the news media, to the university classroom, to the latest credit union conferences, we are constantly hearing about the various paradigm shifts that are taking place in our culture. Consider the following paradigm shifts that we are currently undergoing:

• Industrial Age to Information Age
• Modernism to Postmodernism
• Commuting to Telecommuting
• Centralization to Decentralization
• Institutions to Relationships
• Individualism to Tribalism
• Standardized Economy to Customized Economy
• Local Communities to Global Village
• True Reality to Virtual Reality
• Hierarchical Structures to Team Structures
• Knowledge Based Leadership to Principle Based Leadership

Everett Rogers in The Diffusion of Innovations suggests that one of the features of living in an era of fast-paced change and paradigm shifts is the presence of many organizations and people who are innovators. Innovations give people or organizations new ways or alternative methods for solving old problems or capitalizing on new opportunities. Society, however, does not adapt to innovation all at once.

Many of us remember the first family in the neighborhood to get a color television set or VCR. It was a pretty cool thing but too expensive for most of us at first. A new idea is not entrenched in society until it is exchanged through interpersonal networks. Once it has been diffused through these interpersonal networks, there is no stopping the innovation. Those companies who grab onto innovation early in the process are the ones who will profit the most. The early adopters are the ones who benefit most. They are willing to take a risk knowing that they are trend setters and that their adoption of an idea will help diffuse that innovation throughout the rest of society. Obviously, those who invest in an opportunity after everyone else is already on board are the losers. Credit unions have an opportunity to capitalize on a variety of new innovations and strategic changes by being either early adopters or the early majority. In this age of innovation and change, Nice Enterprises recommends investing time in addressing the following thirteen different strategic areas for your next Business Plan. We have helped hundreds of credit unions adopt many of these strategies throughout North America.

1. Competitive Intelligence. Successful credit unions must have detailed and updated information on their competition. This goes beyond what rates they currently offer to a full understanding of where the competition is taking their business. One of the first rules of competitive “warfare” is to know your enemy. Ask these questions of your organization:

“Do we formally and regularly monitor the price and product offerings of our competitors? Do we monitor the delivery offerings of our competitors? Do we consistently monitor the marketing approaches of our competitors? Do we fully understand where (and why) our competition is moving?”

2. Enhance Technology / Electronic Delivery. Electronic delivery, with proper education, shifts the burden of transactions from the credit union to the member. This enables your organization to focus more time on sales. Your remote banking strategy should include a variety of access devices including ATMs, PCs, Voice Response Units (VRUs) and electric banking to give the member as many options as possible. Your strategy should be seamless and integrated, simple to use, and branded with your credit union’s name to capitalize on the trust and familiarity that comes through name recognition. In addition, your members should be educated in how to protect their accounts from household insiders (the primary security threat). Your members are looking for convenience and value. Your delivery strategy needs to meet those needs or many members will get those needs met somewhere else. That means that your delivery strategy must include remote / electronic access.

3. Facilitate Mergers. Competition continues to heat up throughout the financial industry. Those organizations that are not reaching their maximum potential need to consider merging. In our experience, we have seen that the primary driver for the need to merge comes from either FOM challenges (lack of ability to grow the membership) or operational challenges (lack of qualified resources to lead the organization). Often, organizations have a difficult time in attracting and retaining quality CEOs or quality Directors. If this is the case for your organization, steps should be taken to prepare for a merger as either the continuing or merging organization. Ultimately, this is a more cost-effective way of acquiring members than the traditional “one at a time” method. The litmus test of an effective merger is seen in whether or not there is an overall benefit to the new, combined membership.

Successful mergers are more often linked to politics than anything else. We recommend building relationships with other organizations around common interests, focusing on key people, involving a qualified third-party facilitator / mediator, being patient, and properly recognizing the role of the regulator.

4. Educate. One of the greatest needs, and one of the most neglected, is the need for member and employee education. With the multiplicity of paradigm shifts happening in our world, many people feel overwhelmed. As your credit union transitions to meet the needs of a changing world, your entire organization will need additional education.

In our experience in working with credit unions across North America, we have seen a strong tendency among staff to have a “transaction mentality” and focus. As your delivery strategy changes to include remote access, your staff has an incredible opportunity to change from “order-takers” to “order-makers.” But your staff needs the proper training for your organization to develop and implement an effective sales / service culture.

Credit union management and volunteers require real leadership development as well. Leaders of the future will look much different than the leaders of the past. This will require a significant investment of time, money, and resources so that they can lead your organization into the future.

The 21st century credit union leader will be marked by a strong sense of purpose, a capacity for developing and sustaining deep and trusting relationships, and an ability to consistently demonstrate and communicate a positive view of reality. They will also maintain a balance in their lives between work, family, and outside activities, and will demonstrate the ability to take careful, calculated risk when necessary.

5. Advanced Planning. Many organizations are far too “short-sighted” in their planning. Organizations need to transition from the traditional one-year (budget-focused) planning approach to establishing a strategic vision and overall direction. We recommend three different types of planning processes: strategic, business, and scenario planning. Strategic planning is the style of thinking and method of planning which focuses on what the business should be in the future, evaluates and determines where the business is presently, and systematically concentrates resources to reach that defined future.

Business planning takes the planning process a step further. It involves actually setting measurable goals and building financial models and alternatives to support the desired future. Scenario planning, a concept that several progressive clients of Nice Enterprises have implemented, deals with looking at trends and critical uncertainties to determine several possible, alternative futures. These alternative futures then provide a framework for building multiple scenarios within the organization so that the credit union is positively prepared for whatever happens in the future. In essence, scenario planning is the disciplined method of learning the implications of alternative futures that change our view of reality, thereby creating better current decisions.

6. Reengineer Internal Processes. Unfortunately, reengineering has almost become synonymous with downsizing. However, when done properly, most reengineering is an extremely positive method of refining processes and systems while refocusing employees in new areas. It focuses on changing the way that we work so that we can be more efficient. All organizations, regardless of size, should be actively and continuously involved in reengineering operating systems and processes to reduce the time invested in delivery and reduce operating costs. For example, Nice Enterprises has worked with credit unions who have been able to reduce their turnaround time on consumer loans (non-real estate) from three days to minutes within a period of less than one month. These organizations have reduced loan application and approval processes from one hundred separate processes to less than twenty. Reengineering, applied appropriately, forces us to constantly ask ourselves why we do what we do, so that we never get caught doing something simply because “that’s the way we’ve always done it.” This allows us to constantly improve our service, convenience, and value to our members.

7. Mass-Customization. Our society is increasingly moving away from a standardized economy toward a customized economy. The generations of Boomers and Xers are demanding customized services and products to meet their individual needs. The long term “product offering” vision should be focused toward mass-customization, which is being able to provide “customized” products to members in a timely and cost effective fashion. Mass-customization requires a significant investment of time, state-of-the-art technology, and significant staff training for initial implementation.

8. Target Marketing. In light of the movement toward mass-customization, all credit unions need to “do” target marketing. Active use of MCIF programs and membership surveys (research) are essential to achieve targeted results. The ultimate goal of target marketing is “markets of one” in order to best serve your individual membership’s needs.

9. Expand Membership. Across the board, traditional financial institutions are losing market share to non-banks. Our piece of the pie is not getting any smaller but the pie itself is growing and we’re not keeping up. This means that credit unions need to aggressively expand their membership. For most CUs, this means expanding FOMs and actively pursuing younger members who are in the borrowing stage of life. Based on our experience and research, younger members show little to no loyalty to institutions. This means that our marketing efforts need to be creative in meeting the unique needs of our younger members. Credit unions are uniquely positioned in the marketplace to capitalize on younger members’ needs for relationships, ownership, customization, convenience, and financial mentoring / training.

10. Compensate Appropriately. Many credit unions compensate poorly in comparison to the rest of the marketplace. This discourages the best employees from staying around for the long haul and it makes attracting highly qualified candidates very difficult. Credit unions need to properly and adequately compensate management and staff for demonstrated performance, competencies, and goals achieved. The days of automatic pay increases based on tenure (rather than performance) are gone. By repositioning your compensation system to reward performance, you will ultimately have a well-qualified staff team to implement the changes needed to be competitive in our changing world. An up-front investment in the development of a competitive compensation system will result in reduced operating expenses and greater overall value to your membership.

11. Self Managed Teams. An efficient organization will act as a system in which departmental walls are broken down to better serve the membership. This means that organizations will move away from the traditional, hierarchical, “top-down” structures where managers did the thinking, supervisors did the talking, and employees did the doing. Progressive credit unions will move toward empowered cultures where everyone participates in thinking, talking, and doing, focusing on optimum results. The development of “selfmanaged” teams and employees goes hand-in-hand with an empowered organization, and is much more cost effective in this highly competitive world. Self-managed teams are given a primary purpose and direction, along with appropriate training and resources, and are then commissioned to achieve their purpose with little or no operational involvement from outside of the team.

12. Measure Results. What gets measured gets done! Credit unions do a good job of measuring their numbers. We all know our financials. But do we know how many processes have been re-engineered internally over the last 30 days? How about the number of members acquired or retained per month? The number of “really satisfied” members? In order to be competitive in today’s marketplace, credit unions must meet members needs for time, convenience and relationship.

Sample FILM Measurements

To help facilitate this kind of change, performance (which goes beyond financials) must be measured. To gain a more valuable picture of the credit union’s performance, we recommend developing a “Balanced Picture” approach by recording the measurements whose first letters make up the acronym FILM. The “balanced picture” of the organization can be obtained by consistently measuring some of the recommended sample areas (see table), primarily on a monthly basis.

13. Deal With Politics. Organizations that have marginal performers (at any level) do not achieve excellence. This includes volunteers who ‘warm a chair’ but don’t participate, or volunteers who don’t consistently show up for meetings. Most of us have a tendency to let non-performers hang around because we care about people. This kind of thinking, however, ultimately keeps us from serving people better. Our membership suffers as a result of our unwillingness to deal with marginal performers. Our quality employees are de-motivated by marginal employees. Ultimately, our unwillingness to deal with politics results in more politics to deal with in the future.

These thirteen areas require a significant investment of our time and resources. However, we believe that each of these areas is critical to the future of each credit union. Our investment in innovation is an investment in our future. We must think outside the box. We must take measured risks. We must begin NOW!

The Components of a Comprehensive Plan
A comprehensive business plan helps your organization to better understand and anticipate the future, make more timely and higher quality decisions, and provides the credit union with a unified, completely supported direction. A well thought-out plan will also improve organizational performance and communicate vision and direction throughout the organization. The process of planning also creates significant learning in an organization.

Peter Senge, director of The Center for Organizational Learning at M.I.T., states that organizational learning “involves an organization that is continually enhancing its capacity to shape its future, to produce outcomes its members truly desire.” Continuous learning by all credit union volunteers, managers, and employees is an essential result of the planning process. Another valuable concept, which can be derived from Peter Senge, is the idea that organizational learning means continually enhancing an organization’s capacity to shape its future, rather than allowing the future to shape the organization.

The “year-to-year” approach to planning is no longer effective in the competitive, deregulated environment of today’s marketplace. Without the advantage gained by planning ahead and building the infrastructure that will accommodate the future demands of the market, your credit union will be too busy trying to hold on to your current position to be truly competitive and productive in the long term.

A sound and comprehensive business plan is a 25 to 50 page summary document that details specific actions, outcomes, and measures, provides measurable goals for reaching the desired future, and outlines the detailed strategies and actions, budgets, and individual responsibilities for accomplishing those goals. A comprehensive plan is broken down into several sections or planning building blocks. These building blocks are outlined below:

Vision
A vision of the future answers the question, “What is our ultimate desired result or goal?” The organization’s vision of what it ultimately hopes to become needs to be succinctly written in a few sentences (or words) and communicated to all credit union employees, volunteers, and members. It outlines the credit union’s long term desired future.

Values
Values are the beliefs and standards that govern all actions and behavior. Some examples of values are quality, integrity, and honesty. Values provide the “limits” or boundaries that help to focus all effort.

Mission
The mission statement describes the purpose for which the credit union is in business. Most credit union’s mission statements should be one sentence in length, and, according to Peter Drucker, should be able to fit on the back of a T-shirt.

External Assessment
The external assessment provides an overview of the economic, political, social, and cultural influences on the organization. This area is usually broken into several areas, including macroeconomics, microeconomics, sponsors environment, political / regulatory environment, and competition. Another area that is often included is consumer trends or issues.

Macroeconomics – This section gives a brief overview of global economic changes that may effect the credit union. This area briefly outlines the specific economic environment in the country, such as interest rates, consumer spending, and national indicators.

Microeconomics – This section gives a brief overview of economic changes in the state(s) and/or county(ies) where the credit union does business and which may affect the organization, such as employment figures, labor resources, company downsizing, and natural disaster impacts.

Sponsor(s) Economics / Environment – The sponsor relationship with the credit union is often one of significant importance and, naturally, the future of the sponsor organization(s) greatly affects the credit union’s field of membership. This section should list any plans for sponsor growth or downsizing, the sponsor organization’s financial health, any changes in the sponsor industry, etc. that may impact either the credit union’s financial position or future membership potential.

Political / Regulatory – Specific changes to accounting standards, NCUA regulations, and other federal and state legislation should be described briefly in this area.

Competitive Assessment – Any financial services environment changes or influences should be enumerated here, including local competition from banks, other credit unions, etc. A brief comparison should be made between your credit union and the competition in such areas as rates, product and service offerings, and convenience.

Internal Assessment
The internal assessment includes any information and data that the credit union can measure about its self… including field of membership, member demographics, market share analysis, financial structure, and the organization’s infrastructure.

Membership Attitudes and Desires – Generally, this area highlights the credit union’s strengths and weaknesses, as well as the members’ level of satisfaction and members’ desires learned through membership surveys and other research vehicles.

Current / Potential Membership Demographics – A good demographic (MCIF) analysis will assist the credit union in understanding who its members are and any outstanding features which may impact the organization’s future.

Market Share / Penetration Analysis – This section should include either general or specific product penetration, or growth or decline of market share.

Financial Condition – The credit union’s overall financial condition should relate the capital to asset ratio (net worth ratio), CAMEL ratings, loan growth, and other financial measurements.

Infrastructure
The internal structure or composition of the credit union organization should be studied and included in the business plan. Generally, the infrastructure can be divided into three main areas: Human Capital, Systems, and Technology.

Defining Desired Future (Internal)
The credit union’s desired future is a key area of the business plan and must not be overlooked. This is where the organization can state its desires and specific and detailed vision for the organization’s future. The organization must take into account its field of membership, the region or area of service, its service profile, changes in delivery systems, pricing/fee structure and approach, marketing, future financial position and targets, and board/management/staff development required.

Defining Desired Future (External)
The specific vision of the future should also focus on the credit union’s general understanding of current and future competition, foreseeable changes in regulatory structure, the economic environment forecast, and the future of the sponsor(s) relationship.

Strategic Statements / Strategies
Based upon the internal and external assessments, the board and management should develop specific strategic statements or strategies that address key areas of the business focus. Strategy statements describe, in general terms, how the organization will achieve its desired future and should be written as single sentences.

Strategic Focus / Strategic Initiatives
The key areas requiring specific development should be identified and stated as strategic initiatives. Primarily, these strategic initiatives focus on internal or infrastructure issues and relate to either enhancing or creating new mechanisms which enable the credit union to more successfully carry out its mission, consistent with the credit union’s long term vision.

Corporate Goals

After the strategic initiatives are mapped out, corporate goals for the next five years are developed and written, following proper goal development components. A properly written goal statement should contain all six of the following characteristics:

After the corporate goals have been outlined, management and staff should develop detailed action plans for each goal, stating individual responsibility for each step. This document is not included in the business plan.

Financial Scenario Outline
The next major section of a strategic business plan is the identification of the impact each determined potential scenario will have on the credit union in such areas as operations, overall condition, member relations, and finances. The key components of the baseline scenario are outlining the future in terms of maintaining current operations and systems as they are. It covers a description of the scenario, the basic assumptions of the credit union (both controllable and non-controllable), benefits of the scenario, risks of the scenario, strategy changes required, the financial impact of the scenario with projections of key ratios and graphs, and the F.I.L.M. measurements used.

Management Recommendations
This final section of the strategic business plan allows management to discuss and summarize why it would recommend a particular direction as presented in one of the scenarios. This provides clear direction choices to the Board and helps to focus thinking.

By developing and following a well-constructed and comprehensive strategic business plan your organization will have the framework from which to build a lasting, secure and profitable future

Volunteers…

Separating “Great Boards” from All Others
No topic consistently sparks more discussion, passion, and fervor with credit union executives than that of credit union volunteers. If you are a CEO or are in senior management, you may wish you could replace some of your board members. In many organizations, the board and management have declared an uneasy truce. It is the rare credit union where all the volunteers and management have achieved the kind of positive, synergistic relationship that encourages the growth and development of all parties, and finds its rewards, and shares in, the innovative and productive achievements of a successful, profitable credit union.

When discussing volunteers many specific topics arise: recruiting, governance, leadership, professional growth, ability to change, and perhaps the most volatile, appropriate CEO compensation. While in the short term it may appear easier to avoid the discomfort and potential conflict that may be inherent in many of these areas, a successful organization always bring them to the table. Discussion surrounding these topics must be done openly and honestly as a regular part of the business. A successful credit union willingly and proactively takes on these “hot” topics, and creates real “win-win-win” solutions… a “win” for the membership, a “win” for the President / CEO and a “win” for the Board. A great Board of Directors will continually and aggressively address all these topics in a timely fashion. They will place them on the agenda, and then act on them on a scheduled basis throughout the year.

Volunteer Recruitment

Insanity has been defined as “doing the same thing, the same way, over and over again, but expecting different results.” Unfortunately, when it comes to volunteer recruitment, insanity has become the byword among some credit unions. While the difficulty most credit unions are experiencing in recruiting and retaining qualified volunteers is being discussed in many trade magazines, most organizations continue to try and attract and retain their volunteers by using the same methods that have proven unproductive in the past.

It is true that one of the challenges facing credit unions is the increasing competition from other kinds of groups for a limited pool of prime volunteers. In many organizations the board elections are uncontested and virtually all the incumbents are guaranteed reelection. In this kind of environment, many credit unions hesitate to demand too much from their volunteers and as a result do not get the quality individuals or the quality effort that constitutes the kind of dynamic board an organization needs to grow and succeed in today’s environment.

To combat this “dead-end” approach, many of the more progressive credit unions are offering various types of inducements to attract volunteers, while simultaneously holding all volunteers too much higher standards of performance. Expense paid trips to luxurious locations, enhanced education, insurance, “director-in-training” programs and, in some cases, generous honorariums are used to lure volunteers. These progressive organizations are also looking in new places, seeking to attract volunteers with significant business experience and perspective from newly added SEGs or the community. They invest the time and effort to systematically recruit more volunteers than needed, and refuse to compromise on the quality of candidates that receive an affirmative nomination. They also instill significant “requirements” for serving, which include active participation and peer-review.

Attracting younger directors can also be an issue (or an excuse). Granted, these individuals are harder to attract because they already have their time commitments stretched to the limit with work and family demands, but these are the very members the organization should be grooming for volunteer positions today. To recruit the younger set, both directors and management have to actively find out what will make the time commitment a benefit to younger members that offsets the time invested apart from other activities. Initiatives such as training programs, offering real financial inducements, or serving as a committee member first can all help in this area. In addition, a credit union that really “listens,” understands, and caters to it’s younger members is much more likely to attract the “under 50″ (young) crowd.

Maslow set up a theory of needs represented by a pyramid, in which all the basic needs are at the bottom, and the needs concerned with man’s highest potential are at the top. Each level of the pyramid is dependent on the previous level. We have modified Maslow’s hierarchy, and arrived at a need hierarchy that fits a credit union volunteer. Using this diagram, determine how the organization is effectively addressing each aspect of a volunteer’s needs. Actively investing time to address each need effectively will enhance both the retention of good volunteers, as well as make it easier to recruit new volunteers.

Recruiting and retaining high quality, dedicated volunteers should be a standing goal of every credit union. These volunteers provide the general direction and governance guidance required by every successful organization. Creating a “high performance” volunteer environment will also compel volunteers to work at giving their best.

Governance / Volunteer Roles

A primary key to success in board / management relations, as well as overall credit union success, is a motivated group of volunteers who really understand their proper governance role in the organization. They must have a clear understanding of what a Board and Supervisory Committee does (and doesn’t do), and work diligently to perform their role without falling into the temptations of micro-management, attempting to perform the role of the CEO or senior member of the management team.

A strong, productive board will work to achieve a true team environment where trust, honesty and openness form the bedrock for candid discussion. This foundation provides both the Board and the CEO / management team with the ability to address the real issues and work together to find real solutions, leading to genuine innovation. Lencioni’s book, The Five Dysfunctions of a Team is an outstanding resource for those groups of volunteers dedicated to improving their activities as a team.

Many successful credit unions have found that adopting the Carver model or some version of the Carver model of governance has worked well for them. In this model, the Board sets very broad and general expectations and the overriding direction for the organization, as well as documents specific limitations on the CEO, and then leaves everything else, including the specific strategies, resource allocation, and all implementation directly in the hands of the CEO.

These exceptional boards recognize the problems that are created when they begin to step outside their role and become too involved with the details of the credit union. They are willing and able to trust the management team, under the direction of the CEO, to accomplish the desired objectives. They actively monitor the organization’s results, and the ability of the CEO to stay within the borders that the limitations define.

Volunteer Leadership for the CEO

The CEO of any organization can only be as good as the board that supplies the leadership by example, general direction, and overall control of results. If the CEO is not given a clear and consistent message regarding the general direction the credit union should go, he or she will be unable to provide the organization with the specific leadership that is needed to accomplish its objectives.

It is the CEO’s (not the Board’s) role to provide the specific and detailed direction and leadership of the organization. This is effectively done when the volunteers are willing to put their time and effort into developing and monitoring a comprehensive strategic direction (commonly documented as a strategic plan) that gives the CEO the desired general direction of the organization. This frees the CEO to exert the control over the specifics that will bring the plan to fruition. Our experience shows that the best way of implementing this concept is in how a volunteer asks and answers questions. The graphic at the right shows the types of questions that are appropriate to ask and answer for each party. When the Board asks management questions, the roles immediately begin to blur. When management answers an inappropriate question from a director, the roles are then violated.

This means that management is just as responsible for role confusion as are volunteers. Both management and the board must carefully observe the types of questions they ask and the answers they provide, to positively reinforce their proper leadership roles.

Volunteer Growth and Ability to Change

All volunteers must be willing to grow professionally at a rate of speed at least as fast as the external environment is changing. Our rapidly changing and competitive environment demands innovative solutions to difficult challenges that all consumers (and therefore your members) face. In fact, it has been our experience that the single largest inhibitor to a credit union organization’s financial growth (and therefore membership satisfaction) is either an unwillingness or inability of volunteers to change, adapt, and grow, thereby holding back their organization from making the changes that are required.

It takes a special person to be flexible; actively thinking and learning new things, and to have a zest for personal growth even though they may have long since retired from their chosen occupation. Significant longevity (i.e. age) of volunteers is one of the arguments that is used to support Board term limits. But age isn’t the only issue that can inhibit growth. A lack of internal volunteer accountability can harm or inhibit an organization even more dramatically. The only real solution is that all volunteers, regardless of their demographics, must be willing to objectively assess their own competency and hold other volunteers accountable as well.

CEOs are (or should be) reviewed on their and their organization’s performance annually and the Board should also take the time and effort to review their own performance. A formal board assessment that allows for anonymous peer review is helpful in stimulating honest feedback regarding individual as well as group performance levels. Such an assessment can also be a useful tool in guiding board development and in identifying and strengthening those skills that may need polishing.

In addition, volunteers must also take the time to educate themselves regarding the credit union environment and marketplace. Reading is the best and least expensive source of education. Volunteers must continually recognize that the environment surrounding the credit union is quite different from what they may be experiencing in their own work environment, or if retired, their previous work environment. For an organization to be successful, all volunteers must be able to adjust their attitudes and decisions to reflect those real differences.

And finally, on-going education of volunteers is imperative. It is not enough to pick a conference because it has a great location. Volunteers should actively seek the CEO’s input on which conferences will be most beneficial for them from an educational and training standpoint in order to fulfill their fiduciary responsibilities. Unfortunately, too many conferences, including those sponsored by major trade associations cater to what board members want to hear rather than actively emphasizing what needs to be learned.

Compensating the CEO

No area brings more conflict, provides more stress and damages more volunteer / CEO relationships than that of CEO performance evaluation and compensation. Unfortunately, the majority of credit union boards do not handle this well. When it comes to setting compensation for the CEO, many volunteers have difficulty looking beyond their own employment experiences and expectations. In comparison to for-profit financial institutions, credit union CEO salaries have stagnated. In fact, the average CEO compensation package is anywhere from 20% to 50% below that of their for-profit counterpart, running the exact same type of organization. In some cases, the chasm is even larger. We strongly believe that this must change in order for an organization to reach its full potential. Underpaying the CEO and other key executives will ultimately undermine a credit union’s long term success.

Every credit union paid professional recognizes it as an industry wide “problem.” Recently, another recognized consultant stated in a trade magazine that “Boards need to understand that they’re paying a professional to run an organization that isn’t the organization they’re used to working in. And directors from larger companies need to remember that the credit union isn’t equivalent to a department or division of a large company. The CEO has responsibilities that are unique and different compared with a department manager who’s working within a bigger structure.”

When compensation issues are mishandled one of two situations will occur. Either the CEO will move to an organization that is willing to pay for the expertise and results they bring, or they will stay because they are at a stage in their career where they feel they can’t move on or don’t want to relocate. In this case, the credit union is stuck with a CEO who is unmotivated because they feel unappreciated.

In many cases this also eventually leads to the loss of many of the best players on the executive team. They see how the CEO has been treated and start believing that it is time for them to find a different organization where they can grow.

It doesn’t have to be this way. When compensation is based on tangible, predefined results, both the organization and the CEO will benefit. Results that are achieved under a CEO’s leadership will reveal whether or not an organization is getting its money’s worth. The reality is that credit unions have changed dramatically over the last ten years and it is now time for boards to change how they compensate their executives as well. The skills required to lead, manage and control a credit union today require rethinking and restructuring compensation packages to attract and retain the very best executives. One interesting fact that we have experienced over the last two decades and that illuminates this reality is: Boards that pay their CEO at, or well above the 75 percentile, in total compensation rarely, if ever, are disappointed in the results that their CEO and organization produce.

Conclusion

The relationship between the CEO and the volunteers should be one built on honesty, openness, active communication, transparency and mutual respect. Secret meetings, closed conversations and behind-the-back political dealings will spell the end of that growing relationship and it will substantially affect the credit union’s future potential success.

It may be time for your organization to get a “check up” and assess how well the credit union is doing in each of the areas discussed above. A strong and successful organization does not need to be afraid of the outcome because they realize that every institution has its strengths and weaknesses. The truly excellent organizations will applaud those strengths and actively seek lasting solutions to their weaker areas.

If you are a volunteer, now is the time to bring these issues to your board meeting and ensure that they get addressed. If you are a CEO, it is time to take leadership and help your Board address these important issues. It is never too late to begin to strengthen or if necessary, rebuild the board / CEO relationship and experience the synergistic benefit such a relationship engenders.

In honor of our anniversary, this newsletter and the next newsletter in February will be expanded issues featuring timeless excerpts from five of The Strategists we feel have most influenced and enhanced the credit union industry and it’s leadership. We believe each of these newsletters continue to have much to say to us today. We would love to receive your feedback on Strategists that have especially impacted you or your organization. Please e-mail Ron Nice at ron.nice@trynice.com to give your input.

We look forward to continue providing challenging, interesting and stimulating articles that clearly and succinctly address the issues that touch the heart of the credit union industry, its leaders and its members.

Roles People Play – Getting The Most Out of Meetings

(Published July, 1991)

In every group meeting situation, whether it involves a board meeting, management team meeting, staff meeting, or other groups, people tend to fall into various types of roles. Some of these roles can be very productive and will enhance the outcome of all that is produced within the meeting. These roles are needed in order for work to be accomplished, consensus to be achieved, and creativity to occur.

Unfortunately, there are other roles that we often fall into that are not so productive. These are considered to be group blocking roles. Instead of enhancing the group process, they block all efforts to achieve the group’s goals. By recognizing whether a role is group building or group blocking, you will gain the ability to foster the positive roles within your organization while minimizing the negative influence of the blocking roles.

One of the ways to avert people taking on those negative roles is by clarifying, at the beginning of the meeting, the various types of roles people take on and defining which of those roles will assist the group and which roles will be a hindrance. Humor can often be used very effectively at this point by taking what can be a very touchy subject, especially if everyone knows that “such-and-such” usually plays the part of Attila the Hun, and turn it into a non-threatening way to communicate the needs of the group without pointing fingers.

Often the difference between a group blocking role and a group building role lies only in the motivation behind the action. As an example, “The Devil’s Advocate”, a group blocking role is distinguished from “The Tester”, a group building role only by the intention and Tone behind the raising of questions and challenging of ideas. The “Devil’s Advocate” is interested only in challenging ideas for challenge sake and enjoys creating disorder. In contrast, the “Tester” only raises questions and challenges ideas (not people) to determine whether the group is ready to come to consensus and all the bases have been covered.

To assist you as you lead your various group meeting situations or even when you are strictly a participant, we are including some brief descriptions and “pictures” of the various roles apparent in group interactions.

GROUP BLOCKING ROLES

	The Withdrawer:This individual refuses to participate with the group. They “withdraw” into their own private world, often conversing privately with others and taking lots of notes, while avoiding active participation with the group.  The Devil’s Advocate: This person is obviously more devil than advocate. They enjoy challenging ideas for challenge sake and ignore the needs of the group to satisfy their personal need to crate disorder and confusion.
	The Self Gratifier:The Self Gratifier spends the group’s time by talking irrelevantly about their own feelings and thoughts. This person does not concentrate on the group’s focus and is unaware of the group’s needs or purpose.The Playboy: This individual is self-focused and wastes the group’s time by showing off. They are often an elaborate storyteller and often come across as nonchalant or cynical.
	The Aggressor: This person is often cited as having a “Khrushchev” mentality. This individual constantly criticizes and deflates the status of others. They aggressively disagree with those around them, intimidating other members of the group.  The Recognition Seeker: This kind of individual tends to talk excessively and spend a lot of time boasting about real or imagined achievements. They are also highly conscious of their position, status and title.
	The Special-Interest Pleader: This person focuses only on his or her own special interests and needs. They use the group’s time to plead their own case and take little notice of any other issue.  The Dominator: This individual may not appear to be as aggressive as the “Aggressor”, however, they quietly and effectively dominate the group and attempt to manipulate and take over the group’s decision process.
	The Blocker: This person uses any and all tactics to block decisions and keeps any productive discussion from occurring. They will stubbornly disagree, reject other’s views, cite unrelated personal experiences and often, will return again and again to topics that have already been discussed and resolved.  The Topic Jumper: This individual is easy to spot because they are continuously changing the subject. The rest of the group may be playing baseball but the topic jumper will switch from golf to tennis and back again without any regard for what the group is trying to accomplish.

GROUP BUILDING ROLES

	The Initiator: This creative individual is willing to stretch and suggest new or different ideas for discussion or new approaches to old problems.  The Opinion Giver: This person gets the group moving by stating pertinent beliefs about the discussion and about other’s suggestions. Their desire is to see the group move forward and they use their insights to help make that happen.
	The Organizer: This person is like the traffic cop or facilitator of the meeting. They keep the communications open and flowing and encourage participation from all parties.  The Tester: This brave soul willingly raises questions, challenges assumptions, and throws in new ideas to “test out” whether or not the group is ready to come to a decision. They are willing to take some heat in order to ensure that the best possible decisions are made.
	The Clarifier: This individual takes on the role of “antenna adjuster”. They help to focus or clarify by giving relevant examples, offering rationales, and probing for deeper meaning and understanding.  The Compromiser: The Compromiser takes on a vital role by being willing to yield when it is necessary for the group’s progress. They also help by mediating differences and reconciling points of view.
	The Encourager: This “cheerleader” is responsible for providing the positive build up of good feelings within and among the group. They praise and support others, building up others’ self-esteem, enabling all to function at their best.  The Summarizer: This individual reviews discussion, pulling together all the various details and ideas and are able to suggest a finished product that truly reflects the intention of the group.
	The Tension Reliever: While this role is often overlooked, the Tension Reliever performs a vital function. This person knows how to use humor or when to call a break to draw off any negative feelings, reduce tension within the group, or “lighten-up” the atmosphere in the meeting.  The Elaborator: This is someone who is able to see beyond the basics and build on the suggestions of others. One person might suggest an ice cream cone and the Elaborator will expand upon that idea and suggest a banana split with mocha almond fudge, whipped cream and a cherry on top. They can see other possibilities and enhance the quality of final decisions.

To achieve the maximum results in any group situation, the Group Building Roles must be well represented while the Group Blocking Roles are actively dismissed as unproductive and time consuming. By doing something as simple as reviewing these different roles with participants at your next meeting, you can do much to encourage all attending to take on the positive roles and leave any negative tendencies behind.

These roles and the positive ways in which they are used to facilitate group meetings has been drawn from our experience in acting as facilitator for numerous credit unions at planning sessions, team building meetings and other group functions.

Values…The Backbone of Your Organization

(Published February, 1997)

“One may speculate at length as to the cause of the decline and fall of a corporation”, writes Thomas Watson, Jr. in A Business and Its Beliefs. “Technology, changing tastes, changing fashions all play a part . . . But I question whether they in themselves are decisive. Consider any great organization — one that has lasted over the years — I think you will find that it owes its resiliency not to its form of organization and administrative skills, but to the power of what we call beliefs and the appeal these beliefs have for its people. The basic philosophy, spirit, and drive of an organization have far more to do with its relative achievements than do technological or economic resources, organizational structure, innovation, and timing.”

Values, in any organization, are the underlying beliefs that determine an organization’s core ideology. It is crucial to understand the principles that guide this kind of change. Organizations that are successful over the long haul have defined values that remain constant while strategies, goals, and plans change in a competitive world. Outstanding organizations know the difference between the things that should change and the things that should never change. The core values and beliefs of an organization give it a sense of identity that transcends the ups and downs of the competitive marketplace, technological advances, and management trends.

Walt Disney’s values of wholesomeness and imagination will never change — regardless of the marketplace. Nearly a century ago, Nordstrom instilled a value of service to the customer that remains unchanged. Ralph Larsen, CEO of Johnson & Johnson, agrees: “The core values embodied in our credo might be a competitive advantage, but that is not why we have them. We have them because they define for us what we stand for, and we would hold them even if they became a competitive disadvantage in certain situations.” Credit unions have long distinguished themselves from the competition through their value system. While banks and non-banks are driven primarily by profit, credit unions are defined by quality service to the member. Core values are the bottom line for any successful organization. They are the guiding principles in all decision-making. They influence hiring practices. They are the basic tenets for all future planning.

Values Determine Culture

Values are what define an organization’s culture. Values always exist in an organization. Sometimes they are well defined and thoroughly communicated. In a few organizations, values are implicit, yet shared by all. In other organizations, some of the undefined “values” can be toxic if left intact. 3M has a “new-product” culture, defined by a commitment to innovation. Caterpillar values service and has a corporate culture of providing 24-hour parts service anywhere in the world. Most credit unions genuinely place a premium on quality service to the member. The resulting culture is one that always puts the member first. When strong values are present, satisfying the member motivates even back office staff.

However, there are some credit unions that have not explicitly defined their values. This lack of introspection may result in “values” that are actually detrimental to the credit union. Many of these organizations have cultures that stifle service to the member. The culture sometimes reflects fear. Fear of the auditor or examiner, fear of member complaints, and fear of legal challenges can all negatively motivate an organization.

The culture in these organizations are generally marked by excessive paperwork, an inordinate number of steps and processes (especially in loan approval), an inappropriate Board focus on operational issues, or a very hierarchical and bureaucratic organizational structure. The underlying values of these organizations are either not defined appropriately or these values are not communicated throughout the organization.

In a typical real world example, member complaints tend to come from a vocal minority. A focus on member complaints, rather than on service to the entire membership, sets off a chain reaction ultimately resulting in less effective service to the membership as a whole. The recursive cycle can be broken by defining and communicating the values that will begin to facilitate change, but only when those values are “lived” out.

In our experience, we have noticed several important trends in both determining values and in communicating values throughout the organization.

Developing Values

Values should be determined at the top leadership level. The Board, CEO, and Senior Management should build consensus around approximately two to six values to determine the organization’s core ideology. If there are more than six values, there is a tendency to confuse values with strategies. The basic questions are “Who are we?” and “What do we want to stand for over the next century?” Most often, values are neither created nor set. Rather, they are discovered. They cannot be determined by looking at the marketplace. Values are discovered by probing deep within an organization. By discovering the values that your organization holds passionately, they will be authentic and won’t seem “forced”. In our experience, we have seen credit unions typically discover a combination of the following values: quality, service, integrity, honesty, and member convenience.

Quality. Credit unions desire to be the best at what they do. This means that loan rates maybe lower than the competition and investment rates maybe higher. Quality means that members don’t have to think twice about turning to the credit union for the organization’s product and service offerings. The organization should be so well known for quality that members don’t feel the need to look elsewhere. Quality infers excellence. In a competitive marketplace, it is easy to confuse competitiveness with quality. Competitiveness defines success as being better than the bank down the street, like grading on a curve. A 40% score on a test may be graded as an “A” if it is the top score in the class. But does that mean that we really know the material? Quality, on the other hand, defines success as being the best that we can be, regardless of how the competition performs. Being the best will result in member loyalty and a better financial position.

A recent study of over 1200 different kinds of businesses reveals that businesses who focus on product quality as a point of differentiation from the competition, are generally more profitable than those who focus on lower-quality, lower cost offerings.

Service. “Not for profit, not for charity, but for service.” Service is what sets many credit unions apart from other financial institutions. Credit unions were founded on the concept of service to help honest; hardworking citizens avoid loan sharks and manage their finances appropriately. Today, credit unions still provide the same kind of service to every strata of society. But too often these days, service is confused with inefficiency. Personal service doesn’t necessarily mean “in-person” service. Many front-line staff spend a great deal of time in transactions which keeps them from servicing members’ greater overall needs.

Technological innovation (ATMs, phone centers, and remote banking) can offload the transaction demand on front-line staff, while simultaneously freeing them to serve members’ needs for loans and investments. The result is increased organizational efficiency, enabling the credit union to offer even better rates of return to the member. This attitude of service should permeate the organization so that employees not only serve members, but they serve each other as well. The Apostle Paul put it this way:

“Do nothing from selfishness or empty conceit, but with humility of mind let each of you regard one another as more important than himself; do not merely look out for your own personal interests, but also for the interests of others.” (Phil. 2:3-4)

The paradox in this is that as we look out for the interests of members and other employees, we begin to feel more self-satisfaction, and our interests are also served.

Integrity. Integrity is defined as “who you are when no one is looking.” Many people have talent. True leaders have integrity, shaped by the storms of life. In times of crisis, real leaders emerge as men and women who stand by their word, regardless of the potential consequences. Several years ago, the Wall Street Journal recorded the story of Charlie Olcott, President of Burger King. The Board had asked him to manipulate some numbers in order to cut down on taxes. When he refused, they fired him. Integrity focuses more on doing the right thing than on doing things right.

In 1966, Joseph Fletcher published Situation Ethics. At that time, the book was just a novelty in a society whose social fabric was under-girded by a strong sense of morals and ethics. Since then, a generation has been raised under the dismantling of this fabric. Every day, our newspapers detail the lack of integrity of political, religious, and business leaders. As a result, the emerging generation doesn’t know how to trust. The logical end of situation ethics was Auschwitz and Dachau. In fact, the entrance to Auschwitz is marked by Adolph Hitler’s words: “I want to raise a generation devoid of conscience.” Credit unions have a key role in turning society’s tables. Through integrity, we can begin to rebuild trust. We can stand together in saying that there are absolute values. There is right and wrong. In a gray world, credit union members are looking for black and white. Since most businesses are driven by profit, credit unions stand apart. The driving principle is not profit, but rather, serving the greater overall good of our members (which must include profit).

Integrity must be demonstrated through consensus building rather than aggression; hope rather than apprehension; trust rather than fatalism; flexibility rather than inflexibility; conscientiousness rather than impulsiveness; acceptance rather than prejudice; and commitment to principle-centered leadership rather than submission to forceful, self-serving leaders. Integrity is one of the most difficult values to measure because it is rooted in an individual’s core character and, by definition, it is “who you are when no one is looking.” This means that credit union members don’t often see integrity, only the results of integrity (or a lack thereof). In a credit union, integrity is what happens behind closed doors.

Honesty. Honesty is borne out of integrity. Honesty is proactive. It is more than simply answering questions truthfully. It is a characteristic that calls for leaders to make proper judgment calls where “the heart and the head match up.” It means making the right judgment on how a particular asset is depreciated or on how loan losses are correctly valued. Honesty keeps us from cutting corners and trying to take advantage of loopholes. In one sense, it is looking deep into the “spirit of the law” in order to be congruent with the intent, rather than just following the “letter of the law”, looking for a way out. Honesty is taking ownership and responsibility for all judgments. Judgment calls can be rationalized by claiming ignorance or adhering to rules. But rationalization is the opposite of honesty. Rationalization puts the responsibility on someone or something else, shifting the responsibility (or blame). Based on our integrity, honesty compels us to make decisions determined by the combination of our heart and head working together. If it is the wrong judgment, honesty requires us to openly and voluntarily admit the mistake with a clean conscience.

Convenience. The final value that we have observed in many credit union organizations is member convenience. In our research, we have discovered that members’ needs fall into two basic categories, time and value. Convenience recognizes members’ need for time. Time is the one of the most valuable commodities in today’s marketplace. In fact, an entire new industry is springing forth as a result: the personal services industry (personal chefs, personal grocery shoppers, personal “go-fors” and so forth).

When most credit unions were founded, convenience was not a big issue. People generally lived, worked, and shopped in the same neighborhood. Credit unions were inherently convenient. These days, some of our members fly from one city to another as part of their daily commute. Most of us have to drive 15-45 minutes each way. As cities have grown beyond the urban area, the idea of a town “center” has become nearly extinct. Between our careers, driving the kids to school and after school activities, and running errands, our time has diminished. Therefore, convenience has emerged as a value.

Credit unions can meet members’ demand for convenience by significantly increasing internal efficiency. An operational analysis can effectively reveal the areas (the low hanging fruit) and processes that decrease efficiency. Process innovation can significantly reduce the amount of time invested in routine tasks. ATMs, remote banking, and phone centers give members a variety of options to meet their particular convenience needs. Credit unions who focus all of their energy on only one delivery channel can serve only a select group of members’ convenience needs.

Communicating Values

Values can only influence the culture if they are thoroughly and effectively communicated. Too often, the communication of values is forced through “traditional” communication methods such as reading the value statement at staff meetings, sending a memo to employees, or incorporating them into a newsletter. One of the most effective communication tools, however, is symbolic communication. The most effective methods of communication are those that impact the intuitive side of the brain. In fact, 75% of all commitments are made based on intuition, according to a UCLA study. Symbols communicate most effectively in this context. This is why flags bring tears to the eyes of people who are loyal to their country and why nostalgic songs invoke emotional responses to the days gone by.

There are several ways to communicate values through symbols. Role models are an integral part of communicating values. These role models can come from within an organization or from outside the organization. It is easy for Microsoft Corporation to discover that vision is a strong value for them with Bill Gates as a role model. When we think of civil rights, we automatically think of Martin Luther King, Jr., who embodied the movement. When the employees of your organization look at the CEO, what values instantly come to their minds?

The activities that leaders participate in also become symbolic representations of value. How does the CEO invest his / her time? Credit union leaders can demonstrate service as a value by working the frontlines or phones and serving members from time to time. They can demonstrate honesty by openly admitting failure or mistakes to the staff. If the leaders’ activities demonstrate the organization’s values, then over time, these values will become obvious throughout the rest of the organization as well.

Stories are powerful symbols of organizational values. 3M tells innovation stories to its employees. Southwest Airlines tells stories of family reunions to encourage the value of providing a low-cost travel alternative for the “average” American. The stories of Alphonse Desjardins, Edward A. Filene, and Roy Bergengren can reinforce the value of service by reminding employees of our original mission. Stories of both success and failure can reinforce our value system. People respond to stories in a way that they don’t respond to propositional statements because stories impact people at the “gut” level. They transcend the intellect and motivate people to change.

Finally, organizational structure is a powerful symbolic representation of values. To employees, a hierarchical structure represents power and hoops to jump through. A flattened team structure, on the other hand, represents efficiency resulting in higher quality and increased convenience for the member. Some credit union leaders may need to ask the question, “What does our organizational structure really represent?”

There are certainly many other ways to communicate values throughout an organization using symbols. Organizational rituals, rewards, and recognition are all effective means of communication. The important idea to grasp, however, is that values must be communicated by using more than just words. Values must be tangible, authentic and “real.”

Values define our organization. They remind us “who we are and what we stand for” in a competitive marketplace. They are a rudder that directs all actions and a compass that guides all thought. They give meaning to our vision, mission, and strategies. It is easy to change with the whims of culture and adopt the newest management techniques and strategies. But values help us decide why we must change and what kinds of changes we will make.

As T.S. Eliot correctly observed in Four Quartets, “We shall not cease from exploration. And the end of all our exploring will be to arrive where we started and know the place for the first time.”

An affirmation is far more than just a few, choice words of praise. Affirmations provide the framework on which we individually grow and build on our successes. Affirmations help define how we see ourselves and let us know how others view us. The word “affirm” means to declare positively; assert to be true; to confirm. “Affirmation” is defined as a positive declaration or assertion. These definitions imply something far stronger and more powerful than simply praise or verbal “pats” on the back. A well placed affirmation is a positive, forceful, and truthful declaration of one’s beliefs and feelings regarding another individual or one’s self. Affirmations can move mountains and change the way we look at ourselves as well as those around us. What we do and what we say affects both others and ourselves, either positively or negatively. What we do and say will come back to us in one way or another. We must actively give out (first) to others what we each want so much to hear ourselves.

Affirmation is also the underlying truth that is at the foundation of all successful business relationships. Several powerful principles regarding affirmation can be gleaned from Whale Done! These principles point out ways to truly apply affirmations in a way that will have the most impact on all of our relationships. These principles include:

• Building Trust
• Accentuating the Positive
• When Mistakes Do Occur, Redirect the Energy

Each of these principles builds on a positive rather than critical and negative outlook regarding our relationships.

All successful leaders recognize that in order to achieve the position we each desire in the marketplace and in our individual lives, change… leading to growth, must take place on an ongoing basis. There are many types, kinds and degrees of changes. In many cases, change must be completely innovative or “transformational.” Such changes many would consider “drastic.” Adopting an attitude of affirmation and applying the principles outlined in Blanchard’s book will significantly assist you and your organization in implementing these kinds of far-reaching changes. When you give positive, truthful affirmations to your management team, they receive the feedback they need to know to determine whether or not they are pursuing the right direction. They also know how you are measuring their efforts. When your management team, in turn, passes affirmation on to the rest of the staff, the entire organization is reinforced, validated and valued. Under these conditions, everyone is given the support they need to risk and forge ahead. Just like the whales, when individuals have a framework of positive affirmations, they have the structure on which to build the personal and professional changes required for them to make.

We can learn a lot about how to deal with people if we closely examine how trainers get a huge whale to perform for an audience. The first principle outlined in Whale Done! is “build trust.” This is a simple statement but it is key to the effectiveness of affirmation. The power of trust building is highlighted in the following passage from the book:

“It takes a long time to build trust and friendship with each of the whales,” Dave said. “That trust and friendship is the basis of everything you just saw in the show. These animals are not so different from people. They’ll show you when they don’t like how you’re treating them. You’re a businessman, so you know that the whole game these days is satisfying the customer – and a key ingredient of that is satisfying your own people. When our killer whales completely lose their fear of us the positive vibes between them and us are transferred to the audience.”

Affirmation, when positively and truthfully delivered, is very powerful. Do not underestimate the power to facilitate change in others (as well as yourself) through your affirming communication.

The second principle is “accentuate the positive.” A short story illustrates this point well… Nice Enterprises, Inc. recently completed several teambuilding and planning engagements with several long-term, progressive clients. During the beginning of each program, each management team group was challenged to first talk about the organizational successes that they had achieved. For most, it was somewhat difficult to stay focused exclusively on what was “working,” or their successes, even though each organization had significant achievements, many which had already been acknowledged by respected third parties. Many within these groups, especially the “leaders of the leaders,” naturally drifted into what wasn’t working, or what needed to be changed.

Once that conversation had run its natural course, we then challenged each member of the group to both write down (document) and then publicly verbalize to each team member the multiple attributes that they genuinely appreciated about each other. In other words, to affirm each other. We have found that this is an extremely powerful exercise that has left many a stoic, macho, professional leader with water in their eyes.

What is most interesting is that when analyzing both individual and group written program evaluations, to a person, each had pin-pointed this exercise as the “highlight” or single most important thing that had happened in the entire meeting. Many have commented to us publicly, and many more privately, that they have “never been so moved or motivated” as when hearing the affirming feedback from their teammates, bosses and subordinates. The programs that included this level of positive communication received the highest evaluation scores overall.

From this direct experience we have conclusively determined that, as with the whales, accentuating the positive can improve anything that is done. This is because affirmation touches the “heart,” which is where real motivation and drive to change comes from. Remember, we said that:

An affirmation is a positive, forceful, and truthful declaration of one’s beliefs and feelings regarding another individual.

In addition to creating positive change, the process of affirmation also provides a powerful method for holding others accountable. Members of your team need to know precisely how he or she is succeeding in their performance efforts. By affirming both individuals and teams within your organization, you can appropriately and positively direct action toward that which needs to be accomplished. Truthful, honest, positive statements (affirmations) motivate and encourage the behaviors that you want to reinforce. This leads to the third principle, “when mistakes occur, redirect the energy.” When individuals and groups have been regularly affirmed, it is easier to redirect their energy in a positive direction rather than merely criticize.

To better grasp what redirecting energy into a positive direction really means, we must first discuss what Blanchard terms “performance management.” He begins by listing the ABC’s of Performance.

Basically, an activator is something that stimulates the behavior or performance that you want. In business, the most common activator is a goal. To be effective, the activator, or goal, has to be clear. In many cases what you assume are clear goals are interpreted differently by the people you work with. Therefore, the first step needs to include sitting down, clarifying, and documenting goals so that people know what they’re expected to do and what good performance looks like. After the performance is initiated, the behavior that follows must be observed. This second step is often overlooked but it is essential since it leads to the critical third step in performance, consequence – what happens after the performance.

Blanchard talks about the four types of consequences to behavior:

1. No Response
2. Negative Response
3. Redirection
4. Positive Response

Most of us a very familiar with the first two consequences. If we perform up to expectation we generally receive no response, the performance was expected after all. Also, if we miss the mark in some aspect of our performance we are used to getting a negative response, criticism, sarcasm, etc. The consequences of “Redirection” and “Positive Response” are, unfortunately, rarely experienced. Blanchard’s book points out that these two consequences can turn your relationships around, personally and professionally. The following example was provided in Whale Done!:

“First, Mike described my error without reproaching me. Second, he took the hit himself, removing the pressure I was feeling. That made me open and willing to learn. There was no hint of punishment. He went through the task I’d goofed up on in great detail, showing as well as telling me how it should be done. Finally, he expressed confidence in me. When I left his office, I was completely back on track – and feeling better about doing a good job for him and the company.”

As you can infer from the example above, the redirection response involves describing the error or problem as soon as possible, clearly and without blame. Next, you must show its negative impact and, if appropriate, take the blame for not making the task clear. Then go over the task in detail and make sure it is clearly understood. Finally, express your continuing trust and confidence in the person. Following these simple steps will profoundly affect the people around you and will bring about the kind of performance that will truly impact your organization and your life.

Unfortunately, even when performance is good, too many times it will go unrecognized. When good performance is followed by something positive, people naturally want to continue that behavior. There has been much discussion lately regarding “easy praise” or “false praise” and the negative, de-motivating impact it can have on individuals. These phrases refer to telling others how great they are doing, even when they’re not, or giving praise for work that did not take much effort or perseverance. This is not what we are talking about when encouraging affirmation.

When someone you work with has performed well or invested a significant amount of effort, they need to be told and encouraged honestly, not falsely or glibly praised. As Blanchard emphasizes, you need to learn how to “Praise progress. It’s a moving target.” This kind of honest and truthful interaction works to build the connections and bonds between individuals. This in turn encourages real growth and change. When praise or affirmation is handed out in an unearned or poorly earned manner, it holds little value. But, when it is given for true effort, accomplishment and performance, it provides the stable platform on which the receiving individual can continue to grow and build.

A true “Whale Done!” response incorporates the following essential elements:

• Praise people immediately.
• Be specific about what they did right or almost right.
• Share your positive feelings about what they did.
• Encourage them to keep up the good work.

It is easy to catch people doing things wrong – our goal needs to become catching people doing things right!

If we want to be able to give out appropriate affirmations to those around us, we must be genuinely affirming to ourselves as well. What kind of feedback or “self talk” do you provide to yourself? Most of us are our harshest critics and rarely evaluate our own work or efforts in an objective (let alone a positive) light. Self-evaluation leading to criticism can be even more negative if you do not have a good support network around to encourage and reinforce you. Nevertheless, you do have the ability to change yourself and your environment. Although this can sound overly simplistic or trite, the real keys to changing our own internal dialog are the books we read, the things we listen to, and those whom we associate with.

Each of these areas provides feedback to our internal voice and will either condemn or encourage us, positively motivate or discourage us. We need to take another look at what we surround ourselves with. Are we only looking at books and magazines preaching doom and gloom or those that allow us to escape into another world without challenging us to grow or improve? What kinds of TV shows, radio programs, or tapes do we listen to? There are many positive choices out there – are we taking advantage of them, or are we lazily listening to the same old thing?

What about the people we surround ourselves with? Are we seeking out individuals that support, positively challenge and encourage us, or do we accept criticism and negativity as a normal part of our lives? It is up to you to take advantage of all the positive, encouraging and challenging resources available today.

Seek out books like, Whale Done!, FISH!,
Who Moved My Cheese?, The Five Temptations Of A CEO, and The Five Dysfunctions Of A Team. A book doesn’t have to be long and complicated to challenge old ways of thinking. Try renting some motivational tapes or rent books on tape or CDs to listen to in the car. Fill your mind with beliefs that you want to be able to pass on to others. Finally, work on building relationships with quality, positive individuals. Invest time into your relationships and build them into the kind of support network that both you, and they, truly need and can mutually benefit from.

The use of affirmations has a multitude of applications within the business environment. We have already discussed using affirmations to enhance the ability of holding people accountable, as well as to provide encouragement and motivation. Affirmations are also critical in building effective teams. Since trust is one of the key components of teambuilding, honest and truthful affirmations assist in building that trust between members. All of us have been a part of numerous teams where affirmations are missing. In most situations, the trust and bonds between team members are also missing, or at best, tenuous. We all need to know that our efforts are appreciated. In a team environment, this need is even more pervasive. We have also seen that those who are unable to give out affirmations also have difficulty in holding others accountable. The two sides of the coin go together. And we already know that providing no feedback at all can be even worse.

Don’t risk losing your key people. Reinforce your employees and all those that work with you by providing regular, affirmative feedback. By doing this, you will also help to provide yourself with that needed positive personal environment that reinforces the inner you and helps to enhance your attitude and outlook on life. This is important, since your attitude, as a leader, is infectious. It has been said that “attitude does indeed determine one’s altitude.”

To summarize, we can change how we relate to those around us. In doing this we positively impact their lives for the better. We can change the way we do business and motivate others to do the same. As we have shown, a big part of the solution is affirmation. When we take the time and make the effort to consciously affirm those we relate to each day, we change lives and we change our businesses. We already know we need affirmation ourselves; and the people we work with are no different.

Killer whales are among the most feared predators in the ocean and yet the trainers at Sea World get these huge beasts to perform amazing leaps and dives. If you take the time and make the effort to apply the principles these trainers have learned and then actively demonstrate and share them with those around you, you will receive a reward tenfold. Set a personal goal with a specific measurement to affirm others and yourself, and start that process.

Albert Schweitzer once wrote, “Affirmation of life is the spiritual act by which man ceases to live unreflectively and begins to devote himself to his life with reverence in order to raise it to its true value. To affirm life is to deepen, to make more inward, and to exalt the will to live.” To experience all that life holds for us and to assist others along that same journey, we must be willing to look inside ourselves and commit to changing our outlook. Our lives and the lives of those around us are extremely valuable. Isn’t it time we affirmed that truth? You will be glad you did!

When discussing volunteers many specific topics arise: recruiting, governance, leadership, professional growth, ability to change, and perhaps the most volatile, appropriate CEO compensation. While in the short term it may appear easier to avoid the discomfort and potential conflict that may be inherent in many of these areas, a successful organization always bring them to the table. Discussion surrounding these topics must be done openly and honestly as a regular part of the business. A successful credit union willingly and proactively takes on these “hot” topics, and creates real “win-win-win” solutions… a “win” for the membership, a “win” for the President / CEO and a “win” for the Board. A great Board of Directors continually and aggressively addresses all these topics in a timely fashion, by placing them on the agenda, and then acting on them on a scheduled basis throughout the year.

Volunteer Recruitment
Insanity has been defined as “doing the same thing, the same way, over and over again, but expecting different results.” Unfortunately, when it comes to volunteer recruitment, insanity has become the byword among most credit unions. While the difficulty most credit unions are experiencing in recruiting and retaining qualified volunteers is being discussed in many trade magazines, most organizations continue to try and attract and retain their volunteers by using the same methods that have proven unproductive in the past.

It is true that one of the challenges facing credit unions is the increasing competition from other kinds of groups for a limited pool of prime volunteers. In many organizations the board elections are uncontested and virtually all the incumbents are guaranteed reelection. In this kind of environment, many credit unions hesitate to demand too much from their volunteers and as a result do not get the quality individuals or the quality effort that constitutes the kind of dynamic board an organization needs to grow and succeed in today’s environment.

To combat this “dead-end” approach, many of the more progressive credit unions are offering various types of inducements to attract volunteers, while simultaneously holding all volunteers to much higher standards of performance. Expense paid trips to luxurious locations, enhanced education, insurance, “director-in-training” programs and, in some cases, generous honorariums are used to lure volunteers.

These progressive organizations are also looking in new places, seeking to attract volunteers with significant business experience and perspective from newly added SEGs. They invest the time and effort to systematically recruit more volunteers than they need, and refuse to compromise on the quality of candidates that receive an affirmative nomination. They also instill significant “requirements” for serving, which include active participation and peer-review.

Attracting younger directors can also be an issue (or an excuse). Granted, these individuals are harder to attract because they already have their time commitments stretched to the limit with work and family demands, but these are the very members the organization should be grooming for volunteer positions today. To recruit the younger set, both directors and management have to actively find out what will make the time commitment a benefit to younger members that offsets the time invested apart from other activities. Initiatives such as training programs, offering real financial inducements, or serving as a committee member first can all help in this area. In addition, a credit union that really “listens,” understands, and caters to it’s younger members is much more likely to attract the “under 50″ (young) crowd.

Reviewing Maslow’s hierarchy can also be helpful when an organization is struggling in the recruitment area. Maslow set up a theory of needs represented by a pyramid, in which all the basic needs are at the bottom, and the needs concerned with man’s highest potential are at the top. Each level of the pyramid is dependent on the previous level. For example, a person does not feel the second need until the demands of the first have been satisfied.

Maslow’s first level of needs is biological and physiological. These are our fundamental needs for oxygen, food, water, and a relatively constant body temperature. These needs are strongest because if deprived, the person would die. The second level consists of security and safety needs. Adults experience these needs in times of emergency or periods of disorganization in the social structure. These needs have to do with establishing stability and consistency in a chaotic world. The third level is social (love, affection, “belongingness”) needs. People have needs to escape feelings of loneliness and alienation… to give and receive love, affection and have a sense of belonging. We all need to be needed.

Ego and esteem needs come next on the pyramid. There are two types of esteem needs. First is self-esteem that results from competence or mastery of a task. Second there’s the attention and recognition that comes from others. Everyone needs a stable, firmly based, high level of self-respect, and respect from others in order to feel satisfied, self confident and valuable.

The final level in Maslow’s pyramid is self-actualization fulfillment. The need for self-actualization is the desire to become more and more what one is, to become everything that one is capable of becoming. He describes self-actualization as an ongoing process. Individuals at this level are involved in a cause outside themselves. They are devoted, and work at something very precious to them – some calling or vocation. This is the level at which a volunteer will be most productive and beneficial to an organization.

By reviewing Maslow’s theory it is possible to identify some of the areas where a credit union can begin their recruitment / retention program. The organization can develop creative ways to meet people’s social, ego, and self-actualization needs through various methods that can be used to attract and then to retain the quality of individual that will function well on the board team and benefit the credit union.

We have modified Maslow’s hierarchy, and arrived at a needs hierarchy that fits a credit union volunteer. (See diagrams) Using these diagrams, determine how the organization is effectively addressing each aspect of a volunteer’s needs. Actively investing time to address each need effectively will enhance both the retention of good volunteers, as well as make it easier to recruit new volunteers. Recruiting and retaining high quality, dedicated volunteers should be a standing goal of every credit union. These volunteers provide the general direction and governance guidance required by every successful organization. Creating a “high performance” volunteer environment will also compel volunteers to work at giving their best.

Governance / Volunteer Roles
A primary key to success in board / management relations, as well as overall credit union success, is a motivated group of volunteers who really understand their governance role in the organization. They must have a clear understanding of what a board and supervisory committee does (and doesn’t do), and work diligently to perform their role without falling into the temptations of micro-management, attempting to perform the role of the CEO or senior member of the management team.

A strong, productive board will work to achieve a true team environment where trust, honesty and openness form the bedrock for candid discussion. This foundation provides both the board and the CEO / management team with the ability to address the real issues and work together to find real solutions, leading to genuine innovation. Lencioni’s book, The Five Dysfunctions of a Team is an outstanding resource for those groups of volunteers dedicated to improving their activities as a team.

Many successful credit unions have found that adopting the Carver model or some version of the Carver model of governance has worked well for them. In this model, the board sets very broad and general expectations and the overriding direction for the organization, as well as documents specific limitations on the CEO, and then leaves everything else, including the specific strategies, resource allocation, and all implementation directly in the hands of the CEO.

These exceptional boards recognize the problems that are created when they begin to step outside their role and become too involved with the details of the credit union. They are willing and able to trust the management team, under the direction of the CEO, to accomplish the desired objectives. They actively monitor the organization’s results, and the ability of the CEO to stay within the borders that the limitations define.

Volunteer Leadership for the CEO
The CEO of any organization can only be as good as the board that supplies the leadership by example, general direction, and overall control of results. If the CEO is not given a clear and consistent message regarding the general direction the credit union should go, he or she will be unable to provide the organization with the specific leadership that is needed to accomplish its objectives.

It is the CEO’s (not the Board’s) role to provide the specific and detailed direction and leadership of the organization. This is effectively done when the volunteers are willing to put their time and effort into developing and monitoring a comprehensive strategic direction (commonly documented as a strategic plan) that gives the CEO the desired general direction of the organization and then frees the CEO to exert the control over the specifics that will bring it about. Our experience shows that the best way of implementing this concept is in how a volunteer asks and answers questions. The graphic at the right shows the types of questions that are appropriate to ask and answer for each party. When the Board asks management questions, the roles immediately begin to blur. When management answers an inappropriate question from a director, the roles are then violated. This means that management is just as responsible for role confusion as are volunteers. Both management and the board must carefully observe the types of questions they ask and the answers they provide, to positively reinforce their proper leadership roles.

Volunteer Growth and Ability to Change
All volunteers must be willing to grow professionally at a rate of speed at least as fast as the external environment is changing. Our rapidly changing, and competitive environment demands innovative solutions to difficult challenges that all consumers (and therefore your members) face. In fact, it has been our experience that the single largest inhibitor to a credit union organization’s financial growth (and therefore membership satisfaction) is either an unwillingness or inability of volunteers to change, adapt, and grow, thereby holding back their organization from making the changes that are required. Because the average age of most volunteers in credit unions is in their late 60′s, it is unreasonable to expect a significant degree of new learning to be taking place at an individual volunteer level.

This is not to say that older volunteers can’t learn or change, but rather that it is not the natural propensity of volunteers in their 70′s and 80′s to actively seek out new ideas, challenge the status-quo, be innovative in their thinking, or hold a perspective that is representative of a majority of the credit union’s membership. It takes a special person to be flexible; actively thinking and learning new things, and to have a zest for personal growth even though they may have long since retired from their chosen occupation. When you combine this with the fact that individuals are generally not first elected to a credit union volunteer position after they have already retired from an occupation within the credit union’s field of membership, it is no wonder that many CEOs are highly supportive of volunteer term limits.

ignificant longevity (i.e. age) of volunteers is one of the arguments that is used to support Board term limits. But age isn’t the only issue that can inhibit growth. A lack of internal volunteer accountability can harm or inhibit an organization even more dramatically. The only real solution is that all volunteers, regardless of their demographics, must be willing to objectively assess their own competency and hold other volunteers accountable as well.

CEOs are (or should be) reviewed on their and their organization’s performance annually and the board should also take the time and effort to review their own performance. A formal board assessment that allows for anonymous peer review is helpful in stimulating honest feedback regarding individual as well as group performance levels. Such an assessment can also be a useful tool in guiding board development and in identifying and strengthening those skills that may need polishing.

In addition, volunteers must also take the time to educate themselves regarding the credit union environment and marketplace. Reading is the best and least expensive source of education. Volunteers must continually recognize that the environment surrounding the credit union is quite different from what they may be experiencing in their own work environment, or if retired, their previous work environment. For an organization to be successful, all volunteers must be able to adjust their attitudes and decisions to reflect those real differences.

And finally, on-going education of volunteers is imperative. It is not enough to pick a conference because it has a great location. Volunteers should actively seek the CEO’s input on which conferences will be most beneficial for them from an educational and training standpoint in order to fulfill their fiduciary responsibilities. Unfortunately, too many conferences, including those sponsored by major trade associations cater to what board members want to hear rather than actively emphasizing what needs to be learned.

Compensating the CEO
No area brings more conflict, provides more stress and damages more volunteer / CEO relationships than that of CEO performance evaluation and compensation. Unfortunately, the majority of credit union boards do not handle this well. When it comes to setting compensation for the CEO, many volunteers have difficulty looking beyond their own employment experiences and expectations. In comparison to for-profit financial institutions, credit union CEO salaries have stagnated. In fact, the average CEO compensation package is anywhere from 15% to 25% below that of their for-profit counterpart, running the exact same type of organization. In some cases, the chasm is even larger. We strongly believe that this must change in order for an organization to reach its full potential. Underpaying the CEO and other key executives will ultimately undermine a credit union’s long term success.

Every credit union paid professional recognizes it as an industry wide “problem.” Recently, another recognized consultant stated in a trade magazine that “Boards need to understand that they’re paying a professional to run an organization that isn’t the organization they’re used to working in. And directors from larger companies need to remember that the credit union isn’t equivalent to a department or division of a large company. The CEO has responsibilities that are unique and different compared with a department manager who’s working within a bigger structure.”

When compensation issues are mishandled one of two situations will occur. Either the CEO will move to an organization that is willing to pay for the expertise and results they bring, or they will stay because they are at a stage in their career where they feel they can’t move on or don’t want to relocate. In this case, the credit union is stuck with a CEO who is unmotivated because they feel unappreciated. In many cases this also eventually leads to the loss of many of the best players on the executive team. They see how the CEO has been treated and start believing that it is time for them to find a different organization where they can grow.

It doesn’t have to be this way. When compensation is based on tangible, predefined results, both the organization and the CEO will benefit. Results that are achieved under a CEO’s leadership will reveal whether or not an organization is getting its money’s worth. The reality is that credit unions have changed dramatically over the last ten years and it is now time for boards to change how they compensate their executives as well. The skills required to lead, manage and control a credit union today require rethinking and restructuring compensation packages to attract and retain the very best executives. One interesting fact that we have experienced over the last two decades and that illuminates this reality is:

boards that pay their CEO at or well above the 75 percentile in total compensation rarely, if ever, are disappointed in the results that their CEO and organization produce.

Conclusion
The relationship between the CEO and the volunteers should be one built on honesty, openness, active communication, transparency and mutual respect. Secret meetings, closed conversations and behind-the-back political dealings will spell the end of that growing relationship and it will substantially affect the credit union’s future potential success.

It may be time for your organization to get a “check up” and assess how well the credit union is doing in each of the areas discussed above. A strong and successful organization does not need to be afraid of the outcome because they realize that every institution has its strengths and weaknesses. The truly excellent organizations will applaud those strengths and actively seek lasting solutions to their weaker areas.

If you are a volunteer, now is the time to bring these issues to your board meeting and ensure that they get addressed. If you are a CEO, it is time to take leadership and help your Board address these important issues. It is never too late to begin to strengthen or if necessary, rebuild the board / CEO relationship and experience the synergistic benefit such a relationship engenders.

“After her first two weeks observing at ‘Decision Tech,’ Kathryn Peterson, its new CEO, had more than a few moments when she wondered if she should have taken the job. But Kathryn knew there was little chance she would have turned it down. After all, nothing excited her more than a challenge. What she could not have known when she accepted the job, however, was just how dysfunctional her team was, and how team members would challenge her in ways that no one ever had before.”

While teams and teamwork is a critical component of successful organizations, productive teams are few and far between. Patrick Lencioni effectively addresses the reality of how teams function in his recent book The FIVE DYSFUNCTIONS of a TEAM. In this book Lencioni presents a leadership fable that we can all learn from. Throughout the story he reveals the five dysfunctions that go to the heart of why teams, even the very best ones, often struggle. Through the eyes of Kathryn Peterson, his fictional CEO, Lencioni addresses real issues in a straightforward, simple manner that clearly delineates what can go wrong in teams and what must be done to repair them. We highly recommend this book.

After more than twenty years consulting for credit unions of all sizes and types, Nice Enterprises, Inc. has found that most organizations suffer from one or more of the dysfunctions that Lencioni outlines in his fable. Whether it is the absence of trust, fear of positive conflict, lack of commitment, avoidance of accountability, inattention to results, or a combination of any or all of these, these dysfunctions keep an organization from reaching its’ full potential, and in many cases, put an organization at risk.

The following diagram highlights the five dysfunctions and their opposite counterparts, the functions of a team:The first, or primary level of team dysfunction is the absence of trust. This level is the foundation of every good team, yet too many organizations lack this basic building block. Trust, in this venue, does not mean a belief in a certain outcome, ie. “I trust that the tellers will count their money correctly today.” Instead, this trust can be defined by the willingness of all members of the team to be truly open and vulnerable with one another within the group. This type of personal trust implies that there is confidence in everyone’s true intentions and that team members don’t feel that they must be protective of what they say or careful to conceal weaknesses from each other.

When trust is not present within a team, people feel that they have to hide their mistakes. They waste a considerable amount of time and energy trying to manage all their behaviors to get the response they want. Distrustful team members will hesitate to provide real constructive feedback because they are afraid of potential repercussions. Help is not asked for or given readily. Everyone is protective of his or her own “turf.” Dysfunctional team members easily jump to conclusions about the intentions and/or aptitudes of other members, while little attempt is made to clarify these issues. Team members will also put off meetings when at all possible and look for reasons to avoid contact or investing time with each other. Finally, these individuals will have a tendency to hold grudges and assume the worst about each other, even if it is not verbalized.

In contrast, trusting teams readily admit weaknesses and mistakes and know when to ask for help. They are open to questions and input regarding their areas of responsibility and will take risks in offering their own assistance and feedback. These individuals are transparent, and enjoy tapping into one another’s skills and experiences. They appreciate the expertise that each team member brings to the table. Time and energy is invested on significant issues, rather than playing politics. Each member is willing to offer and accept apologies and provide genuine forgiveness without hesitation. These team members are able to respond this way because they are able to give each other the benefit of the doubt and do not immediately assume the worst.

Once trust is mastered in a team, the next level of dysfunction outlined in the diagram is the fear of conflict. Many of us improperly equate conflict with anger and destructive fighting. In teams, conflict actually means the positive and productive ideological conflict that result in growth, both for individuals and organizations. I remember going through pre-marital counseling twenty-five years ago and one of the primary questions the pastor asked was whether my fiancé and I had had conflicts and how those conflicts were resolved. (We did, and still do, which is one reason why we are still married.) In teams, as well as the rest of life, conflicts should revolve around issues, concepts and ideas and shy away from personality-focused attacks. Positive and productive conflict should bring unfiltered and passionate debate and may result in lots of emotion and often frustration. This kind of conflict is centered around the ideas or concepts, not the personalities of the individuals themselves.

Teams that engage in positive, productive, unfiltered and passionate conflict will definitely have interesting and “lively” meetings. These team members will actively seek and encourage every one to share and exploit the ideas of all team members. These individuals avoid “politics” and work at solving real problems quickly and effectively. Productive conflict encourages all members to put critical topics on the table for discussion without worrying about the ramifications.

Our experience, unfortunately, is that most teams fear conflict, and do just the opposite. Their meetings are boring, uninteresting and ineffective because everyone is afraid to voice the real issues. No one is willing to acknowledge, let alone address the “elephants in the room.” Controversial topics are avoided like the plague, which hampers real team growth and progress. The opinions and perspectives of many team members are never heard or voiced, while time is wasted on posturing and indirect interpersonal “risk management.” Possibly the most counter-productive effect is that individuals resort to back-channel politics, back-stabbing and personal attacks to push their own agendas through. Does this reflect the reality in parts of your organization?

A good facilitator can help to overcome a group’s dysfunction of the fear of conflict. He/She can both model and teach others how to operate in a way that reinforces passionate debate, while positively reinforcing each individual’s value and contribution. Fortunately, with instruction and a significant amount of practice, the knowledge and skills of facilitation can be learned and applied. As they are continually used, trust in the team is positively reinforced, and the fear of conflict begins to melt away.

Lack of commitment is the next level of team dysfunction. When lack of commitment is present, team members are not able to move forward with any kind of power. Don’t confuse commitment with general consensus or certainty. Rather, it is the team’s confidence that they have made clear and timely decisions and that they are moving forward with the complete ownership and support from every team member, regardless of their personal opinion. Committed teams are able to move forward because they understand that human beings do not need to get their way in order to support a decision, but only need to know that their opinions have been fully heard and respectfully considered. When commitment is evident, team members are able to present a united front and commit to a course of action. This is because they are able to grasp that it is better to make a decision boldly and be wrong, and willing to change direction as necessary, than to waffle or “dilly, dally” while trying to come up with a “perfect” answer.

The failure to commit can cripple teams and organizations in many ways. Direction and priorities are up for grabs with everyone pursuing what they individually perceive to be the best action. The organization as a whole suffers, while windows of opportunity close because of unnecessary delay and excessive analysis. A lack of confidence and fear of failure is bred throughout the entire organization due to this failure to commit by the leadership. Meetings generally revolve around endless discussion and decisions are revisited on a regular basis. All of this ambiguity encourages second-guessing among the team members and this dysfunction seeps readily into the rest of the organization.

When a team is willing to commit, it will reap a great reward. Commitment creates clarity around direction. It produces clear priorities, which will align the entire team around a set of common goals, and the order in which resources should be allocated. These committed teams are able to learn from their mistakes and act quickly to correct them. Committed teams are able to take advantage of opportunities and move forward before their less committed competitors can respond. Finally, a team that is willing to genuinely commit with clarity and “buy-in” can change direction without hesitation or guilt when the situation requires.

The fourth level of dysfunction is the avoidance of accountability. In our experience, this is probably the most significant dysfunction we encounter. Accountability is simply the willingness of individuals (team members) to appropriately call their peers on performance or behaviors that might hurt the team. As Lencioni says, “the essence of this dysfunction is the unwillingness of team members to tolerate the interpersonal discomfort that accompanies calling a peer on his or her behavior and the more general tendency to avoid difficult conversations.” The counter to this dysfunction is the willingness to experience this temporary discomfort for the good of the team and the organization.

A team that is unwilling to hold each other accountable ensures that poor performance will continue and mediocrity will become entrenched within the organization. Hierarchy becomes the crutch, or excuse for why accountability doesn’t happen. Resentment will be created between team members who have different standards of performance and missed deadlines will be common place. The sole source of discipline will be forced on whoever is acting as the hierarchical team “leader” creating an undue burden on them and potentially leading to premature burn out.

When accountability is done properly, poor performers will feel the need to improve and potential problems will be quickly identified. Effective accountability also takes place on teams that question one another’s approaches without hesitation. Respect is also reinforced in teams where every member is held to the same high standard.

Another benefit of appropriate accountability is that excessive bureaucracy around performance management and corrective action is avoided. The overriding advantages of accountability will be experienced when all team members demonstrate a willingness to put themselves on the line by calling their peers on performance and behaviors.

The final level of dysfunction, as illustrated by Lencioni’s fable, is that of inattention to results. On the surface this may seem to be of little import, but a clear understanding of Lencioni’s premise reveals this to be the ultimate dysfunction. His definition of this dysfunction is the tendency of members to care about something other than the collective goals of the group. Lencioni makes it clear, and our experience confirms, that an unrelenting focus on specific goals and clearly defined outcomes (with measures), are the absolute requirement for any team that judges itself on performance.

A team that is not focused on results will stagnate and fail to grow because there will be no real impetus for change within the group. Achievement-oriented employees will move on to other positions because they are not sufficiently challenged and clearly see the lack of significant results. Team members working under this dysfunction will focus on their own careers and individual goals because there is no reason to work together as a team. Everyone on the team will have a tendency to become easily distracted because there are no true results that become a requirement for operating. Therefore, no real growth takes place.

Those teams that focus on collective results will reap a very different harvest. Achievement-oriented employees will be attracted to these teams. The organization will benefit by having team members who are willing to subjugate their own goals and interests for the good of the team and ultimately, the organization. Distractions will be avoided and individualistic behavior will be minimized. Everyone on the team will share in and enjoy the team’s successes and will acutely suffer along with each other over failures, spurring them on to even better future results.

As you can clearly see, putting the collective goals of the team above individual needs and desires will result in a significant benefit for the organization. The team will truly be able to create the positive, synergistic effect of many working together for the good of the whole. This is where 1+1+1+1 can equal 15!

Now that you have seen the difference a functional team can provide an organization, you may be wondering what additional things you can do to turn around and correct your team’s dysfunctional challenges. Each of the five levels of function/dysfunction point to their own set of tactical recommendations that you, as leader, can take advantage of and immediately apply.

They are:

Absence of Trust

• Lead, by demonstrating vulnerability first
• Create an environment that does not punish vulnerability
• Make sure that your displays of vulnerability are genuine and real, not staged

Fear of Conflict

• Do not act like an overprotective parent
• Personally model appropriate and positive conflict behavior
• Do not deprive team members of an opportunity to develop and practice conflict management skills
• Demonstrate restraint when your team members engage in conflict, allowing resolution to occur naturally (as messy as that can be), so they learn to resolve issues together
  

Lack of Commitment

• Act like a facilitator
• Constantly push the group for closure around issues
• Become comfortable with the prospect of making a decision that ultimately turns out to be wrong
• Adhere to and reinforce schedules that the team has set
• Do not place too high a premium on certainty or consensus

Avoidance of Accountability

• Encourage and allow the team to serve as the first and primary accountability mechanism (rather than hierarchy)
• Be willing to serve as the ultimate arbiter of discipline when the team itself fails
• Make it clear to all team members that accountability has not been relegated to a consensus approach, but merely to a shared team responsibility

Inattention to Results

• Set the tone and example for a focus on results
• Become selfless and objective
• Reserve rewards and public recognition for those who make real contributions to the achievement of group goals
• Counsel and correct in private

Nice Enterprises highly recommends that you add The FIVE DYSFUNCTIONS of a TEAM to your “must read” list. The “quick read” fable that Lencioni uses to illustrate his premises regarding teams provides a rich background and a more in-depth explanation of how these dysfunctions damage the team process and inhibit an organization’s growth and development. The book is short and easy to read, and you, your Board, and your entire management team will benefit from the simple lessons outlined.

We believe working through your team’s challenges, whether they be with a dysfunctional Board or management team, are definitely “worth it.” No price is too high to have a well functioning team. We have many clients that have moved from dysfunction to function within their team, and they highly recommend the latter. They have experienced both, and tell us they will never go back to the “traditional” way of working as a team.

Consumers, and that includes you and me, have been sending a clear message, “I want you to give me what I need (honesty, respect, trust). If you do, I will return to you loyal patronage.” We are all asking for recognition and respect as an individual and we are beginning to demand it in a big way. The smart businesses are delivering.

Although the Ritz-Carlton Hotel has long been known for tracking guest preferences, they are beginning to exceed themselves in their attention to detail. This story from Barely Managing exemplifies this attention:

“John Rapp, who works at the Baker & McKenzie law firm, saw an outstanding instance of information gathering and management attention at the Ritz-Carlton Hotel in Hong Kong recently. It’s old news that the Ritz tracks guests’ preferences for things like newspapers, smoking or non, and so on, but the hotel has now gone far beyond populating a database with obvious factoids. This time, Rapp was met by the assistant to the hotel’s ‘customer recognition manager’ – note the job title – who was carrying a bottle of water, like the free one in the room next to the ice bucket. ‘We noticed you drink a lot of water,’ she said correctly, ‘so we have arranged to put an extra bottle in your room every day.’ How’d they do that? Rapp never told the Ritz he’s a thirsty guy. Nor could they have learned of his hydrophilia by running his minibar tab through a computer, because water’s a freebie. A low-level employee – a maid or a minibar stocker – noticed the empty water bottles, recognized that this was valuable information, and knew who to tell about it. That person turned the information into an act that made Rapp feel special. And Rapp’s telling everyone he talks to.”

Unfortunately, this kind of special recognition is rare. Consumers are increasingly frustrated with their daily life experiences and they are looking for businesses to reinforce their personal rather than just their commercial values.

As a prime example, remember the last time the airline lost your luggage. Generally speaking, if your luggage misses your plane, you are the last one to know about it. Only after waiting at luggage claim while every other bag is dumped out do you finally realize that yours is not going to show. Today, it doesn’t have to be that way. Due to the new security controls, every piece of baggage is now matched to a specific passenger. No bag is loaded unless the person who stowed the bag also boards the plane. This means that the airline knows when a person boards a plane and his or her “matched” luggage isn’t placed on board as well.

Wouldn’t it be great if shortly after take-off the flight attendant would inform you:

“We’re terribly sorry, but unfortunately your luggage was not loaded into this plane. We wanted you to know now, so that you do not have to wait unnecessarily at baggage claim. Your luggage will arrive on flight #XXX and we are giving you a frequent flyer bonus of 1000 miles to help compensate you for your trouble. Please let me know what address you want your bag delivered to at no charge, and I’ll make sure it arrives by 10 pm this evening. Here is your delayed bag receipt that includes your automated tracking number and toll free phone number to call if you have any additional questions, or to better pinpoint when you will receive your bag. Again please accept our apology.”

Can you imagine the difference in consumer response? This is just one example of simple, proactive, personal recognition that would create a wealth of consumer loyalty and positive reinforcement.

This quiet consumer revolution is not being driven by unrealistic demands or infinitely picky people, but by the cultural shifts that have been expanding for the last fifty years. Life, for may people, has become less and less satisfying and they are, in part, looking for business to set things right. Although in the midst of the current but mild recession, we are surrounded by material prosperity. Even with all the modern conveniences of man, many of us are discovering a discontinuity between our economic and emotional wellbeing. Many recognize that they may be more affluent than their parents ever dreamed of, but their lives are not necessarily “better” or even as good.

Based on the extensive research by Fred Crawford and Ryan Mathews, who have authored the recent book The Myth of Excellence, the human values of trust, respect, honesty, dignity, courtesy, and ease are considered to be the building blocks of any free, advanced society. Unfortunately, these very ideals are being systematically stripped away from our daily lives and the fact that they are missing in most business transactions are creating quiet consumer revolution. According to Crawford and Mathews there are three key changes affecting this shift – societal devolution, personal time compression, and communication technologies.

Historically people were naturally drawn to places and situations where they recognize and relate to the values presented and where they themselves were validated; such as in families, churches, political parties, social club membership, and even chat rooms. In these institutions, our core / fundamental values were reinforced. Today, the reality is that some of these institutions are failing us and many people are looking elsewhere to have these needs met. This phenomenon is described as societal devolution. It is where our trust has been slowly eroding in institutions.

As a society we are also faced with an increased compression of time. Few of us feel that they have enough time to be a good father, mother, brother, sister, and employee, let alone coach and volunteer. U.S. Citizens currently work more hours than either the Japanese or Europeans. Studies show that stress and stress related illness is raising dramatically. The sale of mood-altering anti-depressants currently exceeds $4 billion annually. Suicide rates have jumped 60 percent since 1950. Most of us don’t get the rest / sleep we need. Everyone is stressed by the lack of time to accomplish all they are responsible for, let alone pursue optional activities.

Finally, the proliferation of information and communication technologies attacks us from every direction. The growth in use of the PCs, Internet and cell phones is unparalleled. Cable television penetration continues to grow and spending on advertising continues to soar. We are constantly being bombarded and saturated by the media. Faced with this onslaught of information, most of us begin to “tune out.”

Combine this with the general lack of personal connections (strong and lasting friendships and marriages); consumers are seeking those businesses that provide clarity, ease, certainty and trust.

Businesses that address these needs will be well positioned to take away market share from their competitors. According to Crawford and Mathews, “context has overtaken content as the primary driver of consumer value.”

To take advantage of this quiet revolution in consumer demands, effective companies will establish values-based offerings and evaluate their efforts by looking at their businesses through the customer’s (member’s) eyes and conducting business on terms that the customer finds personally meaningful. Credit unions are not exempt. As a leader in the credit union industry, you must begin by finding out what values you ought to embody by talking to your members in their language and then use that information to form the cornerstone of everything you do.

In addition to the contributions of Crawford and Mathews, Nice Enterprises, Inc. has identified what we believe to be five universal elements that apply to every commercial transaction: product, price, convenience / access, service / experience, and inform / communicate / educate. We have found that the most successful companies dominate in only one of these five areas, are differentiated from their competitors in one other area and are on par (or equal to) with their competition on the other three areas. The Myth of Excellence is that most businesses believe that they must outshine their competitors in all five areas. Most companies spend far too much and allocate too many resources trying to compete on every playing field, instead of focusing those limited resources where they will really make a difference in the heart and mind of the consumer.

It is our belief, which is supported by 20+ years of consulting experience, that great organizations have a clear understanding of how their customers (members) view their performance in each of these areas. From this information, the organization’s leadership can then determine if, and where they dominate their competition, what customers (members) see as the primary differentiation from competitors, and whether or not they are truly on par with the competition in the remaining three areas. Let’s look at the five strategy attributes more closely.

Product
Product includes the range, depth, utility, quality and design of the product or service offered. Do you have credible offerings? What selections of products are offered? Is your quality dependable? Are your products inspired or unique?

The author’s of The Myth of Excellence found that unless a consumer could verify a product claim for himself, he just didn’t care. Also, because of industrial and technological revolutions, most products are now sufficiently “good enough.” As a result, most people are less likely to spend extra in order to get the “best.” If your products are your key dominant area, or your area of differentiation from your competitors, we recommend that you redouble your efforts in evaluating your customer perceptions, since they form the consumer’s reality.

Price
Price is much more than the actual, physical, out-of-pocket cost to the consumer (member). Price includes the complex set of prices, balances, numbers, terms, signals, messages, and interactions surrounding impression, trust, value, and worth. Is your pricing competitive? Is it better than the competition? Is your pricing honest and consistent? Do you offer unsurpassed value? Are you acting as your member’s agent – “you purchase for me”?

In a credit union organization, price is built around concepts like fairness, reliability, impression and trust and it should be a good match between what the organization stands for and what a particular product is actually worth. Contrary to what many think, most people are not necessarily after the lowest possible price, just a reasonable, honest deal.

Convenience / Access
The Convenience / Access area encompasses much more than just physical (or virtual) location. It also embodies ease-of-use, convenience and the ability to interact and transact anywhere, anytime, anyplace through multiple channels. Consumers (your members) don’t want to be confused or slowed down by fancy layouts or de-humanizing “cattle chute” types of lines. They want to be able to quickly and easily access the products and services they need, when they desire. Questions you can ask include: Do your customers (members) find you easy to locate and use. Do you provide multi-channel availability? Do your channels interrelate, coordinate and reinforce each other? What is the real “hassle” factor of using your product or service?

In addition, Convenience / Access include all the notions of comfort, affiliation, and connection. It is as much a psychological convenience or access as it is a physical one. To dominate this area you must provide solutions to genuine lifestyle problems and offer the psychological connection that is crucial to loyalty, as outlined previously.

Service / Experience
Service / Experience is much more than just “entertainment.” Service / Experience encompasses the consistent capability of providing customers (members) what they want, so they feel valued, cared for, educated, entertained, and relaxed.

The Service / Experience attribute includes the two axis of participation (active or passive participation) and activity (absorption or immersion). These axis create the four basic realms of an experience; that of Entertainment, Education, Esthetic and Escapist. In creating a memorable Service / Experience, the more quadrants you tap into, the higher impact the experience will have. The ultimate Service / Experience touches on all four realms of an experience. The restaurant / sports bar / arcade combination of Dave & Busters, Inc. is a good example of a highly profitable business creating “a memorable experience” for their customers. If you have never been to a Dave & Busters, just think of a Chuck-E-Cheese for young adults. There is entertainment, food, beverages, all in a uniquely decorated party atmosphere. The very nature of their arcade creates the immersion / escape aspect of the experience.

For more ideas and thoughts on the progression of the Service / Experience, please see The Strategist article published in October of 1998, Vol. 15 No. 10 at the Nice Enterprises, Inc. web site at: www.trynice.com.

Remember, the offerings and interactions must be customized around individual (or small group) needs, wants and desires. Do your customers (members) truly feel cared for and respected? Do your systems, policies and procedures accommodate their individual needs, wants and desires? Do you customize your offering around individual needs? Is intimacy and “connectedness” created between your organization and your customer (member)? This area is one of the greatest opportunities for any business to compete on, yet it seems to be one of the most difficult to actually execute. It is critical to remember that no matter how many perks or extras are offered, if your service is deficient at the point where your customer needs it most, the extras won’t matter.

Inform / Communicate / Educate
The information, communication and education that you provide to your customers (members) involve a complex set of interactions. These interactions include the techniques, mechanisms, relationships, images and multiple communication channels that are used to actively interact, question, educate, promote, sell and market to customers the organization and explain competitive options. Is the information you provide credible and trusted? Do you offer a range of information (can you “drill down” from simple and straight forward to detailed background) with a clear explanation of the options? Are you proactive in seeking interaction? Do you actively connect and engage your customers (members)? Is the organization driven to market?

Conclusion
We have found that many organizations (including credit unions) are tempted by the myth of excellence. In a strategic planning process, a typical “high performing” client will discuss the five “drivers” listed above and may want to try to excel at them all. They truly believe that their members deserve the best in all areas and they will continue to work at being the best in them all. They have just fallen for the myth of excellence. Don’t you fall into the same trap. The economic reality is that no business, regardless of size and scope, can be the very best at everything. An organization must actively choose what will be their institution’s dominant and differentiating attributes. Part of this analysis / process must ensure that the economic and resource / focus trade-offs that are made between the attributes does not allow any of the attributes to slip below “par,” or being less than “competitive” in the marketplace. For example, a retailer that is known for the very best service and a broad selection of merchandise that is priced competitively will ultimately fail if no one can find his stores or his operating hours are too short.

The economic and competitive realities of today’s market place require businesses to make trade-offs of one kind or another. The key is to have a crystal clear picture of what attribute your organization chooses to dominate and where you want to differentiate your business. Once this strategy is in place, your organization will be able to focus on what will truly impact your customers / members, and therefore your future success.

Truly member driven institutions don’t attempt to dominate in every member-centric category – product, price, convenience, service, information. Great credit unions learn to overcome the constant temptation to strive for universal excellence. They identify their vision, identify their dominant and differentiating attributes which establishes the operating strategy, and sets up systems by which these two areas can grow and excel while maintaining a close watch on the remaining attributes so that they never fall below industry standards (par). Remember, people are so starved for basic human interaction, values and recognition that they will run to the business that provides them, in addition to good value in the products, service / experience and price. This need for trust is so strong that it surpasses all boundaries and is fundamental to all success.

A number of highly successful companies are following this philosophy and maintaining their focus. It is working: Wal-Mart, America Online, Southwest Airlines, Lexus, Eddie Bauer, and Dell all have a distinct strategy. Will your credit union be one of these success stories? It’s up to you and the decisions that you and your credit union’s leadership make over the next year that will determine your success over the next decade.

As Crawford and Mathews have stated:

“As long as there are people, they will engage in commerce. As long as there are transactions, the five attributes will be with us. And as long as they’re with us, they’ll be measurable. And as long as they’re measurable it will be possible to craft a successful strategy around them.”

To further show the interplay among the five attributes and how successful companies create value for its targeted customers; the following table has been constructed to illustrate the interplay between the strategy attributes. We would suggest using this table as a discussion stimulator at your next strategic planning off-site. You might want to take a blank version of this grid, combined with the definitions on pages 3 through 5 and determine where your organization and that of your competition falls.

Our company placement on the grid is not a definitive declaration about a particular company’s strategy, but rather is provided to show how the paring of the domination and differentiation attributes creates real strategic positioning in relation to other companies.

Strategy, Vision, and Focused Execution… these are the key elements to success in any business. They are the source of your organization’s future success. Take advantage of the quiet consumer revolution and begin to harness your strategy mix for a successful future.

While this event did not occur in a business context, it drove home the point that fewer and fewer of us are willing to accept personal responsibility or take “ownership” in our personal and professional lives. We have discovered that excuse making and “passing the buck” has become almost epidemic. In fact many corporate cultures indirectly seem to encourage this “its not my problem” mentality. An unflinching willingness to face facts has become fairly unusual in today’s marketplace. Questions asking; “How did it happen? Why did it happen? Who did it? Who didn’t stop it?” Or, “Who will clean it up?” frequently get political answers, not factual ones. The norm seems to be, “Cover your backside, pass the buck, protect the boss, don’t let our members / customers find out.” Meetings tend to consist of self-serving “reports” and windy speeches rather than concrete fact finding and acceptance of personal responsibility.

We cannot afford to let this kind of culture take root within our organizations, let alone in our own lives. It is a highly destructive mindset. This kind of thinking and the resulting behavior condemn our organizations and us to mediocrity. Instead, taking responsibility or “owning” what happens in both our lives and businesses can, and will, transform both our personal and professional lives.

The U.S. Army is a great example. Recruits are taught that they cannot weasel out of responsibility, even if (as in my daughter’s case) whatever happened is someone else’s fault. Listen in on this typical discussion:

“I didn’t do it, sir!” “Who did?” “Jones did, sir!” “Why didn’t you stop Jones?”

“I don’t know, sir!” “Because you’re a lily-livered idiot, right?” “Yes, sir!”

“Yes, what?” “Yes, I’m a lily-livered idiot, sir!”

The results are pretty impressive: the soldiers take responsibility for their actions – and their in-actions. Breaking the excuse-making, blame-placing mentality is difficult and that’s why the military uses an extreme, intensive regimen like boot camp to break it. On the business front, General Electric’s retiring Jack Welch never stops pushing his series of initiatives to knock down the pretense, uncover facts, undermine bosses’ power, and, as he puts it, turn meetings into “interactive forums for disseminating new ideas and the sharing of experiences.” The U.S. Army implements its own simple and effective way to encourage personal responsibility and create that same interactive forum. They conduct an “after-action review” for about 15 minutes following every identifiable event, big or small. The review asks four basic questions:

• What was supposed to happen?
• What actually happened?
• What accounts for any difference?
• What can we learn?

That’s it.

If business institutions were to adopt this approach, think what changes would occur. No action, sales call, hiring or firing, new product or service introduction, or meeting with a disgruntled member / customer or Board member would go unchallenged. Each “after-action review” would become a source of constant small improvements that would keep an organization always moving forward, never willing to compromise on progress. The key is to keep these reviews simple and to do them every chance you get until they become second nature. While easy to skip this critical process, it is really like flossing… You can skip flossing too, and not pay the bill for months or years; but as with flossing, it’s the cumulative benefits that we all desire.

One credit union organization and long term client of Nice Enterprises, Inc. that consistently conducts their own version of an “after-action review” is SELCO Credit Union in Oregon. They call it “Completion.” Instituted several years ago by the President/CEO, Ava Milosevich, they ask and answer seven basic questions after every meeting I have ever attended. They are:

1. “What are we disappointed about, unhappy about, or what didn’t we like?”
2. “What are we pleased about, what worked, what have we accomplished?”
3. “Who would you like to acknowledge?”
4. “Does anyone want to be acknowledged?”
5. “How did this conversation impact SELCO’s future?”
6. “Are there any requests?” (For future follow-up)
7. “I declare this moment complete!” (Which means you are done with it, and you will let it go)

“Completion,” as they envision and practice it, should be done after meetings, significant dialogues, or conflict resolution. It isn’t a time to fix things that are expressed, debate an issue or defend any position. Rather, it is a time to encourage honest, straightforward communication. Its’ intended result is to insure that people are really heard, and are complete. This is what they call “courageous communication.” It is a part of their corporate culture. They are demonstrating that honest interaction is the fundamental building block of any relationship, be it business or personal.

Jack Stack, President and CEO of SRC Holdings Corp. in Springfield, Missouri promotes personal responsibility in a different way. He believes in creating a “culture of ownership.” Whether or not the employees of a business are in fact owners of that business, having an “owner mindset” pushes everyone to willingly accept personal responsibility for the outcome of an organization. Stack points out several contrasts between an owner mentality and a traditional employee mentality. He says:

ld a successful company. Employees are highly motivated to keep their jobs. These are very different perspectives. Often, employees see their organization from the inside out. They know about rules, policies and the particular business culture. Employees are specialized and one step away from business reality. Owners look at the business from the outside in: who is the customer? Who is the competition? How is the environment changing? How does this effect my organizational family? How can I make changes inside the organization in response?”

Jack Stack goes on to say, “When it comes to creating culture, one of the most important rules is this: everyone performs best when working toward a common purpose. Here’s a story I like. A friend was trying to win the Malcolm Baldridge quality award. He spent three years and over a quarter of a million dollars on this effort. On the night he was supposed to win the award, he looked at me and said, ‘You know, I hope I don’t get it. I don’t know what I’ll do with my people once I get it. We’ve had a really great time trying to win together. This has been the most fabulous three years of my business career, because we were working toward something together.’ He had realized something important – successful companies are always focused on a common purpose. They never run out of goals and ambitions.”

Those who have “ownership,” whether they are an employee or the boss, work together toward that common purpose or goal. These individuals feel that the organization is “theirs” and they want to do what is best, what will bring the most success. Those with an owner mentality know that every business reward – whether it is bonuses, promotions, prestige or other perks – comes after the company gains more success.

In a culture of ownership, leaders get people to do their jobs for the benefit of the community (the organization or membership as a whole). In order to do that, people have to be able to see the community clearly. Leaders show people the community by defining the corporate goals and by explaining why specific things are done. People are being asked to come to work not just to service customers, build engines, publish books, or get the latest report done, but to build the organization. In most companies, cultures are designed around creating a great product or service. In an organization with an “owner culture,” the culture is designed to create a great company.

When you begin to teach individuals what it takes to make a great business, they start to think at a higher level. All the other concerns regarding quality, customer service, product development, safety, responsiveness, etc. falls into place. The need for these things become clear – when you want your company to be truly great!

One method SRC Corp. used to foster an “owner culture” and encourage personal responsibility was to create a management system they call “The Great Game of Business.” Stack’s “Game” incorporates five basic rules:

1. Teach the financials
2. Eradicate a company weakness
3. Increase the value of the company
4. Generate short term reward
5. Build spirit by winning as a team

Each year SRC chooses a different playing field by focusing on changing or improving a business activity that can be defined and measured. Over the years, everyone in the business ends up receiving a comprehensive business education while simultaneously keeping the company healthy. The reward (bonus) drives people to learn and what they learn helps them make the transition from looking at the company with an employee mind set to looking at the company as an owner.

exciting.

When an organization embraces an ownership culture, people are not just trying to get by in life; they are trying to create it. There is pride in the institution and satisfaction in what has been made together. With this acceptance of ownership comes the acceptance of personal responsibility in achieving success. In this kind of culture the people at the top allow everyone to feel responsibility for the outcome. People set their own goals and know how their goals relate to the goals everyone else has within the organization. The company has effectively delegated the responsibility to help plan, execute and perform and that is how individuals are evaluated.

A culture of ownership prevents everyone from walking away from the challenges that reveal themselves in the financials. In this kind of culture, if you walk away, you are walking away from a community – your friends at work, those you have committed yourself to. Ownership stops the “its not my problem” mentality.

What we need in our organizations is commitment and loyalty, the pride of ownership, the feeling that each person, no matter what their position is an integral part of the organization’s success or failure. Each individual must be willing to put him or her self on the line for the success of the whole. This commitment is demonstrated by the Fed/Ex employee who rented a plane to get a package delivered on time, or by the salesperson who calls every one of their outlets to find the right size prom dress and has it delivered in time to the distraught teen.

While our organizations are not GE, the SRC Corp. or the U.S. Military, we can learn valuable lessons from their success. Each of these organizations has demonstrated that personal responsibility produces an organization capable of withstanding intense challenges. We need to pay attention. James Kimsey, founding CEO of America Online, was a 1962 graduate of West Point. He tells what he learned about leadership and responsibility in these few words:

“The first lesson I learned as a plebe came from an upperclassman yelling in my face. He told me that there were four acceptable answers: ‘Yes, sir’; ‘No, sir’; ‘No excuse, sir’; and ‘Sir, I do not understand.’ He’d ask, ‘Why aren’t your shoes shined?’ and I’d say, ‘Well, it was muddy, and I didn’t have time.’ He’d be all over me. He was trying to teach me something: if you have to take men up a hill and write letters to their moms that night, there’s literally no excuse. If you have to lay off thousands of people from your company, there’s no excuse. You should have seen it coming and done something about it.”

Accepting responsibility and ownership, whether for your organization or your personal life, means that you accept it in any situation, regardless of the circumstances. The only thing you can control is yourself. When under fire you can’t stop to ask how to get it done, you take responsibility and just do it. You own your choices, decisions, actions and in-actions with no excuses, no “out.”

All of the service problems prevalent in today’s marketplace including the lack of follow-through found in many organizations and the shortage of self-management and true teamwork can be attributed to one very simple and basic cause, a lack of ownership mentality and the willingness to accept personal responsibility. This seemingly small factor undermines the essence of what it takes to succeed and prosper. To overcome this lack may require a major shift in attitude and focus but the result will be well worth the investment. Whether you begin by recommitting yourself and taking responsibility and ownership for your organization’s success or whether you begin to institute the kind of cultural shift that SRC Corp. implemented, this simple concept will reap a huge reward.

“Yes, sir. No excuse, sir!”

The word “affirm” means to declare positively; assert to be true; to confirm. “Affirmation” is defined as a positive declaration or assertion. These definitions imply something far stronger and more powerful than simply praise or verbal “pats” on the back. A well placed affirmation is a positive, forceful, and truthful declaration of one’s beliefs and feelings regarding another individual or one’s self. Affirmations can move mountains and change the way we look at ourselves as well as those around us.

The atheist might say, “Do unto others before they do unto you.” The agnostic will reply, “Do unto others, but keep one hand on your wallet – just in case.” The biblical response would be, “Do unto others what you would have them do unto you.” Each of these conflicting beliefs agree on one point – what we do affects both ourselves and others, either positively or negatively. This also holds true for how we affirm others. What we do and say will come back to us in one way or another. The biblical truth is the one most beneficial to our discussion of affirmation. We must actively give out (first) to others what we each want so much to hear ourselves. Affirmation is the key, underlying truth that is a foundation of all successful business relationships.

An on-going, underlying theme of the “The Strategist” newsletter ever since its’ inception over 18 years ago, regardless of an article’s focus or content, is that of the need for both personal and professional “change” to take place, as well as and the tactics required to affect that change. All enlightened leaders recognize that in order to achieve the position we each desire in the marketplace, that change, which leads to growth, must be taking place on an ongoing basis. As discussed in previous articles, there are many types or kinds of changes. In more extreme cases, that change must be completely innovative or “transformational,” which many would consider “drastic”. Affirmation will significantly assist you and your organization in implementing these kinds of far-reaching changes. When you give positive, truthful affirmations to your management team, they receive the feedback they need to know to determine whether or not they are pursuing the right direction. They also know how you are measuring their efforts. When your management team, in turn, passes affirmation on to the rest of the staff, the entire organization is reinforced, validated and valued. Under these conditions, everyone is given the support they need to risk and forge ahead. When they have the framework of positive affirmations, they have received from you the structure on which to build the personal and professional changes required for them to make.

Affirmation, when positively and truthfully delivered, is very powerful. Do not underestimate the power to facilitate change in others (as well as yourself) through your affirming communication. A quick story to illustrate this point… Nice Enterprises, Inc. recently completed several teambuilding and planning engagements with several long term, progressive clients. During the beginning of each program, each management team group was challenged to first talk about what each saw as their organizational successes that they had achieved. For most, it was somewhat difficult to stay focused exclusively on what was “working,” or their successes, even though each organization had significant achievements, many which had already been acknowledged by respected third parties. Many within these groups, especially the leaders of the leaders, naturally drifted into what wasn’t working, or what needed to be changed.

Once that conversation had run its natural course, we then challenged each member of the group to both write down (document) and then publicly verbalize to each team member the multiple attributes that they genuinely appreciated about each other. In other words, to affirm each other. We have found that this is an extremely powerful exercise that has left many a stoic, macho professional leader, including a few CEOs with water in their eyes.

What is most interesting is that when analyzing both individual and group written program evaluations, to a person, each had pin pointed this exercise as the “highlight” or single most important thing that had happened in the entire meeting. Many have commented to us publicly, and many more privately, that they have “never been so moved or motivated” as when hearing the affirming feedback from their teammates, bosses or subordinates. This is especially true in a group context. Another fact we discovered by analyzing these evaluations is that when this two-staged exercise is conducted in performing organizations, it automatically improves the overall evaluation score of that program in every case by at least 10% and sometimes as high as 20%, regardless of the program content or other program results.

It is therefore safe to say from this direct experience that affirmation can improve anything that is done. This is because affirmation touches the “heart,” which is where real motivation and drive to change comes from. Remember, we said that an affirmation is a positive, forceful, and truthful declaration of one’s beliefs and feelings regarding another individual.

In addition to creating positive change, the process of affirmation also provides a powerful method for holding others accountable. Members of your team need to know precisely how he or she is succeeding in their performance efforts. By affirming both individuals and teams within your organization, you can appropriately and positively direct action toward that which needs to be accomplished. Truthful, honest, positive statements (affirmations) motivate and encourage the behaviors that you want to reinforce. Furthermore, when individuals and groups have been periodically affirmed, they are more willing to receive and act upon your well placed criticism.

There has been much discussion lately regarding “easy praise” or “false praise” and the negative, de-motivating impact it can have on individuals. These phrases refer to telling others how great they are doing, even when they’re not, or giving praise for work that did not take much effort or perseverance. This is not what we are talking about when encouraging affirmation. It is easy to see the difference if we use this simple example involving a child.

Imagine that your young son of nine years brought home a picture he drew in school that day. In an effort to encourage his artistic and creative nature you say, “This is the best drawing I’ve ever seen. I think you’re going to be the next Rembrandt!” However, your son knows that his picture is not a masterpiece and that he has a long way to go to fully develop his talent. To himself he says, “What does Dad (or Mom) know? They say that about all my pictures. They don’t know what they’re talking about. I can’t trust them to tell me the truth. Maybe I’m not really good at drawing at all.”

A better way to handle the same scenario would be to say to the child, “I really appreciate you sharing your art work with me. Did this take you a long time to draw? It looks like you put a lot of time and effort into it. I really believe that with continued study you could become a real artist. What do you think?” In this scenario, the child receives an honest appraisal that he can trust because it is an honest reflection of reality. The praise was not overblown or out of proportion to what was achieved and yet genuine encouragement for continued development was still provided. The boy feels supported and encouraged in his efforts and motivated to continue working on developing his abilities.

The same holds true in the workplace. When someone you work with has performed well or invested a significant amount of effort, they need to be told and encouraged honestly, not falsely or glibly praised. This kind of honest and truthful interaction works to build the connections and bonds between individuals. This in turn encourages real growth and change. When praise or affirmation is handed out unearned or is poorly earned, it holds little value. But, when it is given for true effort, accomplishment and performance, it provides the stable platform on which the receiving individual can continue to grow and build.

If we want to be able to give out appropriate affirmations to those around us, we must be genuinely affirming to ourselves as well. What kind of feedback or “self talk” do you provide to yourself? Most of us are our harshest critics and rarely evaluate our own work or efforts in an objective (let alone a positive) light. Self-evaluation leading to criticism can be even more negative if you do not have a good support network around to encourage and reinforce you. Nevertheless, you do have the ability to change yourself and your environment. Although this can sound overly simplistic or trite, the real keys to changing our own internal dialog are the books we read, the things we listen to, and those whom we associate with.

Each of these areas provides feedback to our internal voice and will either condemn or encourage us, positively motivate or discourage us. We need to take another look at what we surround ourselves with. Are we only looking at books and magazines that preach doom and gloom or that allow us to escape into another world without challenging us to grow or improve? What kinds of TV shows, radio programs, or tapes do we listen to? There are many positive choices out there – are we taking advantage of them, or are we lazily listening to the same old thing?

What about the people we surround ourselves with? Are we seeking out individuals that support, challenge and encourage us, or do we accept criticism and negativity as a normal part of our lives? It is up to you to take advantage of all the positive, encouraging and challenging resources available today. Seek out books like, FISH! or Who Moved My Cheese?. A book doesn’t have to be long and complicated to challenge old ways of thinking. Try renting some motivational tapes or purchase books on tape to listen to in your car. Fill your mind with beliefs that you want to be able to pass on to others. Finally, work on building relationships with quality, positive individuals. Invest time into your relationships and rebuild them into the kind of support network that both you, and they, truly need and can mutually benefit from.

The use of affirmations has a multitude of applications within the business environment. We have already discussed using affirmations to enhance the ability of holding people accountable, as well as to provide encouragement and motivation. Affirmations are also critical in building effective teams. Since trust is one of the key components of teambuilding, honest and truthful affirmations assist in building that trust between members. All of us have been a part of numerous teams where affirmations are missing. In most cases, the trust and bonds between team members are also missing, or at best, tenuous. We all need to know that our efforts are appreciated. In a team environment, this need is even more pervasive. We have also seen that those who are unable to give out affirmations are often unable to hold others accountable as well. The two sides of the coin go together. It is not appropriate to give only negative feedback, or only positive feedback. And we already know that providing no feedback at all is even worse.

As an example, one of my sons worked for a youth camp for ten months. During that time he was never criticized for any of his efforts, however, no attempt was made to give any affirmations regarding his work either. Even though he repeatedly asked for feedback, no more than a “you’re doing fine” was offered. After months of this lack of feedback, he decided to move on to other employment. Upon leaving, his camp employer wrote a glowing recommendation and asked my son if he would consider returning later, never recognizing that the lack of affirmations given while he worked for them strongly contributed to his decision to leave and not return.

In his words, “I never knew what my boss thought, if what I was doing pleased him, or if I was contributing to the success of the camp. Even though I thought I was doing okay, I wanted to hear it from him and know for sure.” This example is true in many organizations. Don’t risk losing your key people. Reinforce your employees and all who work with you by providing regular, affirmative feedback. By doing this, you will also provide yourself with that needed positive personal environment that reinforces the inner you and helps to enhance your attitude and outlook on life. This is important, since your attitude, as a leader, is infectious.

To summarize, we can change how we relate to those around us and by doing so, positively impact their lives for the better. We can change the way we do business and motivate others to do the same. As we have shown, the solution is affirmation. When we take the time and make the effort to consciously affirm those we relate to each day, we change lives and we change our businesses. We already know we need affirmations ourselves; the people we work with are no different. Remember, “Do unto others as you would have them do unto you.”

As you learn affirmative behavior and actively demonstrate and share it with those around you, you will receive it back tenfold. Set a personal goal with a specific measurement to affirm others, and then begin today.

You will be glad you did!