Accomplishing something complex without a plan can be challenging – especially running a business. Yet, some financial institutions have never created a strategic plan. Imagine trying to build a house without a blue print. That’s pretty much what these financial institutions are doing. They are trying to build a business and a brand without any type of plan to guide them.
Strategic planning, when done well, is extremely effective. It provides specific direction, defines strategies to support that direction and helps the organization determine how to spend money and allocate staff effectively.
Strategic planning not done well is a different story. Usually, ineffective planning happens when leaders fall into certain traps or subscribe to common myths about the right way to do planning.
Myth: We just have to get through the next few days and planning will be over
Truth: Strategic planning is an every-day affair
Your strategic plan should be in action every day your financial institution’s doors are open for business. That doesn’t mean you are sitting in a daily meeting planning strategy. It means you are carrying out the goals and actions defined during your annual planning session. It means your board is reviewing those goals and actions monthly or quarterly and holding management accountable to the strategy developed during that annual session.
Strategic planning often fails, not because the strategy is unsound, but because nobody bothers to follow-through with the strategy once the planning session is over. That’s when the real work begins. That is when you put ideas into motion. If nobody at your financial institution does this, there’s no point in planning at all.
Myth: Planning is only for executives or managers
Truth: Proper planning involves every employee
Executives and managers may make the final decisions, but they can’t possibly decide what is in the best interest of your financial institution, its employees and its customers or members without input from those people. It just can’t happen.
Ask employees what processes work and what needs improvement at your financial institution. Encourage them to offer solutions. If your strategy includes something massive like replacing your core processor, involve the people who use that system in discussions prior to your planning session. Find out how a major change will impact their jobs. Consider the time needed to train them on a new system. All of that ties in to your strategy. The more input you receive before you make a decision, the more support you will get from employees when it’s time to implement that decision. Making decisions in a vacuum slows progress and often hinders it altogether.
Myth: Your strategic plan must remain top secret.
Truth: Communicate your strategy and goals to every employee at your financial institution.
Employees cannot execute your strategy if they don’t know what the strategy is and how their jobs contribute to it. Everyone’s job description and goals must tie back to your strategic plan in some way. If it doesn’t, you don’t need them.
Communicate your strategic plan to every employee. Do it in a big meeting or delegate managers to communicate with the people who report to them. Each employee needs an explanation about how their job ties to your financial institution’s strategy. Their performance and goals should directly support some part of the plan, and that is how they should be evaluated on their annual performance reviews. Everything should tie together.
Construction workers cannot build a structurally sound house with a solid foundation unless they all have access tothe same blueprint and understand their role in the project. The same is true of your financial institution’s strategic plan. Get input. Communicate plans to your employees and remember that planning done well is planning that happens every day your doors are open for business.
The end-goal of a strategic planning process includes a set of clear objectives. It is these strategic initiatives that guide your bank or credit union moving into the next several years. However, poor objectives can just as easily kill a strategic plan and render your investment wasted.
What are poor objectives? What are the things your strategic planning team must avoid when it comes to objectives at its next session? Consider the following:
- Unclear objectives. You want up-front and easy-to-read language in your objectives. Now is not the time to wordsmith and impress everyone with your vocabulary. Your objective must be clear, driven by action verbs and book-ended by start and end dates.
- Un-led objectives. If a ship or plane start a journey without a seasoned captain, they are unlikely to make it very far. Your strategic planning objectives are the same. To succeed, they must have a leader. This could be a single leader or perhaps a small team of leaders, depending on the objective. Lack of leadership for your objective condemns it to failure before it can start. If no one leads it, no one is responsible for it and if no one is responsible for it no one will care.
- Un-reported objectives. Putting your objectives down on paper is just a start. Making sure they have a leader (or leaders) is a next step. In order to be truly successful, however, your strategic objectives must also include regular reporting. After the strategic planning session itself, ensure that leaders of specific objectives understand they are responsible for reporting back to the team on the status of their objectives. Failing to do this is like pushing a raft onto the rapids and putting your trust in the rocks and rushing water. The end result won’t be pretty.
Since well-defined objectives are the desired outcome of a strategic planning session, it makes sense to give them a terrific head-start on their journey towards completion. This includes making sure they are complemented by things like clarity, leadership and regular reporting.
Banks and credit unions that engage in strategic planning are committing time and valuable resources towards planning for the future. Your leadership team will likely spend hours at the table hammering out the details of your strategic plan for the next several years.
One of the most important ground rules about strategic planning (and a compelling reason to use an outside facilitator to help conduct the session) is keeping the discussion at a strategic rather than a tactical level. Your strategic planning session must be geared towards discussing, understanding and deciding on a course of action that concentrates on strategic initiatives — big-picture items.
It’s all too easy for a strategic planning discussion to jump the rails and plunge into the high weeds of tactical discussions. By tactical, we mean the daily tasks and jobs, the nuts and bolts of operations at your bank or credit union, that keep things moving. These are certainly important and, if not in place, can sabotage larger strategic initiatives. However, your time at the strategic planning table simply cannot be spent debating and discussing tactical issues.
For example, let’s say your bank or credit union decides an important strategic initiative for the next several years involves branding. Branding is a huge concept that touches every single element of your financial institution. The visual appearance of your brand is certainly a part of this. If you’re not careful, your leadership team could fly off the rails and start a discussion of dress code and how a revised dress code could fit the new brand.
Dress code is important. Dress code matters. Dress code impacts the brand. But, friends, dress code is absolutely the last thing you want to talk about during a strategic planning session. It’s an agonizing, tactical-specific discussion that almost always degenerates to a microscopic level of analysis that it makes a thesis dissertation look simple in comparison. This type of discussion does not empower your strategic planning session. Quite the opposite — it can cripple it.
Dress code is just one example of the dangers of your strategic planning session sinking into the murky waters of tactical items. There are many, many others. The important takeaway here is that in order for your bank or credit union strategic plan to be successful, it must keep its focus on the strategic rather than the tactical.
I have several loves in my life: my wife, my daughters, my company. Following close behind those top three is my love for fantasy football. Of course my family would probably tell you it’s not that I love fantasy football: I’m addicted to it. The primary league I play in is celebrating its 27th year (you got that right: pretty much same dudes for over a quarter of a century).
There is no better season of the year than fantasy football season. Especially when it’s draft time (which is this time of year). While poring over endless cheat sheets, reviewing favorite websites (that would be Footballguys.com), and loading fantasy football software on my computer (yes, there are such programs), I thought there were actually several strategic planning lessons we can learn from fantasy football.
As your credit union or bank prepares for an upcoming planning session, keep these thoughts from fantasy football in mind:
- Do your research—I can’t tell you how much time I spend researching fantasy football (ask my wife and she’ll joke “too much!”). The people that typically make the playoffs or win their league are usually the ones that do a ton of homework. Show up with a month old magazine cheat sheet and you’re sure to lose. It’s the same way with strategic planning. The more time you put into your session BEFORE it starts, the better session you’ll have. For example, make sure you are reading CUNA’s E-Scan, reviewing blogs like The Financial Brand and answering pre-session questions. The more preparation you conduct for your session, the better outcomes you’ll have.
- Make your plan flexible—When it comes to my fantasy football draft I always have a plan. Who I’m going to draft and in what round. And invariably, my arch-nemesis and co-commissioner (the Fighting Jewish) always picks the guy right before I do. As a result, I have to be a bit flexible with my plan. It’s no different with your strategic plan as well. You have to make it flexible. You can’t possibly foresee all the things that might develop in the course of your strategy: a key employee leaves, the local economy struggles, a marketing promotion bombs. Be ready for changes with contingencies. The more flexibility you put into your plan, the better results you’ll see.
- Identify sleepers—If you want to win in fantasy football you have to pick players no one else thinks is going to do all that great. In fantasy football terms those are guys known as “sleepers.” If you want to win with your strategic plan you have to pick ideas and tactics that others in your market may not be doing. If your competition zigs, you zag. It’s the classic Blue Ocean Strategy For example, rather than doing sales and service training like every other financial institution, maybe you do engagement training. Or rather than doing the same loan and deposit campaigns you do every year you conduct a marketing audit to gain fresh ideas. The more unique you make your plan, the better growth you’ll have.
Another cool thing about fantasy football is how it builds community (something your credit union or bank should do internally and externally). Through the years our league has been there for marriages, divorces, births and more. One of our members passed away after a battle with cancer a few years ago. But through it all, we’ve had this love not just for football but for each other
And if you want to love your next planning session, then remember these lessons from fantasy football.
Year-end? It’s just August! But yes, you read that title correctly: this August post is talking about the year-end. More specifically, strategic adjustments you might need to make.
As we tell our planning clients all the time: strategic planning is a process not a date on a calendar. In essence, you should be doing strategic planning throughout the year.
As the dog days of August hit, here are some issues you should examine to ensure you are making the necessary adjustments for year-end:
- Celebrate gains—It’s always a good time to reflect on your successes. Many executives and managers tend to focus on what is NOT being done or where we’ve missed the mark. Before doing that type of examination look at your accomplishments first. Did loans grow more than expected, did one branch perform exceptionally well, did you bring in a rock star new hire? Making adjustments starts with celebrating your successes.
- Examine gaps—While success is wonderful, odds are your year has not been perfect. What gaps are you seeing with your strategy and goals? For example, maybe certain marketing promotions didn’t succeed, perhaps there is a significant brand gap or it’s possible your budget numbers are not looking they way your projected them. During this analysis, don’t just identify what the gaps are, but rather why they exist. Making adjustments means examining where you are falling short.
- Study graphs—What are the trends with your credit union or bank? Are you opening more accounts than you are closing? Is loan growth up, down or flat? What about net income and branch performance? This is the perfect time of year to study the first two quarters. You have the data, so examine it. What story does the data tell? Making adjustments means analyzing all the information you have and pulling out nuggets of truth.
- Set a guide—Where do you want to go next? Many financial institutions are going to spend a ton of time in Q3 and Q4 on their strategic plan for next year. This is an ideal time of season to put in place a direction for where you to want to go. This is your roadmap. Your compass. But don’t just think about next year. There are still many days, weeks and months to accomplish this year’s goals. Making adjustments means revising your map.
The year is more than halfway complete. What adjustments are you going to make ensure you end the year strong?
We are now in the dog days of summer, which means many banks and credit unions are thinking ahead about their strategic planning sessions in the fall. As you begin to put together your thoughts and expectations for these critically important days of planning, consider the following questions that may not have come to mind before.
These are questions you should ask of yourself and your strategic planning team before the meeting, so everyone has plenty of time to contribute thoughtful replies. Come to your strategic planning’s table session with the answers to help kick-start a dynamic meeting.
- What is the “elephant in the room” issue no one wants to talk about? Every bank or credit union has at least one, if not more. What is that one issue/challenge of which everyone is aware but about which no one wants to talk? Successful strategic planning sessions require honesty – honest talk and honest answers. For your strategic planning session to be successful, your group must honestly tackle this question (or questions).
- What is the one thing only our financial institution can do for its consumers? In other words, spend some time thinking about that one special thing that only your bank or credit union can do for consumers. And if there isn’t one special thing that only your financial institution can do, that should spur some serious strategic planning discussion.
- What are our consumers’ pain points? This is another tricky question to answer (especially if you’re doing it honestly). Here you are considering every point of consumer interaction with your financial institution (in the lobby, on the phone, via email, during the loan application process, etc.). Chances are, you already have a good idea where the hiccups are in the system from personal experience, listening to your staff or from consumer feedback. Identify these pain points during your strategic planning session and create initiatives to tackle them.
Your strategic planning session must feature an open dialogue in which every participant feels free to air his or her honest answers to questions. Hopefully the three questions discussed here have given you new lines along which to think when it comes to conversations at your next strategic planning session.