C. Myblog

Three Practical Ideas For Intentionally Strategic Boards

August 30, 2017

The following article was written by c. myers and originally published in the CUES Professional Development Library on August 14, 2017.

Board governance is a hot topic, as it should be. Effective boards and board members are essential to the success of the credit union industry. And it’s a fact that boards need to continue to evolve to be more strategic as the environment becomes more complex. In the last 10 years, the average credit union asset size has almost doubled, while the number of credit unions over $500 million has increased 80 percent. The resulting growing pains present organizational challenges for boards, just as they do for employees.

As credit unions continue to grow in an increasingly complex and rapidly evolving environment, it is essential that boards do not skim over strategic opportunities and challenges and do not take deep dives into operations.

Many credit union boards have found the following practical ideas beneficial for being intentional about keeping a strategic view:

1.  Rehearse tomorrow today to stay focused on the future

High performing boards are doing more of this. Changes in the environment, especially competition and technology, are coming so fast that boards need to constantly be thinking ahead. This exercise is deceptively simple, but it can build strategic thinking skills while helping position the credit union for the future. All it involves is creating a future scenario and thinking through how the credit union could respond.

For example, the driverless automobile is likely to set off an avalanche of change over time. To explore this more deeply, create a scenario, such as, “It is the year 20xx and X percent of vehicles on the road are self-driving.”

Hint: Use a percentage that is significant enough to push the group’s thinking but not so big that it will be dismissed as inconceivable. Have some questions ready to guide thinking, but also use some open-ended questions. Then ask, “Is there anything we should be doing today to prepare?”

There are many scenarios that challenge credit union business models and make great candidates for rehearsing tomorrow today. In the example above, an institution that is reliant on auto lending should be asking whether driverless automobiles will reduce auto loan demand and, if they will, how the credit union will shift its business model to make up for lost revenue. It’s also important to ask how driverless automobiles could benefit the business model. Thinking in advance about opportunities is as beneficial as thinking about challenges.

The goal isn’t to come up with the “right” answers, but to think through the possibilities. The only wrong answers are those that assume that the scenario will never happen, or that the credit union will magically be fine without coming up with some specifics on what would need to change.

2.  Establish a common understanding of what is strategic and what is not

As a group, create examples of strategic and operational items. This often results in productive conversation that furthers everyone’s understanding. The list can also become a tool to help with onboarding. Another important step is to create working agreements about how the group will handle operational conversations. For example, a working agreement could state that as soon as conversation becomes operational, anyone in the group can interrupt to bring it back to a strategic level. Another working agreement could be that when there is a good reason to dive into operations, the speaker should explain why.

3.  Determine whether the committee structure is contributing to an overly operational board

In the past, for very small credit unions, it might have been appropriate for the board to be involved in some operations. This is extremely rare now, but these types of legacy committees sometimes persist, even though the purpose is no longer appropriate for the board. Review committees with an eye to whether their functions are too operational and make changes, if needed.

There are only so many hours a board member can devote to the credit union. Every moment spent on operations is time taken away from strategy, which is where the board can bring the most value. Boards need to remain ever-mindful of the road ahead and the far horizon, spend a minimum amount of time looking in the rear-view mirror, and provide guidance to management so they can do what they do best.

C. myers is a Phoenix-based firm that has partnered with credit unions since 1991. The company’s philosophy is based on helping clients ask the right, and often tough, questions in order to create a solid foundation that links strategy and desired financial performance.

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