It should be no secret to anyone in credit unions that strategic planning is a major focus of regulators, as well as a very necessary process needed to ensure the growth and viability of an institution. Proactive leaders effectively use the strategic planning process to develop and analyze the organization's overall goals and strategies, and document a "road map" for implementation.
If done right, the strategic planning process can be a very effective management tool used to ensure all of the organization's stakeholders understand established goals and work together toward accomplishing them. The strategic plan should guide an institution's leadership as they make strategic decisions related to the future growth of the credit union.
Although strategic planning is a vital management process, it is predicated on the belief that the institution is operating efficiently and is well-grounded and adequately prepared for the execution of the plans and programs contained within the strategic plan. Many strategic plans contain provisions for new branches, new products, member-service strategies, and financial strategies. Most of these initiatives are aimed at achieving three main objectives: improving an CU's income potential, improving member service, and stabilizing the balance sheet. In order to best ensure the maximum effectiveness of any strategic plan initiatives, an organization needs to understand the scope and capabilities of its internal operations.
Assessing From The Inside Out
Assessing an organization from the inside out at regularly planned intervals should be considered a fundamental necessity and an integral part of the strategic planning process. Adding an addition to a house would be an appropriate analogy. The second story addition (the strategic plan) may be well designed, well intended, and very beneficial if executed. However, without a proper analysis of the foundation and support structure (internal operational efficiencies), the addition, no matter how well planned and designed, is doomed for ultimate failure. The same is true with a strategic plan! Without a proper internal analysis, an organization is unable to assess its true capabilities necessary to support the initiatives contained in the strategic plan.
An even more important reason to undertake an internal strategic analysis relates to the ability to identify opportunities to increase income through completing a process analysis of business functions in every department. In most cases, a thorough process analysis will uncover bureaucratic inefficiencies and unnecessary and expensive processes that have been implemented over time. An effective internal analysis allows management to identify internal barriers to efficient operations, whether it is people, unnecessary processes, or unnecessary expenditures. At one organization, I did an analysis on the purchasing/requisition function of the company. The results of the analysis showed that there were 129 individual and distinct steps involved in the requisition process. By identifying each step in the process, I was able to eliminate 108 unnecessary steps. This obviously resulted in a more efficient and effective process. In another case, I was hired to lead an organization and needed an effective method by which to ascertain the effectiveness of each department. The internal strategic analysis proved to be an invaluable tool at identifying the areas that required modification, as well as the areas that were operating at maximum efficiency.
Anyone who has taken the beginning steps to accomplish any kind of internal strategic analysis is keenly aware that there are as many different lenses for analysis as there are consultants who have developed them. One of the better to use in the credit union environment is the McKinsey 7-S analysis model. The main reason for this is the fact that the credit union industry is a "value" driven industry, as exhibited by our mantra, "people helping people" and the McKinsey 7-S model uses shared values as the nexus for all functional analysis. Therefore, while the typical framework consisting of structure, systems, style, staff, skills, and strategy are all analyzed, each is examined based on its relationship to shared values. Because values are such an important element of the credit union business model, the Mckinsey 7-S framework of analysis will prove to be a beneficial tool in carrying out a comprehensive internal strategic analysis.
In addition to deciding on a lens through which to accomplish an internal strategic analysis, an organization should also employ a rational set of objectives for how the analysis will be carried out. The driving principle behind this function is to ensure that the analysis is accomplished in an effective manner that will reflect actual results. In order to ensure this happens, I have developed a strategic analysis model with the acronym, "CHOICE."
Choice stands for: Comprehensive, Honest, Open, Intelligent, Cost Effective, and Executable. These tenets represent the key objectives that should be present in any analysis exercise. Any analysis needs to be comprehensive and all encompassing in order to be relevant. The analysis must be honest, no matter what the outcome may be. The process needs to be open and transparent to everyone in the organization. The analysis and the processes involved in ascertaining information must be done intelligently. The analysis should be conducted in a cost-efficient manner, so that the ends justifies the means. Most important of all, the outcome and resultant initiatives of the analysis needs to be executable.
The major reason to undertake the exercise of doing an internal strategic analysis is to gain an understanding of where the organization truly is in terms of operations and efficiencies. As we all know, organizations grow and in the process of this growth, implement certain operations over time that may prove to be inefficient today. Without knowing it in many cases, organizations and the people within those organizations, take the approach, "we do it this way, because we've always done it this way." I would suggest that this is a paradigm that deserves intense analysis, and the subsequent implementation of appropriate efficiencies.
There is no doubt that strategic planning is an important business tool. However, a strategic planning process that includes a comprehensive internal strategic analysis will prove to be a much more effective method of identifying opportunities for implementing efficiencies and identifying opportunities for growth. In the end, a well executed strategic analysis allows an organization to honestly understand what it does well, while at the same time allowing it to have the opportunity to improve areas of weakness. A good internal strategic analysis can be the solid foundation necessary to carry out a well designed strategic plan!
Tony Emerson is president of the Connecticut Credit Union League. (c) 2008 Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com/ http://www.sourcemedia.com/