How to Avoid Boiled Frog Syndrome and Get Ahead

If you place a frog in a kettle filled with water that is cool and pleasant, and then you gradually heat the kettle until it starts boiling, the frog will not become aware of the threat until it is too late. The frog's survival instincts are geared toward detecting sudden, not gradual changes.

This story is a warning to stay alert not just to immediate threats within your credit union but how the outside environment is evolving as well — especially economically. Faced with a number of slowly developing trends of today such as "Are we headed out of the recession?" or "Is there another wave setbacks on the horizon?" credit unions will continue to have to work harder to take advantage of any opportunities for top-line growth. To fund these new top-line growth initiatives, they also have to focus on taking waste from their current operations. Credit unions — if they aren't already — are simply going to have to do more with the same or fewer resources. How do they do this? One way is business process improvement.

What Is Business Process Improvement?

Business process improvement is about getting more output from the costs you already have. Cutting costs, by itself, does not necessarily make a process better. In fact, if you don't understand how costs relate to the business process, you can actually decrease many processes' efficiencies.

There are many successful approaches to process improvement: TQM, Six Sigma, Lean, and GE's Work Out. However, the challenge with improving business processes in today's credit union environment is that they are typically organized "vertically" into functions-yet a business process would be mapped "horizontally" across a number of functions. This issue alone can foster a number of communication and cultural barriers to maximizing operational efficiencies. The following information provides an overview for improving business processes and then a new idea for minimizing internal barriers.

Steps for Improving Your Business Processes

  • Determine your business model. How exactly do you earn revenue and where does revenue come from?
  • Create a process map for each of your credit union's core processes. Core processes should reflect the primary way you deliver value to members and still make money for the enterprise. Make sure your process map includes suppliers, inputs, outputs, analytics, and members together to see the overall flow. Clarify boundaries, ownership and effectiveness measures; recognize process sequences; and identify bottlenecks and opportunities for improvement.
  • Use the process map as a communication tool to engage employees across functional areas in identifying and implementing process improvement opportunities.
  • Demonstrate commitment from the executive team by setting disciplined standards and then "inspecting what is expected" through ongoing review of core processes to achieve operational excellence.
Some organizations have created Business Process Portfolios, which are collections of a company's various workflow operations and associated technology solutions. The "custodian" of these portfolios is often the CIO. This individual is typically in the best position to understand how all the "bits and pieces of work and technology" of a business process work together horizontally across the company.

The responsibilities of the Business Process Portfolio Custodian include:

  • Create/oversee Process Portfolios
  • Define costs and performance metrics and determine return on any procedural improvement for each Process.
  • Assess each Portfolio for business impact, dependency, breadth, quality, service level, and process risk.
  • Develop investment strategy. Are investment needs because of a crisis, to monitor and maintain, is it non-critical, or should the organization abandon/ignore the business process?
  • Oversee projects to improve performance.
  • Help the Executive Team prioritize investments based on the business goals.
  • Implement a communication/feedback platform whereby all employees are educated on the core business processes and are engaged in delivering value to the member as stipulated in the process map and overall goals of the organization.
To drive these business process improvements, the custodian or leader must instill top-down performance alignment. Having everything in one fully integrated system developed by leaders throughout the organization builds unifying clarity, a sharp organization-wide focus, a pathway for cross-functional cooperation, and improved time and resource utilization. Everyone is on the same page. It starts with top-down performance alignment. Bottom-up feedback loops provide the credit union's energy, engagement and power. The right people actively working together to achieve a compelling strategy is synergistic. The dialogs at all levels accelerate strategy execution through recognition, reinforcement and learning. They link human behavior with targeted business outcomes. They give everyone skin in the game.

Trust comes from CU-wide consistency. In this type of environment there is a greater acceptance of delegated authority at all levels, which creates faster decisions and shared responsibility in problem solving. When people start working together and see that it is making a difference, you get momentum. And it is the CU-wide momentum around a shared focus that leads to high levels of predictable performance — which ultimately fosters the business process improvements that will enhance your credit union's service and operations.

Don't Be a Boiled Frog

Operational excellence and quality leadership is a constant global quest. Even marginal operating improvements can mean the difference between success and failure. It's time to use business process improvement methods driven by leadership to sustain and improve the performance of your CU and the industry as we emerge from the recession. Incorporating these processes to create a leaner, meaner organization will only make this industry stronger.

So don't be a boiled frog and slowly succumb without even realizing it. It's time to be proactive in improving your business processes to show your members-and prospects-just how solid your financial institution is in today's market. Now's the time.

Jim Cardwell is CEO of the Cardwell Group and can be reached at jcardwell@cardwellgroup.com.