3 minutes
Lead to it.
This is bonus coverage from “Go Along to Get Ahead,” from the March 2014 issue of CUES’ Credit Union Management magazine.
Rita Gunther McGrath, associate professor at Columbia University and author of The End of Competitive Advantage, offers these suggestions for credit union executives who want to enhance collaboration within and outside their organizations:
- Get out of your office. “I’ve never known an executive who knew their customers too well. Most leaders spend much more time with their staff than with customers,” McGrath notes. “There’s no substitute for seeing how members interact with your credit union and talking with them about what works and doesn’t work. You have to know enough about the member experience so as not to stand in the way of useful innovation.”
- Showcase your own collaborative successes. CEOs can model the gains that are possible when joining forces with colleagues, such as touting a positive regulatory change that results from credit union leaders working together with lawmakers.
- Be clear about the “guard rails” of collaborating outside the credit union. Don’t assume your staff understands the need to protect trade secrets, proprietary information, and the details of initiatives in development. “It’s a good idea to have a discussion about the differences between cooperating and competing,” she says. “You don’t want any confusion between the two resulting in someone giving away the ‘secret sauce’ in an IT development project.”
- Look for opportunities to collaborate in areas unrelated to your competitive advantage. McGrath mentions telecom companies to illustrate this idea: “Maintaining a network has nothing to do with competitive advantage. You don’t marvel when you pick up the phone and there’s a dial tone,” she notes. “Networks are just the utility for providing the service.” In the same way, credit unions can look for shared service models and contracts to reduce costs and streamline operations.
- Study other industries for successful collaborations. McGrath lists just a few interesting examples: IKEA contracts with its suppliers years in advance to reserve capacity for whatever products will be in vogue in the future, as a way to gain supply chain advantages. GE provides asset-based financing for its clients to enhance innovation flexibility to the benefit of both parties. The agricultural cooperative Land o’ Lakes has carved a successful niche in bringing products from individual member/owners’ farms to market.
- Shift your focus from disparate products and services to creating a better total experience for members. This is an area where smaller credit unions may have an advantage in building on their intimate financial relationships with and knowledge of their members, she notes. All departments should be working together to identify how they can improve members’ experiences in managing their personal finances. “Instead of an inside-out approach, take an outside-in perspective in considering how the needs of a young family about to have their first child differ from those of members contemplating retirement.
- Build on the trust you have with members in working together to design new products and services. “One of the things credit unions have going for them is significantly higher levels of trust than, say, banks or institutional investors,” McGrath says. “People still think of credit unions as being on the side of the ordinary person, and that’s a heritage that stands in very good stead. There may be a lot of overlooked values—being authentic, personal, local—that credit unions could do a lot more with through vehicles like social media.
- Hold on to the core values that set credit unions apart as you reach out beyond your base for new members. You may find inspiration in other industries, but adapt it to align with your philosophy. The movement’s history and commitment to member service “is very hard for others to replicate,” she notes. “Don’t leave that behind in the search for shiny new objects. People get enamored with ideas like ‘Let’s do it the way Google does.’ Well, you’re not Google.”
Karen Bankston is a long-time contributor to Credit Union Management and writes about membership growth, marketing, operations, and technology. She is the proprietor of Precision Prose, Stoughton, Wis.
