By Lisa Hochgraf
Apparently well-known billionaire investor Warren Buffet won't buy a castle if it doesn't have a moat. In saying this, Buffet is speaking figuratively. What he means is that he won't buy a business (a castle) unless it has a value proposition that sets it apart from the competition (the moat) and protects its viability.
John Oliver told this anecdote to attendees of the inaugural CUES Director Strategy Seminar in San Diego yesterday morning to illustrate the importance of boards participating in the development of their CUs' value propositions.
A value proposition is a statement of what makes your credit union different--the reason your members come to you rather than going to the bank down the street, said Oliver, president of Laurel Management Systems, Palm Springs, Calif. Value propositions are generally about being the best at one of three things: product, price or service. And useful value propositions--those that will support setting a credit union's strategy--will be based on broad research, he asserted.
"A genuine competitive analysis has to look at the experience that members get out there in the general marketplace," he said.
To illustrate taking a useful look at the marketplace, Oliver talked about how his daughter needed to buy a textbook that was out of stock at her college's book store. Amazon delivered it the next day. Oliver contrasted this to how member inquiries are handled at some financial institutions. A member can send secure e-mail and, the next day, get confirmation that the message had been received and would be responded to within a few days.
"Step back from your organization (even if your organization is doing great at the moment) to an industry view," Oliver suggested.
And in the process, make sure you have a moat.
Lisa Hochgraf is a CUES editor.
