Deciding what projects (and innovations) to work on requires knowing what types of initiatives you've got--and how to evaluate them. By Ben Allbee
How can your credit union decide which projects to fund? As my experience at Strategic Innovation Institute I at MIT this August made clear, it's not easy to make the call about what to do--and what not to do--with your resources. During the institute, my classmates and I learned a four-step “aggregate project planning” process designed to aid success with managing an organization's portfolio of projects. Importantly, the process started with identifying projects that were similar. The idea is to have projects compete for funding only against other projects of the same type. This session really drove home the idea that no single metric can be used, in all cases, to compare (and decide about) projects on an apples-to-apples basis. Using net present value or return on investment may work well for comparing derivative projects that add or augment existing offerings. But NPV and ROI are considerably less useful when you attempt to compare breakthrough initiatives. Instead, you may need to look at member value perception, or long-term capabilities and future design options that may be enabled by the project in question. Importantly, we also discussed the “sunk cost fallacy.” This is the idea that just because a project is already underway, or even nearing completion, doesn’t necessarily make it more valuable than a newly identified project. Strategic Innovation Institute I definitely emphasized something most credit union leaders intuitively know: We can't do everything. That means there are choices and decisions that have to be made when it comes to determining strategic direction. So, as credit union leaders, we need to have informed conversations about what trade-offs, choices, and decisions need to be made. That’s what strategy is all about. Ben Allbee, CUDE, is manager/business process office for $2.8 billion Virginia Credit Union, Richmond. Earn your Certified Innovation Executive designation (CIE) by completing both segments of Strategic Innovation Institute and completing the assigned between-segments project. In 2016, Strategic Innovation Institute I will be held at MIT Sept. 25-30. Strategic Innovation Institute II will be held at Stanford University July 31-Aug. 5. Read "Strategic Innovation Institute's 'Red Lens' Gets Magnified."
