By Barb Kachelski, CAE
Credit unions are great about sharing ideas with each other. In fact, at times, credit unions would do well to look beyond their peers and take a few lessons from the for-profit world. If you should decide to do so, however, stay clear of big business. According to Larry Farrell’s presentation at CUES Symposium 2005: A CEO Chairman Exchange, big businesses have dismal success rates, and statistics from 2000 support his claim:
- 84% of the 100 biggest U.S. companies in 1900 were no longer in existence.
- 70% of the Fortune 500 companies in 1955 no longer existed.
- 70% of the mega-mergers from 1990 were no longer in business.
Farrell’s solution is for credit union leaders to find inspiration from small, entrepreneurial companies. His research shows that entrepreneurs have four things that large companies frequently lack:
1. A sense of mission. Entrepreneurs believe what they do is worthwhile. Farrell showed photos of entrepreneurs next to their companies’ simple missions. For example, Konosuke Matsushita of Matsushita Electric said, “Our duty as a business enterprise is to produce goods that are welcomed by the public.”
2. Customer/product vision. Entrepreneurs identify market needs and develop products with competitive position to fill those needs. Farrell said too often “companies spend too much promoting a product that’s not good to a market that’s too small.”
3. High-speed innovation. “Moving quickly is the entrepreneur’s secret weapon,” according to Farrell. Companies that practice high-speed innovation derive 30% of their revenue from products developed in the last five years, value invention, give responsibility for projects to those who invent them, make the best of mistakes, and encourage daydreaming time.
4. Self-inspired behavior. Entrepreneurial firms seek employees who have a combination of high commitment and high performance. In other words, they like what they do, and are good at doing it. Farrell said the key to fostering self-inspired behavior is the power of consequences. In fact, he believes 65% of performance rests upon consistent consequences for negative or positive outcomes.
In closing, Farrell, founder/CEO of The Farrell Company and author of Searching for the Spirit of Enterprise, encouraged attendees to take five steps to establish an entrepreneur-friendly culture at their credit unions:
- Keep it small.
- Keep it personal.
- Keep it honest.
- Keep it simple.
- Start over with the basics.
Barb Kachelski, CAE, is SVP/chief information officer for CUES.
