Extraordinary Performance is Defined by a Strategic Center of Gravity - Blog

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14Oct

Extraordinary Performance is Defined by a Strategic Center of Gravity

Strategy -  is about making choices, trade-offs; it’s about deliberately choosing to be different.

  • A strategy delineates a territory in which a company seeks to be unique.
  • If your goals are anything that can’t be defined in the success of the business you’ll hit problems.
  • Sound strategy starts with having the right goal!

Michael Porter

 

The time for credit unions is NOW! You can dominate markets and grow by over 13% a year! Yes, that’s right, double your size every 5 to 6 years if you take defined strategic risks and require performance within your organization.

 

BIG Consulting has helped credit unions do the unheard of: Find a center of gravity to replace their competitor’s stock price motivator and, by doing so, change the entire velocity of growth throughout the organization. Creating deep alignment between strategy, financial performance, culture and operations propels top 10% peer performance.

 

Strategy is about focus, winning and alignment. In order to connect those points, a center of gravity needs to be established. Your competitors have theirs – stock price. Every decision is guided by maximizing the value of the company vis-a-via the firm’s financial performance and ultimately its market driven valuation – the price of their stock. It is the ultimate grade and determines success. Everything in the firm is aligned with maximizing valuation. You may not like that idea, but it works really well and is the essence of capitalism.

 

Credit unions have both the distinct advantage and disadvantage of not defining ownership via equity shares. The advantage can be extraordinary, allowing the credit union to plan for the long run, sustaining member value in all economic conditions, and allowing the member to always come first. Never needing to put profit, especially quarterly earnings, before what is best for the member and the organization is a distinct strategic advantage.

 

However, not having market-forced discipline also allows credit unions to be inefficient, horde capital, lose focus and be unaligned in their strategy and operations. How many credit unions do you know who have a strategy that is simply a board and senior team shelf document? A document that is never looked at after the board-facilitated session and where next year’s plan is just a list of projects. Everything lacks urgency. These credit unions meander through the year and are satisfied with peer or below peer growth. Peer growth is just average; is that what you want?

 

How do you build a model that creates a winning growth strategy by combining the best of the for-profit and cooperative strategy priorities? Create a center of gravity to replace stock price!

 

BIG Consulting has helped several credit unions build an aggressive model and create a defined strategy by choosing the right goal (center of gravity). Recently two mid-size credit unions, who are gutsy, determined and visionary, followed our advice. One chose to establish a goal of doubling its loan growth over 5 years and the other centered on asset growth. Both chose to center their focus, eliminate projects that wouldn’t support the center of gravity, and invest in long-term projects like data analytics and digital transformation in order to meet their goals. Two large credit unions have set doubling their asset growth over 5 years as their center of performance. The credit union that I had the honor of leading chose this path and grew from $950 mm to $6B in 15 years. IT WORKS!

 

The simple act of identifying one center of gravity, and the hard process of aligning around it, creates clarity of purpose. It demands corporate change, performance, alignment, communication, cultural change and financial rigor. In leaders it requires transparency, trade-offs, constant learning, and ongoing change. For the organization, a center of gravity creates purpose and a winning attitude.

 

BIG Consulting can help you through this complex but extraordinarily worthwhile process. We will help you achieve top 10% performance versus your peers.

 

Kirk@big-cu.com

 

 

About the Author

Kirk Kordeleski

Kirk Kordeleski

Chief Strategy Officer

Best Innovation Group

Strategy & Growth, Digital Transformation, Lending, Payments

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