Transcript Module I Introduction to Scenario Planning California Credit Union League 2008 Big Sky Conference I-1

Module I
Introduction to
Scenario Planning
California Credit Union League
2008 Big Sky Conference
I-1
Making Decisions
member
membership
me
2
What Is a “Strategic
Plan”?

3
A strategic plan is a set of management
decisions regarding what actions the credit
union will be taking in order to move the
credit union along the path toward the
attainment of its ultimate vision.
Terms/Definitions

Vision.

Integrating gestalt, stretch oriented, guiding
light (direction for the future).
• Example: Kennedy's vision to attain leadership in
space exploration following Soviet's Sputnik
launch. This vision was inspired by geo-political
considerations and military defense needs.
4
Source: Decision Strategies International, Inc.
Terms/Definitions

Mission.

Tangible goals derived from and essential to
the vision. Sometimes the mission statement
also includes values or norms that the
organization strives for.
• Example: Get US astronauts on the moon by end
of 1960s.
5
Source: Decision Strategies International, Inc.
Terms/Definitions

Key Success Factor (KSF).

Critical dimensions of success in achieving
the vision/mission.
• Example: Appropriate propulsion technology using
booster rockets and reliable fuels; possess lunar
landing vehicle.
6
Source: Decision Strategies International, Inc.
Terms/Definitions

Strategy.

Conceptual approach for achieving KSF or
mission.
• Example: Fund R&D in universities to develop
advanced proprietary rocket technology.
7
Source: Decision Strategies International, Inc.
Terms/Definitions

Option.

Concrete implementable alternative to
achieve KSF, strategy, or mission.
• Example: Locate the program in MIT's space
program.
8
Source: Decision Strategies International, Inc.
Terms/Definitions

Action Plan.

Organizational program to implement a
strategic option or strategy (with time lines,
review points, etc.).
• Example: Assign 5 NASA engineers full-time under
leadership of Dr. Smith.
9
Source: Decision Strategies International, Inc.
Terms/Definitions

Budget.

A financial plan to accomplish an action plan
within a certain time frame. The budget may
also include non-financial resources.
• Example: Fund MIT program with $47 million over
5 years.
10
Source: Decision Strategies International, Inc.
Scenario Planning Process
Summary
III. Industry and
Market
Analysis
I.
Introduction
I.
Introduction.
We must be aware of some
common strategic thinking traps,
and embrace a disciplined
strategy process to evade them.
II. External
Environmen
t
V. Strategic
Vision
IV.
Organizational
Self-Analysis
11
Source: Decision Strategies International, Inc.
VI.Strategic
Options
VII.
Implementation
Scenario Planning Process
Summary
II.
External Environment.
What impact will economic, social,
political, technical, and industry
forces have on the business
marketplace and organizational
performance? What are the
important trends and uncertainties
that will shape our future? What
might tomorrow be like?.
III. Industry and
Market
Analysis
I.
Introduction
II. External
Environmen
t
V. Strategic
Vision
IV.
Organizational
Self-Analysis
12
Source: Decision Strategies International, Inc.
VI.Strategic
Options
VII.
Implementation
Scenario Planning Process
Summary
III. Industry and
Market
Analysis
I.
Introduction
III.
II. External
Environmen
t
Industry & Market Analysis.
V. Strategic
Vision
VI.Strategic
Options
VII.
Implementation
Which sectors and segments currently offer the
highest financial return and why? We need to
understand each segment strategically to ascertain
whether and how to compete in it in the future.
IV.
Organizational
Self-Analysis
13
Source: Decision Strategies International, Inc.
Strategic
Planning
Process
IV. Organization
Self-Analysis.
Summary – Pages 17-18
How do we define ourselves as an organization?
How do we explain our history, purpose, and
behavior as a company? What are the resources
and capabilities we possess that provides value to
customers and shareholders? How do we sustain
ourselves in a changing world?
III. Industry and
Market
Analysis
I.
Introduction
II. External
Environmen
t
V. Strategic
Vision
IV.
Organizational
Self-Analysis
14
Source: Decision Strategies International, Inc.
VI.Strategic
Options
VII.
Implementation
V.
Strategic Planning Process
Summary
Strategic Vision.
What is the overall strategic
III. Industry and
Market
direction that will give Analysis
us
competitive success? What
are the
future II.key
success
I.
External
Introduction
Environmen
factors in our
chosen
t
business and markets?
What do we want to be and
IV.
Organizational
accomplish as anSelf-Analysis
organization? Where
should we compete and
how do we want to do it?
15
V. Strategic
Vision
Source: Decision Strategies International, Inc.
VI.Strategic
Options
VII.
Implementation
Strategic Planning Process
Summary
VI.
Strategic Options.
III. Industry and
Market
Analysis
What concrete options will
best enable us to achieve our
strategic vision? Which
strategic initiatives are most
critical at this time? How
should we assess and rank
our strategic options?
I.
Introduction
II. External
Environmen
t
V. Strategic
Vision
IV.
Organizational
Self-Analysis
16
Source: Decision Strategies International, Inc.
VI.Strategic
Options
VII.
Implementation
Strategic Planning Process
Summary
VII.
Implementation.
III. Industry and
Market
Analysis
What steps should be taken to ensure
that strategic initiatives produce their
intended results? How do we sustain
these strategic initiatives? What can be
done to improve our capacity for
performance and innovation? What
specific changes will be needed to
ensure that our strategic vision is
realized?
I.
Introduction
II. External
Environmen
t
V. Strategic
Vision
IV.
Organizational
Self-Analysis
17
Source: Decision Strategies International, Inc.
VI.Strategic
Options
VII.
Implementation
Module I: Overview
II. External
Environment
I.
Introduction
III. Industry and
Market Analysis
V. Strategic
Vision
VI.Strategic
Options
VII.
Implementation
IV. Organizational
Self-Analysis
Purpose:
- To discuss the benefits of strategic planning
- To outline some of the strategic pitfalls in various processes
- To introduce a cohesive six-step planning process
18
Source: Decision Strategies International, Inc.
Encyclopedia Britannica: Top
Performer
Oldest English language encyclopedia
 Published 15 editions over 225 years
 Sales grew 8.1% per year in 1980s
 Record Sales in 1989: $627 million
 Sold 117,000 copies at $1,300 each in 1990
 Profitable in 19 of previous 20 years
 Translated into many foreign languages

19
Source: Decision Strategies International, Inc.
Encyclopedia Britannica I
1.What are the variety of ways one might
describe the business of the Encyclopedia
Britannica?
2.Who are the potential customers and
competitors you might look for if these
different definitions were adopted?
20
Source: Decision Strategies International, Inc.
Encyclopedia Britannica
BUSINESS
 Education
21
COMPETITORS/CUSTS
 Cust: Professors; young,
married w/ children; school
textbook distributors;
students; researchers;
journals; libraries;
magazine publishers
 Comp: Libraries;
magazines; other encyclo
companies; book stores;
Source: Decision Strategies International, Inc.
Encyclopedia Britannica
BUSINESS
 Information / knowledge
22
COMPETITORS/CUSTS
 Cust: Everyone
 Comp: Media-related
industries; Internet
Source: Decision Strategies International, Inc.
Encyclopedia Britannica:
Struggling to Survive…

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



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Emergence of CD-ROM encyclopedia circa 1990
CD-ROM adds graphics, sound, video, etc.
Much cheaper to manufacture and store
Sales dropped 53% from 1990 to 1994
Lacked resources to develop new technology
Competing with Microsoft, Times-Mirror,
Bertelsmann
Management looked for buyer around $450 million
CEO Peter Norton retired in 1995
Source: Decision Strategies International, Inc.
Encyclopedia Britannica II
1.In hindsight, how should the managers at
Encyclopedia Britannica have defined their
business and industry?

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Delivering knowledge
Source: Decision Strategies International, Inc.
Why Great Companies Fail
Corporate arrogance and hubris
 Insufficient attention to weak signals
 Lack of vision and risk taking
 Trapped in yesterday’s business models
 Biases of internal decision processes
 Wrong incentives: short-term & risk averse
 OTHERS:

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Source: Decision Strategies International, Inc.
The Evolution of Strategic




26
Level I: Financial Planning
 Strategy is only implicit
 Budget is primary planning tool
Level II: Forecast-Based Planning
 Multi-year budgets
 Use of forecasting models
 Assumes high predictability
Level III: Strategic Thinking
 Focus on strategic issues
 Dynamic, creative portfolio management
 Explores multiple futures
Level IV: Strategic Management
 Wide-spread strategic thinking capability
 Alignment of visions across units and functions
 Integration of strategy and reward system
Source: Decision Strategies International, Inc.
A Six-Step Approach to Strategic
Planning
MetaScenarios
I.
Introduction
• Strategic Segments
• Customer Analysis
• Competitor Analysis
III. Industry and
Market Analysis
II. External
Environment
V. Strategic
Vision
• Key Success
Factors
VI.Strategic
Options
• Creative Generation
• Option Selection
IV.
Organizational
Self-Analysis
• Core Capabilities
• Values/Culture
• Key Assumptions
27
Source: Decision Strategies International, Inc.
VII.
Implementation
• Plans/Budgets
• Milestones
• Incentives
Benefits of the Six-Step

Overcomes 3 strategy pitfalls
Overconfidence
 Wrong frames
 Confirmation bias

Encourages innovative options that position
the company for multiple futures
 Leads to a concrete, comprehensive vision
 Encourages a balance of learning and
performance

28
Source: Decision Strategies International, Inc.
Strategy Pitfall #1:
Overconfidence
We often don’t know what we don’t know
 We might be very overconfident about key
assumptions in our own industry
 A good planning process challenges
managers who might be overconfident

29
Source: Decision Strategies International, Inc.
Overconfidence is Common
30

“There is no reason for any individual to have a
computer in their home.”
Ken Olson, President of DEC 1977

“With over fifty foreign cars already on sale here, the
Japanese auto industry isn’t likely to carve out a big
slice of the U.S. market for itself.”
Business Week, August 1968

“I think there is a world market for about five
computers.”
Thomas J. Watson, Chairman of IBM 1943
Source: Decision Strategies International, Inc.
Strategy Pitfall #2: Wrong
Frames
Commonly held mental frames often shape
whole industries.
 These beliefs and assumptions can distort
our perception so that we miss what, in
hindsight, should have been obvious.
 Often, these paradigms are unconscious or
so firmly rooted that they are beyond
question.

31
Source: Decision Strategies International, Inc.
Strategy Pitfall #2: Wrong
Frames
We see what we are prepared to see
 People filter out what doesn’t fit
 To see things anew, we need new frames

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Source: Decision Strategies International, Inc.
GM’s Frame (circa 1968)
Key Assumptions...






33
GM is in the business of making money, not cars
Success is the result of rapid adaptation, not
technological leadership
Cars are primarily status symbols: people want to
upgrade
The U.S. car market is isolated from the rest of the
world
Fuel will remain cheap and abundant
The government is an enemy and so are unions
Source: Decision Strategies International, Inc.
Credit Union Industry Frames
1.
What are some of the mental models and
assumptions people within your credit union
might use to describe your industry? What
metaphors are often used to describe your
business?




34
Source: Decision Strategies International, Inc.
Credit Union Industry Frames
1.
What are some of the mental models and
assumptions people within your credit union
might use to describe your industry? What
metaphors are often used to describe your
business?




35
Source: Decision Strategies International, Inc.
Credit Union Industry Frames
2. What are some of the relevant issues that
these mental frames illuminate and hide?







36
Source: Decision Strategies International, Inc.
Credit Union Industry Frames
2. What are some of the relevant issues that these mental frames
illuminate and hide?
 Profitability is irrelevant
 We should not fee for services
 Don’t know who our competition is
 We have to sell to survive / thrive
 Members are customers too
 It’s a risky business / risk = reward
 We MUST make money to continue in business
 Eggs in one basket never works
 Loyalty must be earned
 False sense of security
 One size fits all is a lie
 Education inflates our sense of self-worth
37
Source: Decision Strategies International, Inc.
Credit Union Frame (Today)
Key Assumptions May Include...
 Member knowledge continues to improve
 Baby boomers redefine aging and retirement
 Credit union consolidation continues in the US
 Expanded fields of membership continues
 Non-bank financial services providers increase
share
 Credit unions increasingly embraced as “trusted
mediators”
 Internet banking increases
 Telephone banking increases
38
Source: Decision Strategies International, Inc.
Credit Union Frame (Today)
Key Questions May Include...
 Will credit unions enjoy an increasing share of
wallet?
 Will new channels of distribution proliferate for CU?
 Will the economy experience a significant downturn?
 Will credit unions be taxed in the United States?
 Will most Americans have Internet or broadband
access?
 How much will credit union member loyalty go
down?
 Will credit union car loan volume see a major
decrease?
39
Source: Decision Strategies International, Inc.
Strategy Pitfall #3:
Confirmation Bias
We mostly seek to confirm our beliefs
 People rarely seek to disconfirm their beliefs
 A proper balance of confirmation and
disconfirmation is necessary to properly
address an issue

40
Source: Decision Strategies International, Inc.
Confirmation Bias


41
Most of us have a natural tendency to favor data that confirms
our current beliefs and to dismiss evidence that would challenge
them.
James R. Emshoff and Ian I. Mitroff, two professors working at
the Wharton Applied Research Center in the mid 1970’s, studied
strategy formulation in America’s largest companies. In dozens
of companies, they found well paid executives simply using the
latest sophisticated computer information systems to produce
data supporting the strategies they had already decided to adopt.
“The key issue isn’t getting the right facts but challenging the
right assumptions,” they noted.
Decision Traps, pp. 75-76
Source: Decision Strategies International, Inc.
Confirmation Bias
1.What are some of the most cherished beliefs
in credit unions? In what ways do we
“confirm” these beliefs?
2.What are some disconfirming questions that
might be used to challenge and falsify these
assumptions if they are, in fact, incorrect?
42
Source: Decision Strategies International, Inc.
Encouraging Innovative
Thinking
Strategic
Alliance
Process Innovation
By-Passing Normal
Distribution Channels
Breakthrough
TQM
New Product
Launch
Process
Reengineering
Incremental
Product Line
Extension
Outsourcing
Signing on a
New Dealer
Cost Reduction
(Existing Business)
43
Revenue Enhancement
(New Business)
Source: Decision Strategies International, Inc.
Encouraging Innovative
Thinking at One CU
Act as Intermediator for
all Member Business
PC Banking
Breakthrough
Off-Balance Sheet
Lending
Performance
Management System
Pioneer Plus Program
Diversify Service
through CUSO
Fee for Service
Reward System
for Employees
Fully Licensed Staff
Wealth Management
Member Card
Launch/P.O.S.
Outsourcing
Non-Core Items
Incremental
Mergers
Review Service
Charge Fees
Traditional Cost
Controls
Cost Reduction
(Existing Business)
Existing Business Strategy
44
Commercial
Lending Dept.
Financial Planning
Dept.
Traditional
Product Launch(s)
Look at Conditional
Sales Contract
Network
Strategic
Alliances
General
Insurance
Subsidiary
Revenue Enhancement
(New Business)
Innovative New Business Strategies to Investigate/Implement
Source: Decision Strategies International, Inc.
A Concrete, Comprehensive
Vision
Educational Employees Credit Union
Educational Employees Credit Union’s
vision is to be the most valued, respected
and progressive provider of financial
services to all educational employees and
their family members within our field of
membership
45
Source: Decision Strategies International, Inc.
A Concrete, Comprehensive
Vision (con’t)
Educational Employees Credit Union
How to get there:
 We expect to move from our present to our future set of core
competencies through the following actions:
 Develop diverse delivery systems
 Ability to respond rapidly to changing market needs
 Speed of service
 High motivated and knowledgeable staff - culture change
 Global access to information infrastructure on members
 Sales culture based on market segmentation
 Value added products and service through pricing and product
differentiation for: Seniors, Generation X’ers, Low income
households, and high-end baby boomers
46
Source: Decision Strategies International, Inc.
A Concrete, Comprehensive
Vision (con’t)
Educational Employees Credit Union
How to get there:
 Example: Ability to respond to rapidly changing
market needs.

Action Steps
• Assign projects to project leaders or develop crossdepartmental project teams
• Give individuals or teams working on implementation
authority to act autonomously and make major decisions
related to implementation
• Designate a person who’s primary or only function is to
research and report on upcoming automation and its
potential usage
47
Source: Decision Strategies International, Inc.
A Concrete, Comprehensive
Vision (con’t)
Educational Employees Credit Union
How to get there:
 Example: Ability to respond to rapidly
changing market needs.

48
Impact: Faster delivery of new products/
services would allow us to compete in the
increasingly competitive financial services
environment. It is also one way of ensuring
member loyalty by being responsive to their
financial needs.
Source: Decision Strategies International, Inc.
Six Step Process Balances
Learning and Performing
Performance Organization
 Internally oriented
 Focused on making the
numbers
 Rewards consistency
 Dislike of ambiguity and
deviations
 Rule and procedure
oriented
49
Learning Organization
 Inquisitive and
externally focused
 Experimental and
innovative
 Shares information:
fluid
 Rewards risk-taking
 Relies on crossfunctional teams
Source: Decision Strategies International, Inc.
Balanced Emphasis
LEARNING ORGANIZATION
Strong
Strong
PERFORMANCE
ORGANIZATION
50
Weak
Weak
Microsoft
IBM (1980s)
Rubbermaid
Electric Utilities
Hewlett-Packard Western Union
Philips
Digital Equipment
Electronics
Credit Lyonnais
Apple Computer GM (in the 70’s)
FedEx (Europe)
Source: Decision Strategies International, Inc.
How Firms Respond When
Facing Adversity
1. Cost Reduction


Downsizing
Out-sourcing
2. Process Reengineering


Faster and better service
Horizontal organization
3. Reinvent the Industry

(CNN; Wal-Mart; Enron; Apple)
4. Reinvent the Company

51
(Disney; Nike; Xerox; HP)
Source: Decision Strategies International, Inc.
Learning Organizations
How innovative is your CU?
 Consider all projects submitted for funding by your
CU over the past five years. Assess for each one
(on a scale from 1-10):
1.
2.

52
What was the project’s basic intent: to save money
(efficiency) or to create new revenue?
How innovative was this project: conventional or
path-breaking?
Now plot all these projects on a grid of the type
shown on Powerpoint slides (with the oval size
proportional to the investment involved).
Source: Decision Strategies International, Inc.
Encouraging Innovative
Thinking
Breakthrough
Incremental
Cost Reduction
(Existing Business)
53
Revenue Enhancement
(New Business)
Source: Decision Strategies International, Inc.
Learning Organizations

How well-balanced is your organization in its
portfolio of strategic initiatives? Consider as
well the major innovations in your industry.
Where does it rank compared to other
industries?

Some major innovations in the credit union
and banking industry:
•
•
•
•
54
ATMs
PC banking
Debit cards
Next????
Source: Decision Strategies International, Inc.
Strategic Planning Process
Summary
III. Industry and
Market
Analysis
I.
Introduction
II. External
Environmen
t
V. Strategic
Vision
IV.
Organizational
Self-Analysis
55
Source: Decision Strategies International, Inc.
VI.Strategic
Options
VII.
Implementation
A Learning Model
Highlight why current
values and beliefs are
dysfunctional
Offer alternatives
that appear to
improve the situation
• POW’s harsh treatment / reprogramming
• Novice nun initiation rites
• Strategic planning creates
discomfort
• Explain Communist
ideology to POW’s
• Argue case for salvation
and eternal grace
• Logic of new visions
Sources: Kurt Lewin; Edgar Schein
56
Source: Decision Strategies International, Inc.
Reinforce new beliefs and
values through rewards
and punishment
• Rewards for POWs who
switch/ defect
• Admission into sacred
community with rituals
• Committing resources to new
strategic options
Module II
External Environment
Module II: Overview
External Environment considers:
- long term trends
- key uncertainties
II. External
Environment
I.
Introduction
III. Industry and
Market Analysis
V. Strategic
Vision
IV. Organizational
Self-Analysis
58
Source: Decision Strategies International, Inc.
VI.Strategic
Options
Output:
Multiple scenarios
tailored to your
credit union
VII.
Implementation
External Environment
Objectives:
To sketch out strategically different futures
your credit union may face. The focus here is
on external forces beyond your control and
your perceptions of them.
To challenge existing mindsets and develop
comprehensive alternative views of the future.
59
Source: Decision Strategies International, Inc.
Understanding the External
Environment
Does your credit union explore the external
environment comprehensively or piecemeal?
 What tools or approaches does it use?
 What are the strengths and weaknesses of
these tools?
 What are the most relevant issues in the
external environment that are likely to impact
your credit union?

60
Source: Decision Strategies International, Inc.
Signs You Don’t Grasp the
External Environment
Continuously blindsided by external events
 Focused on organizational and other internal
issues
 Don’t understand member behavior
 Reacting to external events (rather than
anticipating them)
 Lack a vision of the future

61
Source: Decision Strategies International, Inc.
Challenges to Understanding
Future External Environment
Your credit union may lack a sound process
for identifying blind spots
 Adverse external change causes your credit
union to focus on the present, just to keep
pace
 No vehicle for generating new perspectives
 No mechanism for integrating diverse
perspectives

62
Source: Decision Strategies International, Inc.
Benefits of Understanding
the External Environment
Allows you to take advantage of change &
discontinuities
 Prevents you from making poor investments
 Broadens your market perspectives
 Improves your strategic options & decisions
 Aligns your strategy with the outside world

63
Source: Decision Strategies International, Inc.
Building Comprehensive
Views of the Future

64
Among the many tools a manager can use for
strategic thinking, Scenario Planning stands
out for its ability to capture a whole range of
perspectives and possibilities in rich detail.
Source: Decision Strategies International, Inc.
The Scenario Method


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65
A Scenario is a richly detailed portrait that describes the salient
features of one possible future environment. The potential
futures for most business environments can usually be
satisfactorily examined with three or four alternatives scenarios.
Everyone uses some mental frame when imagining the future.
Scenario planning deliberately surfaces and examines these
alternative perspectives to gain a more comprehensive and
realistic view of future possibilities.
Scenarios can be used to evaluate how robust current strategies
might be in different future environments. They can also
stimulate the search for new, more resilient and reliable strategic
options.
Source: Decision Strategies International, Inc.
Number of Possible Future Worlds
Scenarios
S1
S5
S2
S3
S6
S4
Future
Present
Scenarios combine existing trends and key uncertainties into a few future
worlds that are internally consistent and within the realm of the possible. The
purpose of these scenarios is not to cover all eventualities, but to discover the
boundary zone of future outcomes and to expand management’s thinking
horizon.
66
Source: Decision Strategies International, Inc.
Scenario Planning: The
Ground Rules
Anything and anyone can be challenged
 Every “fact” has multiple interpretations
 Conflict (among ideas, not people) is
encouraged
 Flexibility and creativity in thought is
rewarded
 A disciplined process is required

67
Source: Decision Strategies International, Inc.
About Scenarios





68
Scenarios aim to expand our awareness about
the future
The value of scenarios lies in the insights they
yield
Scenarios are not predictions--but possibilities
Scenario planners assume the future cannot be
accurately predicted and that trying to do so may
be damaging
Scenarios have proved to be a practical means
of introducing uncertainty into the strategic
process
Source: Decision Strategies International, Inc.
About Scenarios
(continued)
69

Scenarios are intended to push the envelope of
possibilities that we may not have considered before
or had taken seriously.

They should challenge tunnel vision and make you
look at the radar screen to see what things are out
there shaping the future… YOUR FUTURE!!

There are no good or bad scenarios, per se.

How you react to them is most important!
Source: Decision Strategies International, Inc.
Overview of the Scenario Building
Process
Determine the
Scope of the
Scenarios
Determine Important Issues
& Gather Information
Identify the Dominant
External Forces
Determine Trends and
Key Uncertainties
70
Source: Decision Strategies International, Inc.
Develop Detailed
Scenarios
Step One: Determining the
Scope
A. Define time frame

Influenced by rate of technological change,
product life cycles, competitors, strategic
thinking capability
B. Establish boundaries of analysis

Geography, products, markets, technology
C. Identify key stakeholders

71
Industry players, customers, suppliers, new
entrants
Source: Decision Strategies International, Inc.
External Environment
Summary
Main Trends
Setting
Stage &
Scope
72
Gathering
Information
Identifying
Forces
Building Scenarios
Creating a
2x2 Matrix
Key
Uncertainties
Source: Decision Strategies International, Inc.
Blue
Print
Snapshots
Scenario
Drivers
Stage and Scope at Your CU

Time Frame

73
Source: Decision Strategies International, Inc.
Stage and Scope at Your CU

74
Boundaries – External

Boundaries – Internal


















Source: Decision Strategies International, Inc.
Stage and Scope at Your CU

Boundaries – External








75
Field of membership
Charter / credit union
Regulation / guidelines
Technology
Capitalization
Liquidity
Talent pool
Rates

Boundaries – Internal




Internal policies /
guidelines
Organizational
structure
Talent pool
Liquidity
Source: Decision Strategies International, Inc.
Stage and Scope at Your CU
Federal Credit Union

Stakeholders

Members






76
Source: Decision Strategies International, Inc.
Stage and Scope at Your CU
Federal Credit Union

Stakeholders







77
Source: Decision Strategies International, Inc.
Overview of the Scenario Building
Process
Determine the Scope
of the Scenarios
Determine Important
Issues & Gather
Information
Identify the Dominant
External Forces
Determine Trends and
Key Uncertainties
78
Source: Decision Strategies International, Inc.
Develop Detailed
Scenarios
Step 2: Determining Important
Issues & Gathering Information
If you could ask the mythical Oracle of Delphi
only three questions about the external
environment in the future, what would they
be?
 What resources might you use to gain new
insights about these and other questions?

79
Source: Decision Strategies International, Inc.
Step 2: Determining Important
Issues & Gathering Information
A. Identify issues that will have strategic
relevance to you (to focus on)
What three questions would you like
answered about the future?
 Identify types of information that could help
your credit union strategically.

• What information would help you evaluate present
strategies and develop viable alternatives for the
future?
• Look at the past and think about what you wish
you could have known then that you know now.
80
Source: Decision Strategies International, Inc.
Step 2: Determining Important
Issues & Gathering Information

Three Oracle of Delphi Questions



81
Source: Decision Strategies International, Inc.
Step 2: Determining Important
Issues & Gathering Information

Resources
Resources








82












Source: Decision Strategies International, Inc.
Overview of the Scenario
Building Process
Determine the Scope
of the Scenarios
Determine Important Issues
& Gather Information
Identify the
Dominant
External Forces
Determine Trends and
Key Uncertainties
83
Source: Decision Strategies International, Inc.
Discuss Detailed
Scenarios
Step Three: Identifying
Forces


Forces: Current or future developments that are
likely to influence Your CU in the future
List the most important forces (from 5-25)
Consider economic, political, social,
technological, industry
 Be sure forces are listed at a similar level of
abstraction / detail
 Formulate your forces directionally (e.g. “an
increase in…” and focus on fundamental
drivers, not just the symptoms)

84
Source: Decision Strategies International, Inc.
Step Three: Identifying
Forces








85
Source: Decision Strategies International, Inc.
Overview of the Scenario
Building Process
Determine the Scope
of the Scenarios
Determine Important Issues
& Gather Information
Identify the Dominant
External Forces
Determine Trends
and Key
Uncertainties
86
Source: Decision Strategies International, Inc.
Discuss Detailed
Scenarios
Step Four:
Determine Trends and Uncertainties
High
Importance
Trends
Uncertainties
Low
Low
High
Unpredictability
• Trends are defined as those forces that are important and highly predictable
• Uncertainties are defined as those forces that are important yet have a highly
unpredictable outcome
Proposed Trends
Trends are concrete forces that are important to our business
and that we believe are likely to occur. In general, we’re willing
to bet our Your CU’s strategy on these trends ...
Trends identified:
 Example: The level of member technology
sophistication and usage will increase
88
Source: Decision Strategies International, Inc.
Proposed Trends








89
Source: Decision Strategies International, Inc.
Proposed Uncertainties
Uncertainties are concrete forces that are important to our
business and whose outcome is highly unpredictable. In general,
these are important guideposts, but we should be prepared for
them to play out in different ways.
Uncertainties identified:
 Example: The economy will change
dramatically
90
Source: Decision Strategies International, Inc.
Proposed Uncertainties








91
Source: Decision Strategies International, Inc.
Overview of the Scenario
Building Process
Determine the Scope
of the Scenarios
Determine Important Issues
& Gather Information
Identify the Dominant
External Forces
Determine Trends and
Key Uncertainties
92
Source: Decision Strategies International, Inc.
Discuss
Detailed
Scenarios
Step Five: Developing
Detailed Scenarios
A. Constructing a 2x2 Matrix


93
Select the two most important uncertainties

Ex:Technology

Ex: Credit Union Industry Environment
Define two outcomes for each

Ex: Technology: Moderate / Radical

Ex: Industry: Moderate / Radical

Place them in a two-by-two table

Provide titles for each cell
Source: Decision Strategies International, Inc.
Step Five (A): Your CU
CREDIT UNION INDUSTRY
94
MODERATE
TECHNOLOGY
MODERATE
RADICAL
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Source: Decision Strategies International, Inc.
Step Five (B): Build a
Scenario Blueprint

Using the uncertainties from earlier, assign
outcomes to each of the scenarios by setting
up a grid in which:
Columns are scenarios
 Rows are key uncertainties

Play out each uncertainty in a way that best
fits that scenario
 Add the main trends (which apply to all
scenarios)

95
Source: Decision Strategies International, Inc.
Building a Blueprint
Business As Usual
Forces
Scenario 1:
Scenario Name
Scenario Opportunities
U1
Moderate change
Continued loan growth / liquidity constraints
U2
Moderate change
Upgrade core system (scenario insensitive)
U3
Moderate change
U4
No significant change
Rejoin League / individual activism
- banker attacks continue (state level)
U5
Stable work force
1) Increasing pool of qualified staff
- Maximize benefits of average
2) Demographic changes drive higher costs
tenure increasing
U6
Continued enhancements
Upgrade delivery systems / branch expansion
U7
Status quo
1)Development of business to business relationship
2) Pick up other Kaiser facilities as SEGs
U8
Few new meaningful changes
Implementation of member business services
- continued refinement (competition driven)
U9
Trends
96
Moderate change
Penetration into sponsor group
All
Source: Decision Strategies International, Inc.
Definition of Scenario 1
SCENARIO NAME



Status quo – there will be changes, but at a
controllable rate
Economy grows (declines) at a steady rate – stable
environment (2-4% annual change)
Field of membership expansion through existing
opportunities / methodology





97
Continuing migration to community charters (1020/year)
No taxation
Credit union model holds
“Normal” contraction of the industry
Continuing banker attacks (state level)
Source: Decision Strategies International, Inc.
Definition of Scenario 2
SCENARIO NAME








98
Source: Decision Strategies International, Inc.
Definition of Scenario 3
SCENARIO NAME








99
Source: Decision Strategies International, Inc.
Definition of Scenario D
SCENARIO NAME








100
Source: Decision Strategies International, Inc.
Module III
Industry and
Market Analysis
Module III: Overview
II. External
Environmen
t
I.
Introduction
III. Industry and
Market Analysis
V. Strategic
Vision
VI.Strategic
Options
VII.
Implementation
IV.
Organizational
Self-Analysis
Industry and Market Analysis
- strategic segments
- customer analysis
- competitor analysis
102
Source: Decision Strategies International, Inc.
Output:
A segmentation
scheme tailored to
your credit union;
competitive insight
Understanding the Industry
and Market
Does your credit union examine its products
and customers in a strategic way ?
 How and why does it do this?
 What are the strengths and weaknesses of
this approach?
 Can you identify your most profitable
products and / or markets?

103
Source: Decision Strategies International, Inc.
Understanding the Industry &
Market
How we define our business determines our
ability to recognize customers and competitors as
well as opportunities and threats
What?
Customer Functions / Products
How?
Activities & Technologies
104
Source: Decision Strategies International, Inc.
Who?
Customer Groups
Signs You Don’t Understand
the Industry & Market
Products are developed to be “all things to all
people”
 Can’t identify your most profitable customers
 Can’t identify your most profitable products
 Being “cherry-picked” by competitors
 Don’t understand customer or competitor
behavior

105
Source: Decision Strategies International, Inc.
Benefits of Understanding
the Industry & Market
Allows you to choose battles more effectively
 Focuses resources on “strategic” initiatives
 Lets you serve your customers better
 Allows you to launch / maintain profitable
products
 Improves strategic decisions
 Aligns your strategy with the outside world

106
Source: Decision Strategies International, Inc.
Industry and Market Analysis
Objective: To recognize why and how various segments
in your industry differ in their strategic value to you.
This means better understanding your customers,
competitors and each segment’s key success factors.
Comprehensive and well-defined industry analysis makes
it easier to recognize strategic segments with high versus
low profit potential. It becomes possible to evaluate
various segments based on their overall attractiveness
rather than one or two vivid factors that may distort the
full picture of potential hazards and opportunity.
107
Source: Decision Strategies International, Inc.
Industry and Market Analysis

The Key Insights will be:




Key Challenges:


108
A strategic segmentation of your business.
A better descriptive analysis of each segment,
especially regarding customers, competitors and
partners.
A deeper understanding of each segment’s strategic
structure and value creation potential.
Only fight battles you can win -- ignore bad segments.
Different strategic segments require different battle
plans.
Source: Decision Strategies International, Inc.
Overview of Industry and Market Analysis
Identify Strategic
Segmentation Criteria
Develop a
Segmentation Matrix
Select Strategic
Segments
Analyze Segments
Deeper Strategic
Analysis of Segments
109
Source: Decision Strategies International, Inc.
Business Segmentation
Schemes
Traditionally, industries have been segmented by:
 Product
 Distinguish products sold to same market
 Market
 Focus on end user
 One product satisfies customer groups differently
 Product-Market
 Different strategies for each segment
 Increased management complexity
 Geography Segments
 Different strategies for each distinct region
 Loses sight of main objective: to gain competitive advantage
110
Source: Decision Strategies International, Inc.
Strategic Segmentation

Strategic segmentation goes beyond traditional business
segmentation. It attempts to highlight and delineate the
important but essentially different battlefields the firm is or might
be competing in. This involves analyzing a particular industry
through a variety of lenses to understand the competitive
dynamics in current business segments and discover potential
opportunities and dangers in the surrounding segments.

Strategic segmentation seeks to move beyond the limits of any
one individual frame and uses multiple frames to understand the
challenges and potential present within an industry. After a
thorough analysis from many perspectives it is possible to
develop a comprehensive assessment of each segment’s value.
111
Source: Decision Strategies International, Inc.
Strategic Segmentation


Combines multiple dimensions of competition
Focuses on important strategic segments




112
Exhibit strategic similarities within segments
Differentiate strategically among segments
Different strategic segments represent different
battlefields, each with its own rules and competitive
strategies
Each segmentation map is a simplification: it
distorts (like any map) to bring out the salient
features and suppress detail
Source: Decision Strategies International, Inc.
Step One: Identify Possible
Strategic Segmentation Criteria
Segment the industry or sector along the
following dimensions:
in terms of products and services currently
offered by yourself and others;
 in terms of major market segments (i.e. major
customer groupings);
 in terms of distinct geographic segments;
 explore other segmentation criteria to develop
yet other segmentation lenses.

113
Source: Decision Strategies International, Inc.
Your CU Criteria and
Categories

Products/Services: Lending Products, Investment Products,
Convenience Products, Relationship Products, Alliances, PC Banking,
Financial Counseling, Debit/Credit Cards, Automated Services, Branch
Services

Market Segments: Credit Driven, Upscale, Middle Market, Middle
Income Depositor, Fee Driven, Low Income Depositor (Age / Income /
Balance & Mix (Profitability))

Geographic Segmentation: Local (9 Bay Counties), Regional
(Northern/Southern California), State, National, International

Other Criteria: Select Employee Groups, Channel Usage
(Technological, Traditional, Multi-Channel) User, Consumer Services,
Commercial Services, Cultural (Hispanic, Asian, etc.) , Education, Life
Stage/Life Style
114
Source: Decision Strategies International, Inc.
Step Two: Develop A
Segmentation Matrix
Select the two most strategic criteria -- those
dimensions that most differentiate the various
competitors and products
 Build a segmentation matrix
 Complete cells with relevant information
 Combine cells that are too similar
 Define and describe your segments

115
Source: Decision Strategies International, Inc.
Segmentation Matrix for Your CU
Life Stage / Life Cycle **
Financial
Products
and
Services
Mix
Middle Mkt / MID Upscale
$1 (45%)
$94.2 (17%)
Credit Driven
$128.7 (16%)
Fee Driven / LID
<$5.2> (15%)
Lending
Products &
Services
HELOCs
Automobiles
Mortgages
Gold/Plat cards
Mortgages
Platinum cards
HELOCs
Automobile (new)
Automobiles
Mortgages
Platinum cards
Home equity loans
Automobile (used)
Unsecured LOC
Credit cards
Investment &
Deposit
Products &
Services
IRAs
Term certificates
Money markets
Mutual funds
Annuities
Checking
Term certificates
IRAs
Money markets
Mutual funds
Annuities
Checking
Term certificates
Checking
Convenience
Products &
Services
(Delivery)
Direct deposit
Debit cards
MOM
Online banking
Branch
ATMs
Online banking
ATMs
Direct deposit
Branch
Online banking
MOM
Debit card
ATMs
Drive-ups
Debit cards
ATMs
Drive-ups
Relationship
Products &
Services /
Alliances
Sharebuilder
FOLIOfn
Insurances
Estate planning
Sharebuilder
FOLIOfn
Insurances
Estate planning
Balance (credit
counseling)
MBI / Gap
CLCD
Balance
MBI
Gap
** Undetermined impact of member business services
Step 3: Analyze Segments

Gather relevant information for each segment






Profile customers




117
Market size and share
Products and services
Competitors and their strategies
Distribution channels
Suppliers, regulators, unions, etc.
those seeking ease in transactions
those seeking wealth accumulation
those seeking financial advice, etc.
Perform profitability analyses
Source: Decision Strategies International, Inc.
Analyzing Segments
Middle Market / Middle Income Depositors (45%)
Descriptive Analysis
Products &
Services Offered
HELOCs; Automobiles; Mortgages; Gold/Platinum Cards; 2nd Mortgage
IRAs; Term Certificates; Money Markets; Mutual Funds; Annuities; Checking
Types of Members
Encountered
Age: MM 43; MID 60
Income: MM $61k; MID $54k
Distributors and
Channels
Direct deposit; Debit cards; MOM; Online banking; Branch; ATMs; Call Center
Major Players:
Competitors
Washington Mutual; Bank of America; Wells Fargo; Their CU;
Complementors
Personal Trust; Insurance (Life, Property & Casualty, etc.); Sharebuilder;
FOLIOfn; Estate planning
Other Important
Factors
As this group ages, they shift from key loan to key depositor segments
Ability (proven) to migrate segments into electronic/remote services and
delivery
Duration: MM: 8.2 yrs
MID: 13.5 yrs
118
Avg Deps: MM $6.1k; MID $12.5k
Avg Loans: MM $21k; MID $15.8k
Source: Decision Strategies International, Inc.
Analyzing Segments
Basic Competitor Analysis
Major
Competitors
Our Credit
Union
Washington
Mutual
Key Elements in
Their Strategic
Vision
Profitability
Lending growth
Important
Strategies
Relationship
development
HELOCs/Mtgs
Risk-based
pricing
Non-int income
Convenience
Mortgages
Home equities
(Visa access)
Consumer
Core
Capabilities
Service
Real estate
solutions
Convenience
Important
Strategic Assets
Online loan app
(not RE)
Multi-branch
Extensive ATMs
Performance
Indicators
119
4
3
Bank of
America
Wells Fargo
Mortgage refis
Home equities
Automobiles
Commercial
Cross-selling
Credit cards
Mortgages / HEquities
Commercial
Technology
Response speed
Technology
Response speed
1
Source: Decision Strategies International, Inc.
2
Analyzing Segments
Gap Analysis
Middle Market / Middle Income Depositors
Poor / Weak
Good / Excellent
Our CU
Legend:
Our CU
BoA
WAMU
WF
TCU
120
BoA
TCU
WAMU
WF
= Your CU
= Bank of America
= Washington Mutual
= Wells Fargo
= Their CU
Source: Decision Strategies International, Inc.
Analyzing Segments -- TakeAways




121
There are multiple ways to define and
analyze segments: choose an approach that
meets your credit union’s needs
Information gathering can be challenging:
false assumptions are often made
Be sure information is available (or can be
generated) for the segmentation scheme you
choose
Focus on the forest -- not on the trees
Source: Decision Strategies International, Inc.
Step Five (A): Evaluate the Forces
of Competition for Each Segment
Buyers
Suppliers
Government
Action
Value
Created
Intensity of
Competition
Potential
Entrants
Other Products
or Services
(Substitutes)
122
Source: Decision Strategies International, Inc.
Source: Michael Porter
One Credit Union’s
Segmentation

Segment – Middle Market / Middle Income
Depositors
Buyers:
 Substitutes: Service Kiosks, E-Mail, Audio
Response
 Suppliers: Banks, S&Ls, Credit Unions,
Insurance Companies, Mortgage Companies,
Auto Dealers
 New Entrants:
 Rivals: Banks, S&L’s, Credit Unions

123
Source: Decision Strategies International, Inc.
Step Five (B): Strategic Coopetition
Competitors: Customers
value a product less when
they have the other player’s
product than when they
have yours
CUSTOMERS
Toys “R” Us, Walmart
COMPETITORS
Atari, Commodore
(hardware)
Complementors: Customers
value a product more when
they have the other player’s
product than when they have
yours alone
NINTENDO
SUPPLIERS
Ricoh, Sharp (microships),
Marvel, Disney (game characters
Nintendo
Example
COMPLEMENTORS
Acclaim, Electronic
Arts
(software)
Understanding Added Value
YOUR ADDED VALUE
=
The size of the pie when you are in the game
MINUS
The size of the pie when you are out of the game
How do you assess Added Value:
Put yourself in the shoes of the other player
to assess how valuable you are to them
Source: Brandenburger and Nalebuff: Coopetition
125
Source: Decision Strategies International, Inc.
Business Examples of
Co-opetition




126
GM, Goodyear and others set up Lincoln Highway
Association to catalyze coast-to-coast US Highways
Michelin Tire Company creates Michelin Travel
Guides in France and then Europe to stimulate
driving
Intel’s Pentium Pro will offer full-screen video (24
fps): $100 Million investment in Proshare with
phone companies offering ISDN, and Compaq to
add it onto business PCs
Cable companies got started by complementing
broadcast TV to extend their reach; now they
compete (HBO, CNN, MTV, QVC, etc).
Source: Decision Strategies International, Inc.
Strategic Co-opetition
Savvy players ask two key questions:
 How can the segment pie be enlarged?
 How can we increase our slice of the pie?
They think both competition and cooperation.
Who are the major complementors for:
 Credit Unions
 Brokerage Houses
 Credit Card Companies
The new reality of business is that any given organization can
be your customer, rival, supplier or complementor. A prime
example is Microsoft.
127
Source: Decision Strategies International, Inc.
Important Reminders About
Understanding Your Industry &
Market
Segmentation should broaden the way you
think about products and markets
 Analysis should be conducted to answer
strategic questions
 Learn to think differently: new strategic
decisions will result from this process

128
Source: Decision Strategies International, Inc.
Industry & Market Analysis
Summary
Optional
Define
Business or
Industry
Develop
Segmentation
Criteria
Create
Initial
Segments
Analyze
Segments
Descriptively
Create a
Segmentation
Map
Conduct
Deeper
Analysis
Forces of
Competition
129
Source: Decision Strategies International, Inc.
Co-opetition
Analysis
Module IV
Organizational SelfAnalysis
Module IV: Overview
II. External
Environment
I.
Introduction
III. Industry and
Market Analysis
V. Strategic
Vision
VI.Strategic
Options
VII.
Implementation
IV.
Organizational
Self-Analysis
Organizational Self-Analysis
surfaces - core capabilities
- values / culture
- key assumptions
131
Source: Decision Strategies International, Inc.
Output:
A list of your
credit union’s
core competencies,
values and culture
Understanding Your
Organization
How do you currently assess your
organization’s skills and capabilities?
 Can you identify your credit union’s strengths
and weaknesses?
 How many management levels in your credit
union understand these strengths and
weaknesses?
 How do you make outsourcing decisions?
 Is your current framework and process for
self-analysis adequate?

132
Source: Decision Strategies International, Inc.
Signs Your Credit Union
Doesn’t Understand Itself
Can’t assess options effectively
 Don’t know where to make future investments
 Budget cuts are made across the board
 Can’t decide which functions to outsource

133
Source: Decision Strategies International, Inc.
Why Self-Analysis is Crucial
Competitive climate is intensifying
 Regulation is changing
 Industries are changing (more convergence)
 Outsourcing is increasing
 Growth is required for survival
 Competitors are getting smarter

134
Source: Decision Strategies International, Inc.
Organization Self-Analysis
Objective: To perform an in-depth analysis of your organization’s
A. Conceptualize the organization as a
strategic strengths andportfolio
weaknesses
by focusing on core
of core competencies.
competencies.
B. Define
your criteria
important
core
Use rating
to determine
a
Key steps in the module
are:
competencies.
limited set of your “core” skills and
capabilities.
Identify Core
Competencies
A. Identify what activities, skills, and
resources that are entailed for each
of the core competencies.
B. Benchmark selected aspects of
Rank Core Competencies
the core competencies against
“best-in-class.”
The aim is to surface internal
assumptions and core values that
Develop
a Deeper
may impact your
strategic
vision.
Understanding of Core Competencies
Conduct a Culture Audit
135
Source: Decision Strategies International, Inc.
A Tool for Self-Analysis:
Core Competencies
What are core competencies?
 Complex set of skills, knowledge, and
resources that reach across the organization
 Yield a sustainable competitive advantage in
the marketplace
 Permeate the organization’s culture, evolve
over time, and are based on specific “knowhow”
136
Source: Decision Strategies International, Inc.
What Is a Core Competence?
A “core competence” is a set of interwoven skills
that is tied to organizational values.
A core competence
is composed of…
…a complex
set of skills,
capabilities, and
expertise...
Skill #1
Core
Competence
Skill #2
Skill #N
…that reside in
employees working
collaboratively within
and across skill sets
Source: Advisory Board, 1996
137
Group of employees who,
working together, constitutes
base of organizational
expertise
Source: Decision Strategies International, Inc.
Where do Core Competencies Reside?
Honda Example
End Products
1
2
3
4
Business Unit
or Division
Cars
5
6
7
Business Unit
or Division
Motorcycles
9
10 11 12
Business Unit
or Division
Lawn Mowers
Business Unit
or Division
Generators
Core Product
Core Product
B
A
Engine
Manufacturing
Engine Design
Core
Competence
#1
Attracting Top
Engineers
8
Core
Competence
#2
Thinking
Globally
Core
Competence
#3
Formula
Racing
Step One: Identifying Core
Competencies

Two approaches
(A) Tree : Leverage focus
 (B) Onion : Outsourcing focus

Should yield similar results
 Try both if people disagree a lot
 Each is a mapping tool (it simplifies)

139
Source: Decision Strategies International, Inc.
Step One (A): Tree
Approach




Identify leaves--existing and planned
products
Identify branches--SBUs (Strategic Business
Units)
Identify trunk-- core products
Identify roots-- core competencies
Hint: Start from the top and work your way to
the roots of the tree
140
Source: Decision Strategies International, Inc.
Tree Approach at One CU
Loans: Home Equity
Vehicle, Signature,
Line-Of-Credit
Credit Cards
Concumer
Loans
Loans: Mortgage
Conventional
FHA, VA
Mortgage
Loans
Insurance: AD&D,
Life Savings
Credit Life &
Disability
Protection
Savings:
Savings Accounts
Checking, Certificates
Money Market
Deposits
Stocks:Mutual Funds
Stocks, Bonds,
Brokerage
CUSO
Investments
Information:
Financial Counseling
advice,
information
Financial Planning
Wealth
Financing
Automatic Trans.:
Debit, POS, Checks
ACH, PC Home
Banking, Bill Payment
Payment Systems
Support Systems
Information
Processing/
Accumulation
Facilitating
Transaction
Inherent Trust in CU
Name
Efficient Operation
Products
141
SBU’s
Cooperative Spirit
Core Products
Source:
© 1999. Decision Strategies International,
Inc. Decision Strategies International, Inc.
Support Systems:
Community, SEG,
CU Industry
Core Competencies
Your CU – Products (Leaves)
Savings
Term shares
Club
Money market
Checking
IRAs
SEPP
KEOGH
ACH
Direct deposit
Automatic xfer
services
Bill pay
Home banking
ATM network
Payroll
deduction
MOM
POS
Debit card
Website
Shared
branch
Overdraft
protection
Balance
Travelers
cheques
Corporate
checks
Check
cashing
Vehicle
Signature
Line of credit
Credit card
Asset-based
Stock secured
Share secured
Mortgage
HELOC
Second
mortgage
Mortgage
servicing
AD&D
CLCD
GAP
MBI
CPI
Life
Alternative
investments
LTPC
Estate
planning
Property &
casualty
Trust services
Financial
planning
Reverse
mortgage
Debt
cancellation
CUSO
expansion
Member
business
lending
Member
business
deposit
services
Member
business
support
services
SEG
employee
benefit
Sponsor
relationship
Strategic
partners
Your CU – Business Units
(Branches)
Deposits
Convenience
Consumer
Lending
Mortgage
Lending
Insurance &
Investments
Member
Business
Services
Relationships
Your CU – Core Products
(Trunk)
Wealth
Management
Financing
Delivery
Community
Your CU – Core Competencies
(Roots)
Depth &
Diversity of
Experience
Awareness &
Innovation
Risk
Management
Your CU – Core Competencies
Savings
Term shares
Club
Money market
Checking
IRAs
SEPP
KEOGH
ACH
Direct deposit
Automatic xfer
services
Bill pay
Home banking
ATM network
Payroll deduction
MOM
POS
Debit card
Website
Shared branch
Overdraft protection
Balance
Travelers checks
Corporate checks
Check cashing
Deposits
Convenience
Wealth
Management
Vehicle
Signature
Line of credit
Credit card
Asset-based
Stock secured
Share secured
Mortgage
HELOC
Second mortgage
Mortgage servicing
Consumer
Lending
Mortgage
Lending
Financing
Diversity
AD&D
CLCD
GAP
MBI
CPI
Life
Alternative
investments
LTPC
Estate planning
Property & casualty
Trust services
Financial planning
Reverse mortgage
Debt cancellation
CUSO expansion
Member business
lending
Member business
deposit services
Member business
support services
Insurance &
Investments
Member
Business
Services
Delivery
Awareness &
Innovation
SEG employee
benefit
Sponsor relationship
Strategic partners
Relationships
Community
Risk
Management
Step Two: Ranking Core
Competencies

Core competencies must meet the following
criteria:
Provide advantage over competitors
 Hard to replicate, imitate, or transfer
 Cannot be bought or sold
 Provide value to customers
 Applicable across markets or product lines
 Exist broadly across groups of employees
 Sustainable and durable over time

147
Source: Decision Strategies International, Inc.
Step Two: Ranking Core Competencies at
Your Credit Union
CORE COMPETENCE
Definition: A core competence is a
complex set of interwoven skills,
capabilities and expertise that reside
in groups of employees working
collaboratively.
Diversity
Awareness & Innovation
Risk Management
RATING CRITERIA
Provides
advantage over
competitors
(1=does not;
7=does)
Hard to replicate,
imitate, or transfer
(1=easy;
7=difficult)
Provides value to
Member (1=little
or no value; 7=high
value)
Applicable across
multiple markets or
product lines (1=very
focused in one or a
few lines; 7=applicable
across many lines)
Exists broadly
across groups of
employees (1=very
concentrated; 7=
very diffused.)
Sustainable and
durable over time?
(1=fleeting, not
sustainable; 7=
very sustainable)
5.67
5.17
6.33
5.83
6.33
5.33
6.33
5.33
6.33
6.33
4.50
4.83
6.00
5.00
6.33
5.50
3.33
4.00
Not necessary to exist broadly
Most significant rating criteria
Area of concern
Step Three: Developing a
Deep Understanding of Core
Competencies
(A)
Identify the activities, skills and resources
required for the top core competencies
 List the activities performed within each of the
top core competencies
 Identify the knowledge base required for each
activity
 List the skills used in each activity
 List the resources required for each activity
149
Source: Decision Strategies International, Inc.
Ability to deploy multi-disciplinary resources
EXAMPLE
ACTIVITY
SKILLS
RESOURCES
Define Problem
Conceptualization, technical skills,
problem solving, public interface
Executive Management,
Functional Chiefs, Local
conditions knowledge
Determine Scope of
Work
Conceptualization, Communication,
Public interface, Multidisciplinary
technical skills
Technical Specialists
Prepare project mgmt &
implementation plan
Project mgmt, Analytical skills
Functional Chiefs
Coordinate stakeholders
Stakeholder recognition, team
building, negotiation,
communication
Functional Chiefs,
Technical Support
Execute plan
Project mgmt, contracting, technical Technical Staff, Network comm.
skills, budgeting & programming
funds, Contractors, Engineering
facilities & equipment
DIVERSITY
ACTIVITY
SKILLS
RESOURCES
Develop a hiring model
Establishing competencies
Defining desirable attributes
Focus on business needs
Alignment of recruitment process
with hiring model
Management experience
Perspective / “intuition”
Human Resource Department
Executive Management Team
CUES / CUNA
Job Analyses
Develop a reward and
recognition program
Training
Behavior modeling
Compensation models
Other financial institutions
Promote corporate core values
Training
Behavior modeling
Planning process
Management meetings
Staff meetings
Training
Communication
Behavior modeling
CUES / CIA / CUNA / NAFCU
BAI / HRD / SHRM
Management meetings
AWARENESS & INNOVATION
ACTIVITY
SKILLS
RESOURCES
Develop an empowering
leadership program
(Encourage (reward) strategic
thinking / external thinking (outside
CU industry))
Management development
Enhancement
Coaching
Communicattion
Mentoring
Succession planning
Career pathing
Human Resources Department
Executive Management Team
Outside resources / vendors
Develop reward & recognition
Program
Behavioral modeling
Human Resources Department
Management Team(s)
Employee Focus Groups
Training
Enhanced project management
Interdepartmental communication
Problem resolution
Accountability
Human Resources Department
Executive Management Team
Implement continuous process
improvement program
RISK MANAGEMENT
ACTIVITY
Risk-based lending
Organizational structure
- Human resources
- Branching
- Delivery channels
Risk management / assessment
(ALM) program
SKILLS
Analytical / trend evaluation
Decision-making
Reliance on systems / tools
Communication
Timeliness / monitoring
Human resource
Ability to define / analyze business needs
Effective checks and balances
Proactive senior management
Communication
Flexibility / adaptability
Strategic thinking
ALM / financial understanding
Analytical evaluation
Strategic thinking
RESOURCES
Experience
- Partners / regulators
- Networking (CUESnet)
Tools (reporting/systems/etc.)
Information management
Partners
Cost center reporting
- Security matrix
Professional literature / workshops
Departmental representation
Functional expertise
Human resource best practices
ALM models
Regulators / examiners
Independent accountants
Partners
Economic indicators / data
RISK MANAGEMENT
ACTIVITY
SKILLS
RESOURCES
Compliance (training / awareness
networking / competence)
Legal / logical thinking
Interpretative / prioritization
Detail orientation
Trade associations
Outhouse council
Regulators (multiple discipline)
Product development / product mix
analysis
Marketing
Data analysis
-Industry / market
-Your CU / Kaiser
Creativity
Strategic thinking
Innovative thinking
MCIF
Core systems / sub-systems
Industry / trade resources
Front-line staff
Member survey / feedback
External research / resources
Networking
Strategic partners
Information management (systems)
-Business resumption
-Testing
-Training
System / data analysis
Data results communication / reporting
Logical thinking
Strategic thinking
Analytical / trend analysis
Business understanding
Creativity
Problem resolution
Risk taking
Project management
Proactive / assertive
Security
Technical support
Core systems / sub-systems
-Credit bureau data
Partners / processors
Security
Support software
Step Three: Developing a
Deep Understanding of Core
Competencies
(B)
Benchmark selected aspects of the core
competencies against the “best-in-class”
 What are the ways top performers use these
core competencies to create advantage?
 How close to world-class are we in this
competence?
 What adjustments are needed to become
world-class or the market leader in this
competence?
155
Source: Decision Strategies International, Inc.
Where Does Your CU Rank with Respect
to:
DIVERSITY
Banking /
Credit Union
Industries
NFL / MLB
Technology
Government / Gap
McDonalds / Levis
Subway / Benetton
MTV / Music
Absent
Extraordinary
Your CU
Step Four: Conducting a
Culture Audit
Surface key internal assumptions about your
business
 Surface your organization’s core values
 Consider the following tools

Anonymous survey
 Employee focus groups
 Investigative mission by an outside observer
 Honest evaluation by strategic team

157
Source: Decision Strategies International, Inc.
Determinants of Company
Culture
Written and stated values of the firm
 Examples set by leaders
 Reward, promotions, and recognition
programs
 Structure of business processes and systems
 Heroes about whom tales are told

158
Source: Decision Strategies International, Inc.
Important Reminders
Be sure your analysis is properly focused
 Limit the number of core competencies you
analyze
 Don’t define assets / infrastructure as core
competencies
 Be intellectually honest; use data
 Others can see your culture better than you
can

159
Source: Decision Strategies International, Inc.
Culture Questions

What behavior(s) do we actually reward?
Commitment to the job
 Initiative
 Risk taking (within competence level)
 Excellence in service quality
 Positive contribution
 Problem resolution (proactive solutions)
 Exhibiting leadership skills
 Selling / cross-selling
 Goal attainment

160
Source: Decision Strategies International, Inc.
Culture Questions

What do people actually believe about how
good (and bad) performance is rewarded?
Due to switch in compensation models (and
failure of managers to adequately
communicate differences in models),
misperception of how performance is tied to
reward
 Inequity in managers’ application / evaluation
of performance

• “Who you work for makes a difference.”
161
Source: Decision Strategies International, Inc.
Culture Questions

Are we oriented to get results or to follow a
process?

Now: getting processes in place so that we
can get results (trying to get results where we
can)
•
•
•
•


162
Defining “results”
Project management
Team concept of improvement
Evolving from “let’s do it” to “let’s do it right”
Future: results with CPI ongoing
What results are considered acceptable?
Source: Decision Strategies International, Inc.
Culture Questions

Are we oriented to get results or to follow a
process?


See previous slide
What results are considered acceptable?
Actually fixing those things are require fixing
 Moving to results oriented with ongoing
process improvement

163
Source: Decision Strategies International, Inc.
Culture Questions

What rites and rituals do we have?
Concentrated knowledge base (the one
person who knows)
 Attendance award (for “perfect” attendance)

• Entitlement?

Individual versus team reward
• Moving on this
Lack of courage to address problems
 Wanting to be liked

164
Source: Decision Strategies International, Inc.
Culture Questions

How do we communicate?

Effectively
• Face-to-face
•
•
•
•
•
Regular management meetings
Operational meetings (four formats)
Listening / soliciting commentary
One-on-one
Open door policy
• Training sessions / PowerPoint
• By using examples / role playing
• Electronically
• E-mail
• Webinars
• Outlook
• Honestly
165
Source: Decision Strategies International, Inc.
Culture Questions

How do we communicate?

Otherwise
• Electronically
• E-mail avalanche
• Lack of written communication (case-by-case)
166
Source: Decision Strategies International, Inc.
Culture Questions

What do we talk about and what don’t we talk about?

Do talk about
•
•
•
•

Problems
BHAGs
Projects
Too much “stuff” (not enough meat)
Don’t talk (enough) about
• Solutions (sometimes)
• “Third rail” issues (e.g., “relationship improvement”)
• Soliciting feedback
•
•
•
•
167
Timely basis
Honest
Quality / importance
Acceptance
Source: Decision Strategies International, Inc.
Culture Questions

How are important and minor decisions made? (Your
CU question: How do we define “importance” and/or
“priority”)

Important
• Quickly (sometimes too quickly, as opposed to “timely”)
• Sometimes too slowly
• Lack a process of decision making process / project mgmt
• Tell / solicit (consult) / sell
• Getting all the affected parties involved on the front end
• Communication on the back end

Minor (routine / impact / ? – definition required)
• Within silos
• Delegated (empowerment / accountability)
168
Source: Decision Strategies International, Inc.
Culture Questions

What is our decision-making process?

Major
• Top down approach
• Managers involved in initiating research/ideas/etc.
• CEO
VPs
Mgrs
Staff
• Moving to more empowerment / involvement of staff in
decision making (support for this at Exec level)

Minor
• Departmental level

Who is involved?

169
CEO / Exec. Team
Source: Decision Strategies International, Inc.
Culture Questions

How are decisions announced?
Getting better with timely communication
 Announced on a need to know basis
 Utilization of all appropriate tools

• Written
• Oral
• Email

170
Working on follow-up
Source: Decision Strategies International, Inc.
Culture Questions

How is implementation handled?

Still some thoughts of “us versus them”
• Seen as “Execs make decisions and staff
implements”

Developing a structured project management
process
• Utilization of CUES project management model
• Enables managers to focus communication toward
individuals
• Using project teams at staff level
• Initial meetings with all staff (pared down from there)
171
Source: Decision Strategies International, Inc.
Culture Questions

What role do individuals play? Teams? Task
forces?

See previous discussion
• Making more utilization of teams and task forces
• Getting universal participation
• Post-mortem will be a critical process to our success
172
Source: Decision Strategies International, Inc.
Culture Questions

What are the most common management
styles and patterns?

Authoritative (tell style)
• Non-negotiables
• Core values / mission / vision

Direct (blunt style)
• Expediency
Participative (consultative style)
 Coaching


173
Evolving / maturing into a more consultative
style
Source: Decision Strategies International, Inc.
Culture Questions

What are the attitudes toward learning at all
levels and in all groups?

Expectation of continuous learning (part of our
culture)
• EX: preparedness to sell Your CU products (on last
employee survey)

Is it encouraged or rewarded?
Yes – education is part of performance eval
 Encouraging more employees to take
advantage of the tuition reimbursement
program

174
Source: Decision Strategies International, Inc.
Culture Questions

How do people expect learning will be
achieved?
In-house training programs
 Offsite training programs/conferences

• Individual development plans
• Match against budget per department/branch
Online programs/e-training
 Webinars


Company averages
Executives: 117 hours per year
 Staff: 80 hours

175
Source: Decision Strategies International, Inc.
Culture Questions

What is the expected role of a leader: coach,
expert, etc.?
Coaching in order to develop experts
 Strategic thinker (beyond the short term and/
or the short distance)

• External thinking
Lead by example (core values)
 Support (360 degree)

176
Source: Decision Strategies International, Inc.
Organizational Self-Analysis
Summary
Identify
Core
Competencies
Onion
Method
177
Optional
Analyze Core
Competencies
Tree
Method
Source: Decision Strategies International, Inc.
Conduct a
Culture Audit
Module V
Strategic Vision
V-178
Module V: Overview
II. External
Environmen
t
I.
Introduction
III. Industry and
Market Analysis
IV.
Organizational
Self-Analysis
179
V. Strategic
Vision
Inputs:
Your credit union’s
Scenarios
for the Future
Strategic
Segmentation
Scheme
Core Competencies
and Culture
Source: Decision Strategies International, Inc.
VI.Strategic
Options
VII.
Implementation
Output:
Analyze
Key
Success
Factors
An overall
strategic vision
for your credit
union
Developing a Strategic
Vision

Does your credit union currently have a clear
strategic vision?
Not necessarily clear (focus is clear; desire to
achieve vision is present, but not universal
understanding of long-term)
 We are continuously developing / shaping our
vision (fairly good idea of DIRECTION)
 Still defining “who we are” (in transition)
 Strategy is driving vision (instead of other way
around)

180
Source: Decision Strategies International, Inc.
Developing a Strategic
Vision

Is that vision shared among all employees?
Short-term focus is shared
 Vision should not be shared until consensus is
reached

181
Source: Decision Strategies International, Inc.
Developing a Strategic
Vision

How was the vision developed?


How often is it re-visited? Tested?


How well does it align with your FOM’s
vision?

182
Source: Decision Strategies International, Inc.
Developing a Strategic
Vision
Objective: To create a shared strategic vision
that positions Your CU well for the future and
builds on existing strengths.
 Creating and sharing a strategic vision within
the organization is one of the most critical
steps in building an overall strategy.
 A strategic vision is a clearly articulated
statement of what the company wants to
achieve and how it plans to go about
achieving that.

183
Source: Decision Strategies International, Inc.
Overview of Developing Strategic Vision
Develop a Key Success
Factors (KSF) Matrix
Rank the KSFs
Assess gaps relative to your
core competencies
Articulate a clear
strategic vision
Share and explain
the vision
184
Source: Decision Strategies International, Inc.
What is a Strategic Vision?
Inadequate Strategic Vision
Strong Strategic Vision
Growth
Growth
Low Tech.
Low Tech.
High Tech.
Cost-containment
High Tech.
Cost-containment
* The two axes are illustrative of dimensions that can drive strategic vision in your business.
185
Source: Decision Strategies International, Inc.
Signs Your Organization
Lacks Vision
Resource allocation seems arbitrary to key
employees
 Many decisions are made centrally because
individuals do not understand what to do
 Executive decisions appear highly
unpredictable and inconsistent
 Managers don’t feel as though their actions
make sense in the “bigger picture”
 Company takes multiple actions that seem to
conflict with each other
186

Source: Decision Strategies International, Inc.
Common Pitfalls in Vision
Building
Vision focuses the company on the wrong
segments and opportunities
 Vision is not clearly understood
 Vision is understood, but not embraced by
key employees

187
Source: Decision Strategies International, Inc.
Benefits of Having a
Strategic Vision
Provides guidance on where the company
wants to be in the future, and how to get
there
 Identifies which projects should be pursued
and which should be dropped
 Allows the company to focus its resources
productively
 Allows the company to adapt to the changing
business climate

188
Source: Decision Strategies International, Inc.
Many Types of Vision
Do you have the resources and drive to change?



189
Bold Vision--What your company perceives to be the
ideal target and strategy for the future
Incremental Vision--What your company perceives to
be the minimum necessary departure from current
skills and capabilities
Compromise Vision--A trade off between what the
company perceives to be the ideal strategy and the
organizational capacity to change
Source: Decision Strategies International, Inc.
Step One: Develop a Key
Success Factors (KSF) Matrix

190
The KSF Matrix brings together the scenarios
you developed in Module II and your
industry’s strategic segment analysis from
Module III. The combination of these two
components, plus the gaps with current
competencies, will determine your strategic
vision, and help you understand where and
how to compete.
Source: Decision Strategies International, Inc.
Step One (A): Identify Key
Success Factors

Key Success Factor: A discriminating
capability that firms must possess to create
competitive advantage. These cannot be
bought from the outside, but must be
developed from within.

Example: The ability to integrate delivery
channels, allowing point-of-sale convenience
and thus superior value.
191
Source: Decision Strategies International, Inc.
Categories to Consider for
KSFs
Lending
 Investments
 Technology
 Convenience
 Business models
 Relationships
 Marketing
 Product and service development

192
Source: Decision Strategies International, Inc.
Identifying KSFs at One
Credit Union

Personalized / Customized Service
• Deep knowledge and understanding of member
needs
• Outstanding personal service for each member
• True customization of products and services
• Members have input into the design of their
personalized products / services

Knowledgeable Staff
• Well-trained staff throughout the organization
• Ability to educate members about the credit
union’s products
193
Source: Decision Strategies International, Inc.
Step One (B): Completing the
KSF Matrix
SCENARIOS
I
SEGMENTS
A
KSFA,I
III
KSFA,III
B
C
KSFC,II
D
E
194
II
KSFE,I
Source: Decision Strategies International, Inc.
KSFE,III
KSF Matrix Example: Success Factors
Scenario I
Scenario II
Scenario III
Scenario IV
Homogeni
zation
Niche
New World
Status Quo
Segment A: Loans
1, 4, 9, 10
1, 2, 3, 4, 8, 9
1, 5, 10, 11
1, 2, 10, 12
Segment B: Deposits
2, 4, 5, 10
1, 2, 4, 12
1, 2, 3, 4,
5, 6, 10
1, 2, 4, 10, 12
Segment C: Checking
2, 4, 5, 9, 10
2, 4, 7, 9, 10
2, 4, 9, 10
1, 2, 4, 9
Segment D: Equity &
Insurance
1, 2, 5, 6
1, 2, 5, 6
1, 2, 5, 6
1, 2, 5, 6, 7
195
Source: Decision Strategies International, Inc.
Legend of CU’s Key
Success Factors












196
KSF 1: Strong Image and Reputation Based on Trust
KSF 2: High Service Quality (Accuracy, Problem Resolution,
Professionalism and Friendliness of Staff)
KSF 3: Speed of Service
KSF 4: Improved Member Retention through Multiple Services per Household
KSF 5: Sales Culture Based on Market Segmentation
KSF 6: Highly Motivated and Knowledgeable Staff
KSF 7: Value Added Products and Services through Pricing and Product
Differentiation for: Seniors, Generation Xers, Low Income
Households, and High End Baby Boomers
KSF 8: Strategic Alliances: Sponsor Group, Outsourcing, Etc.
KSF 9: Delivery System Diversity
KSF 10: Ability to Respond to Rapidly Changing Market Needs
KSF 11: Community Oriented
KSF 12: Sponsor Oriented
Source: Decision Strategies International, Inc.
Step One (C): Identify Table
Stakes vs. KSFs

Separate success factors in each cell into two
categories
Table Stakes - Having this capability is a
“must” to be a player in the industry
 Discriminating Capability - Having this
capability will differentiate a company and
make it a winner

Record table stakes separately (remove them
from the matrix)
 Hone matrix to include 4-6 KSFs per cell

197
Source: Decision Strategies International, Inc.
Step Two: Ranking KSFs

Assign weights to the segments and
scenarios
Segments -- How much emphasis should the
company place on this segment in the future?
 Scenarios -- How relevant is this scenario to
our vision?

Generate a weighted score for each cell, and
in turn each KSF
 Construct a summary bar chart highlighting
the most robust KSFs

198
Source: Decision Strategies International, Inc.
Cell Weights of KSF Matrix
Scenario I
Scenario II
Scenario III
Scenario IV
Homogeni
zation
Niche
New World
Status Quo
Total
15%
100%
Weights
20%
20%
Segment A: Loans
30%
6%
6%
13.5%
4.5%
Segment B: Deposits
45%
9%
9%
20.25%
6.75%
Segment C: Checking
15%
3%
3%
6.75%
2.25%
Segment D: Equity &
Insurance
10%
2%
2%
4.5%
1.5%
100%
199
45%
100%
Source: Decision Strategies International, Inc.
KSF: Ranking
80
70
63
56.5
60
70
67.5
66
51.75
45.25
50
35
40
30
20
10
0
S2
200
S3
S4
S6
S8
Source: Decision Strategies International, Inc.
S9
S12
S13
Step Three: Gap
Analysis
Absent



Identifies where your credit union is currently
positioned regarding each KSF
Identifies where “best-in-class” companies are
positioned
Provides company with an understanding of:



201
Extraordinary
Where it is today
Where it has to be in the future
How it might get there
Source: Decision Strategies International, Inc.
Gap Analysis Take-Aways
Gapping is both a diagnostic tool and a
learning process
 Gapping is best done with a diverse group of
managers: It often leads to important options
to incorporate in the strategy
 Gapping sometimes identifies “holes” in the
company’s knowledge base

202
Source: Decision Strategies International, Inc.
Gap Analysis at Your CU
Table Stakes
Shared strategic vision – board/management/staff.
Your CU
Board
Your CU
Staff
Your CU
Mgt
Absent
203
SW Airlines
Disney/Sony
Wells Fargo
Local Bank
Extraordinary
Source: Decision Strategies International, Inc.
Step Four: Creating a Vision

Vision determines
Future product scope -- What offerings will the
company have in the future?
 Future market scope -- What segments will
the company play in?


It could include
Key capabilities required
 Size / growth guidelines
 Return / profit guidelines
 Business unit visions
 Key success factors

204
Source: Decision Strategies International, Inc.
Creating a Vision at One
Credit Union
Vision: EECU is the most valued, respected
and progressive provider of financial services
to all educational employees and their family
members within our field of membership.
 Mission: EECU’s purpose is to understand
members’ financial needs and provide quality
financial products and services to meet the
needs of its membership.

205
Source: Decision Strategies International, Inc.
Creating a Vision at One
Credit Union (con’t)
Values (these are the values we are striving for)
 Through our business:
•
•
•
•
•
•
•
•
•
•
•
•
206
Be member focused and offer unparalleled member services
Drive bureaucracy out of our internal operations
Move toward household direct transactions through technology
Continually improve the knowledge level of all staff
Be progressive in our use of technology
Continue to educate our members, staff and community about credit
unions
Continually improve employee productivity
Use every resource as efficiently as possible
Continually expand enrollment in our field of membership
Develop and maintain a cooperative partnership with our sponsor
groups and vendors
Improve product penetration in single product households
Encourage participation of volunteers
Source: Decision Strategies International, Inc.
Creating a Vision at One
Credit Union (con’t)
Values (these are the values we are striving for)
 Through ourselves:
• Be employee focused and encourage a fun, team-oriented
approach to our work environment
• Allow for flexibility and diversity in establishing processes (no one
way is absolute -- all ideas will be respected)
• At all levels of the credit union, give and receive graciously, have
open and honest communication with NO FEAR of reprisal
• Focus on results not the process
• Trust and support individual initiatives to create an empowered
environment
• Work together as a team in an atmosphere of respect; we will
recognize and praise even small accomplishments
• Breakdown existing barriers to our becoming an efficient team
207
Source: Decision Strategies International, Inc.
Creating a Vision at One
Credit Union (con’t)
How to get there
 We expect to move from our present to our
future set of core competencies through the
following actions:
•
•
•
•
•
•
•
208
Develop diverse delivery systems
Ability to respond rapidly to changing market needs
Speed of service
High motivated and knowledgeable staff - culture change
Global access to information infrastructure on members
Sales culture based on market segmentation
Value added products and service through pricing and
product differentiation for: Seniors, Generation X’ers, Low
income households, and high-end baby boomers
Source: Decision Strategies International, Inc.
Vision Creation Take-Aways
Be sure to involve key managers with
implementation responsibility
 Brief key managers ahead of time
 Create an interactive, consensus oriented
meeting
 Address the difficult issues: don’t dance
around them

209
Source: Decision Strategies International, Inc.
Step Five: Instilling Vision
Board approves vision
 Consider
• External validity -- are key premises, perceptions,
and observations correct and complete?
• Internal validity -- Is the logic of the vision sound?
• Trade-Offs -- Are the trade-offs made in ranking
KSFs and setting future directions reasonable?
• Operationally -- Is the vision expressed in terms
that give direction and guide managers throughout
the organization?
210
Source: Decision Strategies International, Inc.
Important Reminders
The strategic vision is one of the most critical
outputs of the strategic planning process
 Don’t let the drive for “results” overcome the
need for learning
 Building consensus throughout the vision
creation process is critical: otherwise
implementation will fail

211
Source: Decision Strategies International, Inc.
Developing Strategic Vision at Your Credit Union
• Different approaches can be used, each involving its
own level of effort.
Least
EFFORT / LEARNING
Level I
Impose a top-down
vision
Level II
Use example
vision as a
foundation and
short-circuit the
process
Greatest
Level III
Follow the process
step-by-step and
build a vision that
fits your
organization
• We recommend employing Level II for a first time
effort at your credit union.
Developing Strategic Vision
Summary
Create
Success
Matrix
Identify Table
Stakes &
KSF’s
Weigh
Scenarios
and
Segments
213
Rank
KSF’s
Gather
Additional
Research
on KSF
Gap Analysis
Re-Core
Competencies
Source: Decision Strategies International, Inc.
Conduct
Vision
Workshop
Instill
Vision