HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

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HMMM….. STUFF T O THIN K ABOUT!

Transcript of HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

Page 1: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

HMMM…..

STUFF

TO T

HINK A

BOUT!

Page 2: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

IT IS

OUR “B

AGS FLY

FREE” M

OMENT IN

TIM

E

Page 3: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

Innovation

Entrepreneurship

Marketing/Brand

Strategy

Leadership

Sustainability

Trends

People

Hmmm…..

Page 4: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

PEOPLE

Tomorrow’s Workforce Flexible Multi-Functional

Value Oriented

Does the credit union business model reflect the attributes of your staff?

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HR IN THE FUTURE

Business Focused

Strategic In Nature

Data Centric

Analytical Skills

Aligned

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PEOPLE ARE THE DIFFERENCE

Necessity vs Difference

Transaction vs Relationships

Create Experiences

Think WOMP

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SUSTAINABILITY

A non-negotiable requirement

Balance Sheet vs. Income Statement

Using the “Coop” model to leverage shared value

Is the credit union biz model a 5 yr., 10 yr., or longer (or shorter) solution?

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AVOID A “SIX-PACK” OF MISTAKES

900 lb. Gorillas Eat 800 lb. Gorillas

Relationships Matter

Stop Believing Your Own Press Releases

Expense Mgmt. On Steroids

Board Independence Is Essential

Grow Market Share…Never Be Satisfied

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HMMM…STUFF TO THINK ABOUT

Supply Chain Efficiency Is Difficult To Achieve & Cost-cutting Kills The Culture & Brand

As A Result…Revenue Production Is Essential

What Is “The On-Margin” versus “Off-Margin”

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COMMON PRIORITIES TO BUSINESS

Access To Capital

Reasonable & Certainty of Taxes

Certainty & Efficient Regulation

WITHOUT…Fewer Companies Drive Fewer Jobs

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THE NEW PRICING PARADIGM?

The Social Network Has Hit Its Stride

In The Past , Biz Made The Decision on Pricing

Now…

Consumers

Government

Media

Consumer Financial Protection Board (CFPB)

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SUSTAINABILITY IN THE LONG TERMRetain existing members and attract new members to optimize revenue

and achieve scale.

Develop new offers that quickly result in a profitable return on investment - ROI

Increase productivity and employee accountability in order to optimize work performance to achieve greater scale specific to labor costs.

Enhance cross-functionality to minimize hiring.

Improve member service and risk mitigation processes to optimize efficiency and reduce operating expense.

Page 13: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

SUSTAINABILITY IN THE LONG TERM

Enterprise-wide focus on critical mass to best utilize capital and human resources.

Insure operating expense as % of asset remains efficient in growth.

Work diligently to grow loan activity to increase Net Interest Margin and Top-Line Revenue.

Net loan spreads and funding mix should reflect risk tolerance while maintaining profitability that exceeds investment opportunities.

Continue expansion of payment systems and transaction processing as a means by which to grow non-interest income.

Page 14: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

INNOVATION

Cultural paradigm

Re-ignites growth curve

Create energy and change minds

Using this “destructive force” to better your credit union’s competitive position?

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Energy

Does It

Stick?

Ramp It Up

Execution

“Tossin’ It

Around”

Time

Innovation Map

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GREAT BIG IDEAS TO INNOVATE

I. People Before Profit

II. Stakeholder Value Provides Brand Boost

III. Service On Steroids

IV. Opportunities To Grow The Biz

V. Don’t Be Satisfied With Satisfied

VI. Speed…A Competitive Advantage

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THREE CATEGORIES OF CUS

Winners

Survivors

Losers

The Risk Of The Unknown Becomes A Big Problem For Many Credit Unions

What Business’ Didn’t Exist 15 Years Ago?

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THE ULTIMATE GOAL

A Leap In Value Rapidly Earns Buzz & Loyalty… And Dare We Say Growth

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BIZ PLAN DISRUPTION

GROWTH

VALUE

Disruption

DisruptionWindow

Innovate

Disruption = Competition, Legislation, Regulation, Financial, Macro Economy

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HMMM…STUFF TO THINK ABOUT

Innovation is more necessary than nice. Immediate ROI usually works against innovation.

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THE “ALCHEMY” OF GROWTH

CUs need 3 different “Horizons of Investment”

Current…Today’s cash flow (up to 12 months)

Near Term…Today’s revenue + tomorrow’s cash flow

(12 -36 months)

Future…Options on investment beyond the current horizon ( 36+ months)

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THINKING LONGER TERM

Horizon 3

Horizon 2

Horizon 1

Time

Today’s Cash Flow (0 – 12 Months)

Today’s Revenue & Tomorrow’s Cash Flow (12 – 36 Months)

Future Growth R & D/Cap. Exp.(36 – 72 Months)

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HMMM…STUFF TO THINK ABOUT

We need “functional & planned obsolescence” in our products that creates a new buzz. “Product driven” companies do this .

Think P & G…New & Improved

Think Auto Industry…New model years

Page 24: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

P&G AND CAR COMPANY MENTALITY

Keep the product fresh and compelling

Planned obsolescence assists in achieving product differentiation

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HMMM…STUFF TO THINK ABOUT

Ask staff to uncover member needs that leads to innovation which creates elasticity for your products because they’ll be better and more economical. As a result, your product penetration improves, your members are dazzled, the brand is strengthened, loyalty increases, sales grow, profits grow and you increase & create more jobs.

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CREATE “REAL GROWTH”

Create new categories or sub-categories for which competitors are not considered

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MARKETING/BRAND

Be significant in your members’ lives

Life Stages; Life Styles; Lifetime

You must be more than service

Member participation and collaboration co-create brands & build bonds with the membership.

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WHAT ABOUT THE CURVES WITHIN THE CURVE

Page 29: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

WHAT CURVES ARE HIDDEN BELOW THE FANCIAL “WHAT’S BEHIND THE “S” W CURVE

Check Your Market RelevanceCheck Your Distinctive Capabilities

Check Your Strength of Talent

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STRIVE FOR “PSYCHIC PIZZA”

Compare CU to a “stellar industry” (not banks)

Design to “head off” the problem

Turn up all of the “unpleasants” that member encounters

Page 31: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

HMMM…STUFF TO THINK ABOUT

Members who have a problem with your CU instantly become more sensitive to the prices you charge, the rates you pay, the convenience you offer, etc. etc.

Page 32: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

STRATEGIES TO AVOID MEMBER ISSUES

Pro-active Education: (warn the member about the problems they may encounter)

Have a Flexible Response: (across all channels) describing why you do what you do

Aggressively Seek & Solicit Complaints: (once you have education & channels of “why” in place)

Page 33: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

THE REAL PROBLEM WITH MEMBER SERVICE

Inertia leads to complacency within the organization which results in member boredom which leads to member & credit union taking each other for granted

Page 34: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

MAXIMIZE PROFITS

Member

Sales Marketing

Service

Interconnectedness Is Key Understand Your Costs Of Acquisition

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ENTERPRISE WIDE UNDERSTANDING

Have a unified picture of what the member experience should look like

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LOYALTY/BRAND INTEGRATION

Normative

Affective

Cognitive

Hard to imitate

Hard to deliver

Most meaningful

“Lifers”

Emotional/Spiritual/

“The Thing To do”

Make it Personal

Both functional & emotional …benefits are readily visible

Easy to Deliver

Easy to Lose

Easy to Imitate

Page 37: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

TRENDS

Economic Dilemmas

Increasing Regulation

Changing Members

Get your handle around the impact of emerging trends that will effect your credit union over the next decade.

Page 38: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

PARADIGMS FOR THE DECADE…

Is Our Wealth Formula OK?Is This X & Y’s Life Event…Delayed Purchases,

etc.?Will Pricing Elasticity Increase?Emerging Tech Trends?Marketing The Ol’ Fashioned Way?Branch Paradox…Is It Real? Strategic Planning Is Not An Event?Risk Management Changed Forever?

Page 39: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

THREE CONCERNS OF MEMBERS

What lessons did we learn from the financial crisis

Federal deficits and what needs to be done

The current unemployment situation

Page 40: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

WHAT DID CREDIT UNIONS LEARN ?

Misguided Comfort

Misunderstood Risk

Short-Term Choices

Page 41: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

WHAT CUS CAN LEARN FROM THE FED DEFICIT

Raise income

Gain operating efficiency (Note: Not “cut” expenses)

Control future expenses

Page 42: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

WHAT CUS CAN EXPECT FROM UNEMPLOYMENT

Monetary & fiscal policies aren’t helping

Housing isn’t leading the recovery

Households are retrenching

Uncertainty weighs on business decisions

The “hour-glass” of jobs

Page 43: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

AMERICA’S WORKFORCE

Base Is Largest @ 15/1%

Middle Class

Low-Skill Low-Pay

High-Skill High-Pay

Page 44: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

RICH GET RICHER

$180,810 95th Percentile

9X

Largest Gap Since Keeping Records - 1967

$20,000 20th percentile

Page 45: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

JOB PICTURE

High

8.3%

Unemployment

Low

Less Greater

GDP

GDP (2011)+1.7%

Projected @ 2.5% Annualized 1st Qtr. 2012 GDP @ 4%

Page 46: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

RETU

RN

RISK

Treasury Bonds

Efficient Frontier Matrix

• A combination of assets, SLCCU’s loan and investment portfolio for example, is referred to as “efficient” if it has the best possible expected level of return for its given level of risk.•Risk, in the case of SLCCU’s earning assets, broadly represents credit and interest rate risk.

HIG

HLO

W

LOW HIGH

Bank/CU CDsGSE Bonds Prime Auto Loans

Private-Label CMO

Prime Unsecured Loans

Non-Prime Auto Loans

Non-Prime Unsecured Loans

GSE MBSGNMA MBS

GNMA CMOGSE CMO

Investors look for!! Efficient markets push down Return for this level of Risk

Capital will not flow here!! Efficient markets price Risk accordingly and push up Return

Page 47: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

STRATEGY

Agility and nimble

Quickly adapt

Anticipate and Lead change

Develop deep differentiating capabilities that enables the credit union to separate from competition and “shape-shift” as the market changes.

Page 48: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

TWO TYPES OF PROFIT

Good

Bad

Know The Difference?????

The Wrong Choice Kills The Brand

Page 49: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

LEADERSHIP

Tap into “Values Behaviors”

Understand the myths & cultural norms that are cultural drivers

New, flexible, fluid management systems

Be visionary, be smart, empowering and supporting of a great “talent pool.”

Page 50: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

THREE (3) THREATS TO THE BUSINESS PLAN

Imitation…Creates Cognitive Loyalty

Operational Slack…Productivity Inefficiency

Substitution…Products That Reduce Our Value

Page 51: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

PLANNING SESSION DISCUSSION

Who Is Your Member?

What Does The Member Value?

How Do We Deliver Value @ An Affordable Cost?

What Is Our Profit Formula?

What Are The Key Resources Used?

What Key Processes Are Employed?

Page 52: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

ENTREPRENEURSHIP

Launching Products

Create a Credit Union with meaning beyond the sum of its parts

Profit should not be only goal

Success comes from maintaining an entrepreneurial culture no matter how big or small.

Page 53: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

THREE TIERS OF CONSUMERS

Close To You…Cognitive Level Of LoyaltyRefuse To Use You…Unacceptable OfferingsNever Thought Of You As An Option…Assumed They Belonged Elsewhere

Go With The One That Provides You The Greatest Amount Of Potential

Make Sure You’re Profitable & Sustainable

Page 54: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

A COMPLETELY FRESH PERSPECTIVE

See it from a fresh angle

Don’t be anchored

Reinvent the value proposition

Understand what your CU really does

Do you know what you’re really selling

Page 55: HMMM….. STUFF TO THINK ABOUT!. IT IS OUR “BAGS FLY FREE” MOMENT IN TIME.

ENTREPRENEURIAL TRAITS

Vision

Passion

Drive

Integrity

Innovation

Risk-Taker

Resilience

Pro-active