Stop Kicking the Can Down the Road!

This is a harsh economic environment for community financial institutions. Deposits are tight. Rates are still high. Income sources are becoming narrower and narrower. I hear about these strategic issues all the time on calls with clients.

It’s tempting to look at all these factors and think the cost of change is too high to undertake. But it’s not…and the cost of doing nothing is much higher.

You don’t have to look much further than the classic case of Blockbuster to see what happens when you do nothing. Blockbuster failed to adapt to the digital world, but they also passed on a chance to buy Netflix. The decision seemed too risky…and now it seems flat-out silly.

Netflix co-founder Marc Randolph said he learned this from Blockbuster’s failure: “You have to disrupt yourself before someone disrupts you for you.”

Community financial institutions are traditionally resistant to change. They want to tighten the belt or address that new idea next time. As Randolph implies, there may not always be a next time.

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The High Cost of Not Investing

You’ve heard the expression, “You have to spend money to make money.” Well, it’s true. You can’t be foolhardy, but at some point…you must invest in change.

The Blockbuster example showed how their failure to invest in Netflix was a serious mistake. Let’s look at a more positive example of how investing leads to incredible results. In the turbulent atmosphere of 2020, Chipotle strategically invested a lot of money in mobile order drive-thru lanes called “Chipotlanes.”

This smart move allowed Chipotle to keep up with fast food competitors during a time when people entered restaurants less. It also continued Chipotle’s recovery from the food-borne illness scandals that rocked the company in the 2010s.

What does this mean for community financial institutions?

Don’t fear smart investments. Spend money when it will get you ahead and safeguard your future. Don’t sit on a super-capitalized money trove. Use capital on a new core, a new website or whatever else will grant a strategic advantage.

A good position now isn’t a guarantee of future safety. Invest for your institution five years from now.

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The High Cost of Not Innovating

Innovation usually requires investment…but what about simply coming up with new ideas? There’s a nasty temptation to do things the way you’ve always done them – to remain complacent. Or you might assume something will always work because it works now.?

Resist those temptations. They’ll lead your institution down the proverbial road to perdition.

Just look at Kodak’s fate. The once proud camera company refused to accept the decline of film-based photography. It’s attachment to film allowed digital-savvy competitors to surpass them…bankrupting the company in 2012.

What got you to this point isn’t going to get you through the next ten, twenty or thirty years. Innovate!

Innovation will look different depending on the institution. For some credit unions, it means expanding beyond an employment group (or better serving a current one). Other institutions might decide to rethink their product offerings. Whatever you do, make sure to spit in the face of stagnation.

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The High Cost of Not Integrating

Not every change issue comes down to dollars or ideas. Cultural conundrums tank businesses as well. Ignoring cultural incongruencies doesn’t mean they’ll work themselves out.

For example, take the merger between Chrysler and Daimler-Benz. This deal was supposed to create a powerhouse automaker to conquer the markets. Instead, the two organization’s cultures were so different that the benefits never materialized. The people simply couldn’t work together.

It was starkly the opposite of this harmony-focused advertisement for the merger…

Many community financial institutions take an interest in mergers, and it won’t work without elbow grease. You must unite both cultures into one, new culture. You must get everyone on the same page.

But you don’t need a merger for organizational issues to capsize your credit union or bank.

There are many types of divides: front office-back office, Board-executives and managers-direct reports to name a few. Learn how to bridge these gaps. Without an aligned team, it won’t matter how much money you invest or how many new ideas you have. It’s the team that executes your investments and innovations.

Integrate your people. Train them on your brand and why it’s important. Then, face the future with confidence.

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Here’s Something You Can Do…

Defeat the high cost of doing nothing. Choose to do something instead. From brand training to website design and more, On The Mark Strategies helps you tackle institutional changes. Watch our latest brand video to learn more about who we are…

It’s time to make a worthwhile investment. Book a free consultation today.

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