“I told you so.” That's what Peter Drucker might say tocorporate credit union managers in the wake of our recent financialcollapse. So says the November 2009 issue of The Harvard BusinessReview. Drucker-the highly influential management guru-spent alife-time rallying against the mismanagement practices that inlarge part triggered the crisis, like focusing on short-termresults and bottom-line results at the expense of long-term goalsand social responsibility.
Drucker contended that businesses could avoid these destructivepractices by learning from well-run nonprofits. He stressed that,all organizations-profit or nonprofit-need to define their missionsas providing value to people and society, not just making money andgrowing the business.
Yet, ironically, the crisis is pressuring CUs-despite theirnonprofit status-to act as if profitability and growth are ends inthemselves. This is understandable given the immediate demands forearnings and growth and a future in which economies of scale willprovide larger CUs with a significant competitive advantage.
I celebrated Drucker's recent centennial (he would have turned 100this past November) by speculating about what he would say to CUleaders.
Keep your eye on the long-term future. Make it absolutely clearthat everyone understands that the ultimate purpose of your CU isneither growth nor profitability but to provide value to yourmembers, your community and society at large. Can you clearlyarticulate what this value is? Do you make enhancing this value thekey driver of major CU decisions? Can you measure it? Do you holdyourself and the organization accountable for achieving it?
The proper role of profit. It has always been a major CU challengeto strike the right balance among maintaining needed profitability,enhancing member value and building the business. But thischallenge has never been as difficult as it is today. Maintainingthe right balance as conditions change needs to be the subject ofan ongoing conversation that includes both the board and seniormanagement.
Ensure an independent board. Many corporations get into troublebecause their boards routinely rubber stamp management proposals.Remember that your volunteer board of directors is the agent ofyour member-owners. Is your board fully exercising its independentresponsibility for setting long-term strategic direction, assessingresults and holding management accountable?
Become a chief marketing officer. Many managers confuse marketingwith sales. To the degree that marketing is effective, sales isirrelevant. Marketing is the business seen from the outside in-fromthe viewpoint of the customer and the marketplace. As such, itcannot be delegated to a single individual. It's the responsibilityof the CEO as well as the entire management team. It is yourultimate responsibility to lead the CU in clearly defining (andcontinually questioning) who your members are, what they need andhow you can provide increasing value to them.
Innovate. You think that the financial services world has changed alot over the past 20 years? You ain't seen nothing yet. Today, CUsare still doing pretty much the same things as they have in thepast. Yes, they are doing things much more efficiently, on agreater scale and using new tools, but they are pretty much doingthe same things. The industry is changing, and the pace of changeis accelerating. Your role as a CU leader is to create that future,and that's where innovation comes in. Innovation requires creativedestruction, questioning whether today's products and services willmake sense tomorrow. It requires continuously asking, “What willour business be in the future?” and taking concrete actions to makethat future happen.
Create a compelling work environment. People are motivated bycontributing to something bigger than themselves, having meaningfuland challenging work, achieving important results and continuouslygrowing and developing. As a member-owned nonprofit, you have amajor advantage over banks in creating a compelling workenvironment focused on serving a larger purpose. It requiresestablishing high expectations for performance for the CU as awhole and everyone involved-both staff and volunteers. It includesinvesting in the continuous development of skills and capabilitiesthat will prepare people for success, both today and tomorrow.

John Redding is president of the Institute for StrategicLearning LLC. He can be reached at 630-416-7971 [email protected]