An important skill for an agile credit union is the ability to be decisive in indecisive times. Previously, executives and boards made all important decisions once all the facts were in and lengthy discussions had happened. Sometimes decisions could drag on for months which frequently caused the prime opportunities to be lost.
Today, decisions must be made faster and in some cases, with less than complete information. To wait for all facts to be known, all costs to be completely understood, and to get buy-in from all board members, most likely the critical moment has passed.
A more agile competitor has grabbed the opportunity while your credit union was still thinking. Business opportunities will be lost again and again using this time-consuming approval process in the new economy.
For example, the CEO of one of my client credit unions must get board approval for any expenditure over $5,000. When this rule (and dollar amount) was established in the 1980s, that may have been a more reasonable figure. Today it’s a handcuff to timely decision making.
Decisions in the new economy need to be made with better agility. The entire credit union needs to be taught how to make proper decisions by using a basic model that is one of the simplest, most easily repeatable processes for making good decisions at the speed of the new economy.
The OODA Loop is a decision-making tool that allows for real time decision making as quickly as needed. Currently SEAL teams are being taught the OODA Loop because they can no longer wait on the chain of command for decisions. The speed of decision can literally mean the difference between life and death in conflict situations.
Fortunately, business decision making doesn’t have consequences as dire, but the training and development of real-time decision making can create a more agile credit union in a highly competitive environment.
The OODA Loop
OODA is an acronym for Observe, Orient, Decide, Act. As with most skills, the more a person uses it, the more comfortable they become and the more efficient in using it.
The decision makers must be observant of the choices available for the decision. Let’s use an example of a credit union wanting to grow using a capital project. The group has to decide whether to open a branch, or place a few ATMs in new locations, or expand their online capability.
Being observant of possible choices and option will answer the question: Which of these choices can best serve the credit union immediately, in three years, in five years? The best facts on costs, advantages and potential suppliers need to be gathered quickly for each possible choice. Observations help gain perspective of the decision at hand.
Once the board and CEO have made their observations, they need to orient them. What is the intended outcome of the decision? Is this expansion an effort to attract more prospective members of a borrowing age? Is this capital expense to better serve current members? Is this an effort to directly take on a particular competitor? Orientation takes observations and places them in a context for a decision.
Frequently, this step is lost on most critical decisions. Bank of America raised debit card fees because they failed to ask the critical question of, “What are we trying to accomplish and what response will we get back?” Obviously, the response was not what they desired so they rolled back the fees and lost credibility in the process simply because they failed to orient their decision.
Once everyone has observed the situation and oriented it with the credit union’s intent, the board is presented with a number of well-informed options. In the decide phase of this process the board completes the analysis of their options and determines which is the best fit for their desired outcome.
For example, based on observations and orientations of the options available, the board has gathered information that says of all of the choices presented, they believe it is best to spend the money on online services to reach a younger generation of borrowers. A board vote should be taken at that time. No need to wait, it’s time to act now.
With most major board decisions I’ve witnessed, once the decision is made the process slows down. Vendors are asked for bids, then those not in full support of the decision want to continue to debate the choice, or the executive is more concerned with the politics of the board than taking the correct action.
Once the decision has been made to take the best possible action, implementation needs to be as swift as the process to this point. By continually applying the OODA Loop decision-making process to board decisions, the board will develop a greater level of comfort with the process. Not only will better decisions be made more frequently, but the evaluation of poor decisions by walking through the process again will quickly show where the error happened along the way.
Decision making in the new economy requires a different skill set and speed, the more split-second decisions you make; the better you get at making them and the better you position your credit union as a leader over the competition as you beat them to the punch every time.