If your strategic plan only gets touched when the cleaning staffdusts the shelves, you're in trouble.

For the most part, that isn't the picture today. With a littlenudging from regulators, plus the growing pace of change in thefinancial services industry, strategic plans have taken on newimportance.

One example is the $2.7 billion Wright-Patt Credit Union in Fairborn, Ohio, where strategicplanning is considered a constant, year-long process, not aone-time event, said President/CEO Doug Fecher.

“We do have a board planning retreat and we've moved thatearlier in the year,” he explained. “We've also added a strategicdiscussion section to every monthly board meeting. We're talkingabout the plan and evaluating it almost constantly and can makecorrections as we find them necessary.”

Fecher said the key is it's not an event that happens once ayear and that arrangement has paid off.

“Some companies spend considerable time once a year writing astrategic plan. Then, they put it on a shelf and don't get it outuntil the next year,” Fecher noted. “We force ourselves to look atit constantly, measuring what we planned to happen against what isactually happening.”

The plan covers issues such as Wright-Patt's strategicobjective, how the credit union will compete, the target market andgeography, and the financial model, which creates automaticmeasurements by breaking down revenue into net interest income, feeincome and CUSO income, Fecher said.

If there's a gap between plan and reality, there are questionsto be answered. Was something not carried out as well as it shouldhave been, or was it something beyond the control of the creditunion? Did something unexpected in the environment impact thecredit union? How should the credit union react?

“By looking at it all the time, you make little coursecorrections instead of waiting until the end of the year anddiscovering we missed by a mile,” Fecher said. “We try to lookahead one to three years. We believe beyond about three years youcan pretty much get out a crystal ball.”

Regulations have added a lot of uncertainty, he added. A numberof them are just now coming on line in a way credit unions canunderstand, including the latest mortgage rules, for instance.

“So far, we don't feel we've had to alter our plans a lot,”Fecher said. “But that could change. We rely heavily on Fannie Maeand Freddie Mac for mortgages. Of course, they're inconservatorship, and something new is going to come out. If itcomes out wildly different than it is now, we're going to have tomake significant change in our plan.”

Fecher said overseeing the strategic plan is a CEO's mostimportant job. He figures he spends two-thirds of his time lookinginto the future and what Wright-Patt needs to do to be successfulseveral years from now.

Neelima Firth, president of the Association for StrategicPlanning, isn't surprised by increased attention to strategic planning. She said it is more common than it used tobe because the investment community wants to know the seniormanagement of a company has a good handle on what they need to dotoday and where they are going. She distinguished between abusiness plan and a strategic plan.

“A business plan is how to win the battle. A strategic plan isall about how to win the war,” Firth explained. “That calls forlonger-term thinking about choices – what to do and, just asimportant, what not to do.

She added, “Don't forget your core. JC Penney is an example ofan organization that did that. They had a strategy of coupons andspecial offers. Then they brought in a new CEO who had a differentkind of positioning. There were no coupons any more, and they wentafter the higher end. It was a disaster. They didn't get the higherend and they lost customers who wanted coupons.”

Still, businesses often recruit outsiders to the board in searchof fresh ideas. Does the fact that credit union boards are allunpaid members present a problem? Not necessarily, Firth said. Acredit union board can still offer diversityif its members bring in different experiences. Firth underscoredFecher's point that a strategic plan must actually be used so acredit union can see what is working and what is not.

“We can monitor and measure, and if something is not working, wecan edit,” she said. “There's green, red and yellow. Green meanseverything is going the way you thought it would go. Red meanssomething is not right. Yellow means slightly over or slightlyunder expectations.”

Actually, strategic planning is easy, it's strategic thinkingthat's difficult, said Les Wallace, Wallace president of SignatureResources, a governance consulting firm in Aurora, Colo.

“Strategic thinking means challenging assumptions about yourcurrent business and processes,” he pointed out. “I tell boards,'Think strategically first. Have a robust, assumption-challengingconversation about your entire business. Then come back andconsider the implications for how you should change your businessplan.'”

Wallace said new regulations have led to broader questions aboutrisk management overall.

“Boards are moving more into an enterprise risk management focusand looking across the organization to identify potential risks.With recent breaches of IT at Target and so on, credit unions arelooking at IT more closely. Enterprise risk management is showingup more and more in the strategy conversation.”

Wallace said high performance boards or those that tend to dothe best job of governance are attuned to strategy in the near-termthree-year range. He believes looking ahead five years simply isn'tpractical any more. However, it is possible to ponder threealternative scenarios five years out, he suggested. First, someeconomic weakness continues, second, interest rates are favorable,the housing market is strong and the economy is booming and third,there is a major economic collapse.

Those high performance boards have an annual strategic planningretreat. They're also revisiting the strategic plan after sixmonths, and are spending more than 50% of their time at eachmeeting reviewing results and trends and updating strategy.

With the NCUA requiring every credit union to have a strategicplan, the quality of those plans is improving, said Keith Hughey,senior consultant at management consulting firm John M. FloydAssociates in Baytown, Texas. However, those changes are likelycoming at a significant expense.

“The reality is regulations are putting a significant costburden on credit unions,” Hughey said. “It's particularlyproblematic for the smaller ones that don't have a big asset baseover which to spread those costs.”

Another issue is even as credit unions transition to communitycharters, the board may still reflect the original select employeegroup, experts say. That can present a barrier to understanding thevarious elements of the community the credit union is now trying toserve. As a result, it may be a struggle for board members tounderstand their current and future market.

Creating a strategic plan also requires time, which meansadditional demands on unpaid board volunteers.

“One of the cultural problems facing credit unions isunderstanding that we have to make money,” Hughey said. “We stillwant to deliver a very high level of service to our members, but wealso have to get paid a fair return for that. There's anaccelerating understanding of the importance of making money. It'screating real conflict within some individuals.”