LAS VEGAS – As the industry's longtime champion of innovation, CUSOs are in an ideal position to become agents of change "in taking on the Goliaths," but there are any number of strategic barriers including overestimating potential growth markets, a Toronto management consultant advised CUSO executives this week. In a keynote speech at NACUSO's annual conference, Michael E. Raynor, consultant and author of a popular book on innovation, said credit unions and their CUSOs need to know timing and technique in entering virgin markets with new products and services. "Being an advocate of disruption" has its risks, warned Raynor in detailing chapters of his book, "The Innovator's Solution," and reviewing examples in corporate America of competition by upstarts gone bad or good. In his speech, he hit upon a wide variety of industries ranging from Domino's losing share to gourmet pizza firms to Southwest Airlines scrapping food, service and assigned seats for cheap fares. Southwest is a good example, he said, of a firm finding a niche and then overtaking the larger established competitors because it found the public willing to sacrifice discomfort for the lower fares. Taking a short-hop Southwest flight "was preferable to spending 12 miserable hours on a bus." Raynor, who also is a consultant for the accounting firm Deloitte Touche in Canada, cited numerous examples of companies in technology, steel making, insurance as well as other industries offering "terrible products but finding willing buyers" motivated by price. He warned the CUSO audience of plunging into oversaturated markets suggesting the risks can be costly. Still, once upstart firms got in the door, they begin what he called "an upmarket march" eventually overtaking the behemoths, suggesting CUSOs have that potential as well.

Applying the consultant's views to payday lenders, Victor Pantea, NACUSO's interim CEO who introduced Raynor, said those firms are examples of niche builders which have long catered to very low-income segments and now are carving out new markets among middle income.

While CUs have long scoffed at payday lenders and their unsavory practices, they do seem to be on an upward trajectory in some areas, a phenomenon raising CU eyebrows. While there have been CU and CUSO innovations in payday alternatives, more may need to be done, he said. -