Jeffrey Pfeffer, a Stanford professor and author, points out that Detroit automakers have pandered to Wall Street rather than listen to their customers, and they have paid for it directly and indirectly-directly through dividends and stock repurchases and indirectly through loss of market share because of a bluntly inferior product. What has this got to do with community banks and credit unions? The answer is: Other than expanding our charters and offering many of the same services that big banks do, how have credit unions differentiated themselves? In my career as a credit union executive and as a consultant, I have not seen an abundance of risk taking and creativity. When credit unions pursue expansion strategies, their arsenal to do so seems pretty standard: community charter, indirect lending and business services. As an industry, credit unions have seen little in the way of market share growth, especially in key demographic segments. When is the last time we saw a credit union offer a really unique product? Community banks have largely done much better than their bigger brothers, but there hasn't been tremendous leadership there either. The Japanese automakers that ate Detroit's lunch, don't do everything right, but it appears that in many ways they focused on superior products, quality and service. Detroit relied on the numbers. The Japanese model is one of relationships. In some ways, one could make the case that they have embraced at least some of the foundational aspects of engagement. In the process of engagement, members or customers move through five distinct levels: Satisfaction-the product meets their needs. Loyal-they purchase the product or service with regularity. Recommend-they promote the product or service to others. Benchmark-there is an association with quality or leadership. Affiliation-there is a sense of public pride and a relationship. Peppers and Rogers, the consulting firm that defined these levels, said there is one more element that is key: the foundation of trust. Most organizations, especially credit unions and community banks, focus their energies in achieving the second or, at best, the third level. We want our member to be a "net promoter." We call our customers "members," but do we appropriately measure that relationship in terms of services and products, pride of association or other metrics more substantive than an active checking account? As you might suspect, achieving the higher level relationships and building a foundation of trust is hard work. It goes far beyond rate and service. It requires an enterprise philosophy that incorporates employee and management training, performance management, community leadership and "real marketing." The difference between real marketing and traditional marketing is that real marketing includes market research, customer feedback, product development and a sophisticated external and internal branding strategy. The Achilles heel of engagement is management. In fact, James L. Heskett, the author of the Service Profit Chain, is explicit: "One bad manager can pollute multiple levels of an organization, and poor management brings down employee morale, which spills over into the engagement level of customers." And Heskett goes on the say, "but it also requires actions. When managers are not managing by the values and cannot be admonished or retrained to do so (which rarely works), they have to go." This sounds a lot like Detroit and the financial services market. How much real change have we introduced into the leadership models of community banks and credit unions? The Harvard Business Review puts it this way: "Too many organizations focus on what customers think-to the exclusion of what employees think. Companies are more likely to be growing if employees' opinions of the company are better than customers'." If you are an executive with a financial institution how much time are you spending talking to your employees as well as your members and customers? Peppers and Rogers studies told them that organizations with high true engagement significantly outpace their competitors in performance, productivity and sustainability. So which of those three would we not be interested in? Three examples of where moving to adopt these kinds of integrated strategies worked with significant positive results are Hudson City Bancorp, Affinity Plus Credit Union and Oregon Community Credit Union. By using some or all of the strategies involved in engagement, all three saw significant positive movement. You are not going to see these strategies developed and implemented in the boardroom or achieve them by maximizing your capital. These are new strategies with a new model, a model based on relationships. This means that you are going to be looking at leadership strategies that depend on soft skills, like hiring the right people, understanding what your customers want, and building a link between individual employee goals and organizational goals. The new leadership is highly adroit and committed to managing relationships and people, not systems and numbers. So you decide, do you want to be Tokyo or Detroit?