From Paper to Practice

Continuous research keeps strategic plans flexible and actionable.

June 17, 2009

Your annual strategic planning session recently concluded at a swanky beach resort Holiday Inn near the airport. The caviar and smoked salmon cheese and crackers were excellent, and you’re excited apprehensive about the coming year. Your new strategic plan practically sparkles in its three-ring binder.

All set until next year? Not quite.

“We view any plan as a road map written at the beginning of a journey,” says Tim Garner, senior vice president of marketing and strategic planning for $4.5 billion asset Digital Federal Credit Union (DCU), Marlborough, Mass. “As you move forward, new opportunities and problems arise that you must deal with. Priorities change. Things may not work as intended. It requires flexibility.”

The best tool for keeping strategic plans flexible and actionable is research, say Garner and others. That involves identifying opportunities and threats with member and market research; analyzing internal and external financial trends; and “constantly scanning the competitive environment for relevant data, trends, ideas, threats, and opportunities,” Garner maintains.

DCU gleans information from mainstream and business magazines, credit union and banking publications, subscription-based research, Credit Union National Association’s (CUNA) 2009-2010 Credit Union Environmental Scan (E-Scan), member surveys, staff feedback, and analyses of current and past business performance.


  • View your strategic plan as a road map written at the beginning of a journey.
  • Make cost-cutting efforts strategic in nature.
  • Board focus: Employ a year-round approach to strategic planning.

“Never stop looking,” Garner advises. “You never know where the next good idea will come from. Look at your operation inside and out, and don’t make any assumptions.”

“Research is a critical driver,” agrees Bill Handel, vice president of research and development for Raddon Financial Group, Lombard, Ill. “You must understand your key competencies and whether they mesh with what your field of membership looks for. And if not, how will you change?”

Plan year-round

One recent initiative to come from DCU’s research is student loans. The credit union had considered this product line for a couple years before diving in.

“Our strategic vision is ‘that all members achieve their financial goals.’ Since it’s much easier to [do so] with an education, we felt providing education financing fit that vision,” Garner explains. “Although members used our home equity loans for this purpose, we had a gap concerning other types of student loans. We filled this gap with private student loans. Our timing was great. The credit crisis created a void in the private student loan market just as we stepped in.”


Garner details DCU’s year-round strategic planning approach and time line:

  • Complete annual membership survey and present results (December).
  • Gather data on the external environment and updated member demographic data (January through July).
  • Request updated data for a host of business measures and operational details through midyear (July).
  • Analyze the data, identify trends, and consider strategic implications (July).
  • Update the plan with midyear data and updated analyses of the information (July through August).
  • Circulate the plan document and CUNA’s E-Scan to the CEO and vice presidents for review prior to the planning session (August).
  • Hold a two-day planning session (September). The first day typically includes the CEO, vice presidents, and top-level managers; often with an outside speaker to put attendees in a strategic frame of mind. The second day involves the CEO and vice presidents, and focuses on affirming the current strategic direction or setting a new one.

“We want to come away with an agreement on the strategic issues for the coming one to three years, and the main corporate goals for the coming year,” Garner says.

During a recent year, DCU’s strategic objectives addressed its corporate vision, deepening of active member relationships, maintaining financial soundness, enhancing employee relationships, and continuous improvement.

“Once we have the broad strategic objectives, we dig deeper and determine critical issues tied to these objectives,” Garner says. “What must we resolve to achieve them? Later, we get more operational and break these into bite-sized pieces—typically, projects and assignments.”

  • Firm up goals, create budgets, and develop marketing and business plans (October through December).
  • Refine goals based on year-end numbers and complete the business plan (January).

Various credit union teams meet more frequently to discuss progress toward goals and make course corrections as necessary, Garner says. The CEO and senior vice presidents, for example, meet weekly about major issues, and the broader senior management team meets monthly.

Handel would prescribe this process for all credit unions. “Too often, strategic planning is a once-a-year deal,” he says. “You don’t want to change your strategic direction too often, but you have to take into account changes that can happen,” such as last fall’s housing meltdown.

“A lot of credit unions had done their planning before the events of last year hit,” Handel continues. “If you don’t have a mechanism in place that says ‘we need to revisit where we’re going,’ then everyone isn’t pulling on the same oar. We’ve seen a lot of that.”


Improvise, adapt, overcome

Executive managers should attend strategic planning meetings at least quarterly, Handel maintains. More frequent strategic planning meetings might have assuaged credit unions’ fear following the housing and corporate credit union crises, and prevented poor decisions accompanying that fear—namely “draconian” cost-cutting, he says.

“People went into the mode of, ‘Everything is falling into the abyss and we’re trying to preserve as much as we can,’ ” he relates. “That’s unfortunate. Credit unions should look at where they are in this scenario. Yes, we’ll bear some expense stabilizing the corporates and have some charge-off issues. But from a long-term perspective, this is a major opportunity to take market share from a crippled banking industry.”

Cost-cutting efforts should be strategic in nature, Handel adds, not done solely for short-term gain. Such measures should benefit members and make long-term sense for the credit union. They shouldn’t hinder the credit union’s member service or ability to sell.

Offering electronic statements, for example, reduces expenses, improves security, and makes members feel good about using less paper, he says. And implementing new processes, software, or hardware can improve efficiencies.

“Those are fine. But just saying ‘I’m going to squeeze bodies here and there’ or closing a branch just because you don’t want to bear the cost starts a credit union down a dangerous path,” Handel maintains.

Instead, he suggests employing four strategies to generate revenue and increase margins:

  1. Implement a deposit-management plan. Categorize deposits by core products and specials. Base core deposit pricing on what it costs to borrow from a corporate credit union or the Federal Home Loan Bank, and offer short-term, loss-leader specials to attract growth. As they mature, specials will roll into rationally priced core deposits, and new member relationships will become fruitful.
  2. Increase reliance on nonpunitive fees. Nonpunitive fees—such as debit and credit card interchange income— don’t affect members. “Make money off the vendor, not the member,” he advises. “As much as members like that you won’t bounce their checks, they don’t like paying a $35 or $40 nonsufficient funds fee.”
  3. Collect the fees you charge. Too many fees aren’t collected, Handel says. “So you’re bearing the negative persona of imposing the fee, and yet you’re not collecting the fees and getting the benefit.”
  4. Take market share from banks. Banks’ image among consumers has tanked because some accepted bailout funds. “That’s why some banks want to repay [Troubled Assets Relief Program] money. That’s a huge opportunity for credit unions to say, ‘We’re different, we’re strong and well-managed, and we take care of our members.’ ”

Strategic planning flexibility has helped DCU weather the corporate stabilization storm, Garner says. Of everything the credit union covered in its last planning session, “a huge [National Credit Union Administration] assessment wasn’t something we thought of as a possibility.

“We’ve learned to be nimble,” he adds. “We can quickly analyze a situation and make adjustments. How we’re dealing with the corporate situation this year is a case in point. We met frequently about [this] and considered the strategic implications. Ultimately, we made maintaining our net worth ratio the primary objective. We’ve done so while still delivering a high level of member service.”

What one issue should all CUs address with strategic planning? Find out now.


1. 2009-2010 Credit Union Environmental Scan: enter 28801 in the product finder.
2. 2009-2010 National Member Survey Report: enter 28532 in the product finder.

  •  Raddon Financial Group, Lombard, Ill.: 800-827-3500 or