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The whys and hows of reinvention.

Reinvention strategist Jim Mathis walked into a credit union. After chatting for a bit with the member service representative who was helping him, he was asked if he’d like to apply for a car loan. “We have all this money and no one to lend it to,” the MSR confided. Instead of feeling flattered, Mathis was perplexed. “If car loans are not the number one thing people want, I’d stop pushing them,” he said.

Telling a credit union MSR that you don’t think auto loans are a good product to push is a little like heresy, but Mathis makes a point. Times have changed. People and their life situations have changed. The whole world is new, and we need renewal to go along with it. As the author of a book on the subject – “Reinvention Made Easy” – Mathis has a lot to say about competitive transformation. Among his suggestions: Be willing to kill your darlings. Auto loans have been a cornerstone of the credit union business for as long as most people can remember. But if you can’t at least imagine a profitable future without car loans, you might not be thinking hard enough.

“What are you holding onto that is holding you back?” Mathis asks.

To be honest, the answer probably isn’t auto loans. But it might be an over-reliance on the tried and true. It might be a poverty of new ideas and bold thinking. Maybe the past few years have tired you out. According to Mathis, you do not have the luxury of letting it ride. “If you’re doing business the way you were doing it two or three years ago, you’re dying,” he says. That is, the policies and practices you put into place in 2010 may already be played.

“Recession accelerates change,” says Mathis. “Everybody fights it, but it’s happening. You need to reinvent yourself and you need to do it constantly, because someone will always find a way to do what you do – and they’ll do it cheaper than you do.” Unless you can ratchet up the value, live up to expectations, surprise and delight and make yourself relevant, you aren’t going anywhere.

WHAT REINVENTION IS NOT

Reinvention is not problem solving. If your teller lines are too long, finding a way to cut them down by 20 percent isn’t reinvention. It might be a good idea. It might even be necessary. But it doesn’t change what you do or who you are.

On the other hand, if you looked at your long teller lines and asked, “How can we serve our members faster and with less hassle to them?” – then you might be onto something. Asking this question won’t result in a quick fix. Instead, you might use analytics to find out what times of day are most impacted and staff accordingly. You might decide to augment the staff during those peak times with folks from your management team. What they observe about members and fellow staffers from working their branch shifts might spark new ideas. Maybe the issue isn’t centered around the branch itself. What if members were able to do more electronically? What would it take to make them more comfortable doing so? What additional services would make their experiences better?

The process of reinvention is discrete. It asks large questions:

  • Are we sustainable?
  • Why do our members bank with us?
  • What aren’t we providing that could transform our organization?
  • Is this awesome?
  • How do we mine our own collective knowledge?
  • Do we have the will, structure and capacity for change?
  • Are we building a road to the future?

When John Saatela, CEO of Anaheim, Calif.-based CarePoint Federal Credit Union, asked these questions a few years back, reinvention was the inevitable answer.

“The economy forced us to look at the way we were doing business,” says Saatela. “We had 12 branches and 49 employees coast to coast.” The cost of operating those branches was becoming oppressive, particularly as member household incomes dropped. At the same time, branch coverage wasn’t comprehensive.

“We serve employees of 50 hospitals across the country,” says Saatela. “We’ve never had branches at each location. But even locally we had members who were driving 20 minutes in each direction to visit a branch. Our members are nurses. They can’t make it to a distant branch and back on a break.”

It was a classic dilemma. CarePoint needed both to expand and contract to stay competitive. The decision was difficult, even painful, but Saatela resolved to take radical action: He closed all the branches and went virtual.

The result? Following the closure of the last branch in August, 2011, CarePoint saw a dip in membership. But they’ve also seen a return to profitability. And, best of all, they’ve been able to direct resources to serving all of their members more effectively – through CO-OP Network ATMs and shared branching; better online service, longer call center hours, the list goes on and on. CarePoint is now positioned to look toward the future.

Saatela doesn’t suggest that all credit unions go the all-virtual route, but he does believe that reinvention saved CarePoint. He also points out that many elements of being a virtual credit union were already in place when the transformation began. “Even 30 years ago we were operating virtually,” he says. “We had automatic payroll deposits and ATM cards. We were early adopters of loans by phone. Our members work around the clock, so we’ve had to find ways of accommodating them.” With renewed focus, CarePoint can be even more proactive in offering products and services that truly reach their members.

START HERE

What transformations are waiting to unfold at your credit union? Samantha Paxson, Vice President of Marketing for CO-OP, urges credit unions to look specifically at member experience.

“Credit unions need to focus and walk in their members’ shoes,” says Paxson. “We’re in a very operationally focused industry, but when you look at it from a market perspective, you see your business in a whole new light. Are we making it a “wow” experience? Credit unions have been through such a difficult period, it’s been hard to find the time to think about these issues. But credit unions can be really amazing at what they do – and they can do it as a category. When we lift ourselves, we lift the whole category.”

The second step you take will depend on your individual circumstances. But the first step is almost always the same: Embrace change. Really give it a hug. Bringing yourself into the year 2012 and preparing for the future is going to require, first and foremost, a willingness to throw out the old, fashion the new and never stop evolving. Take a deep breath.

Then, Mathis suggests looking at two main areas of concern: pain and pleasure. “What are you doing now to punish your members?” he asks. Sound overly dramatic? Mathis tells this story: “I met with the management team of a small financial institution. One of the branch managers came forward and said, ‘The day I became branch manager I applied for an ATM card. That was four months ago and I still haven’t received it.’ The CEO was livid. When I opened an account at my credit union, I got an ATM card right then and there. The member service person gave me the card and walked with me to the ATM to make sure it worked. Imagine what it feels like to be a customer at that bank waiting months for an ATM card. That’s where the improvement needs to begin.”

But it doesn’t end there. Mathis also tells transformation-minded clients to look at how they’re delighting their members. Inspiring delight may have fallen off your credit union’s agenda. It’s time to bring it back. “Whatever part of the member experience you’re considering – online, onboarding, visiting the branch, getting a loan – ask yourself whether it’s a beautiful experience,” says Paxson. If you need to reconnect with that ideal, browse Zappos.com, visit an Apple store and fiddle with the gadgets, order something fancy at Starbucks. There it is.

GET READY TO SELL

We like to believe that the best ideas sell themselves. In reality, you have to sell everything – especially change. At the beginning of this year El Paso Employees Federal Credit Union changed its identity to Evolve Federal Credit Union (for more on their transformation, see “You’ve Changed” starting on page 17). The change was both positive and needed. As a community-chartered credit union with its eye on Gen Y, Evolve FCU needed to shed its old SEG-oriented identity in favor of one that was fit for the future.

Evolve FCU’s president and CEO Ken Walters was all aboard with the identity change, but he also knew part of his job was to sell it to members and staff. So, knowing that established members would have concerns, Walters and his team communicated early and often about the impending name change. “We were able to reassure members that the change wouldn’t have a negative impact,” says Walters. “They could still use their old checks and debit cards until they ran out or expired.”

The staff was already enthusiastic about the switch, but Walters won additional buy-in anyway by having them vote on the new identity. Their new logo was designed in-house, which gave the team an added shot of brand spirit. To go along with the new brand, Evolve FCU launched an inventive series of community events, including a local film festival they screened at the branch. Events are promoted via social media, which has become an active channel for the credit union.

The Evolve FCU team is justifiably fired up, and that’s more than a plus in Walters’ book. “It’s essential that our employees understand the changes and like them,” he says. “They’re the ones who have to sell the new name and identity to our members and the public.”

STAY PRETTY

Building a culture that embraces change takes thought, effort and leadership. But building that culture is a critical piece to the reinvention process. Why? Reinvention is no longer a one-shot deal. It’s the operating system that runs in the background of everything you do. When are you done reinventing yourself and your credit union? When you’re done.

Until then, examination and re-examination are your new business partners. And input is all. “I tell people to make networking a priority,” says Hank Blank, an Orange County, Calif.-based marketing consultant, who blogged about reinvention on his site www.hankblank.wordpress.com. “Tools like LinkedIn make it easy to connect with people both inside and outside of your field. And when you make connections, you don’t have to have all the answers yourself.”

You already employ a team of experts on what your members want and need. Want to encourage feedback? Mathis suggests holding regular town hall meetings with staff.  He also encourages leaders to empower their teams to contribute insights and ideas: “You need to practice helping each person in your organization in realizing that he or she has seen things, noticed or not, which no one else has seen, and thought thoughts which no one else has thought,” he writes. “They need to discover that you believe that in them as unique resources to draw upon. Make time for regular frequent practice of creative processes yourself, and support the practice of such processes by your staff.”

Beyond that, make change a regular, expected occurrence. You don’t want to react impulsively to every bump in the road, but you do want to respond to opportunity. Every viable opportunity. If Mathis’ calculations are correct, the changes you make today will be old news by 2014.

LIVING ON THE UPSIDE

Change is necessary. It’s enlivening; it’s inspiring. It’s also disruptive. Change is risk. It’s trial and error. It’s growth and loss.

When you’ve lived through a period of wholesale change – as we residents of planet Earth have done these past few years – it’s easy to see change as antagonistic. So much has altered, and without our control. Reinvention switches up the experience. It’s intentional. It directs you to the future.

If all the adversity of recent years has taught us anything, it’s that change is possible. As Chicago Mayor Rahm Emanuel famously observed, no good crisis should go to waste. Progress and transformation are the upside of difficulty. They are driven by the belief that we can not only move, but move forward.

“It can be a scary situation to try to initiate a big change when everybody else is retracting their efforts,” says Walters. “We were increasing our marketing dollars just as everybody else was pulling back. But taking action when we did actually gave us an advantage. We were marketing in a less crowded field. And people noticed that even during tough times we were out in the community. Everybody thinks we’re the new credit union in town, and that’s fine with us. Being new is good.”

But being new won’t last forever, and what comes next – and then after that – is what will determine Evolve FCU’s long-term success. Walters isn’t worried. He and his team are so committed to meeting the future that they built adaptation into their identity. “Our name itself is a good way to communicate our vision,” says Walters. “This is a progressive credit union. Things are going to change in the future and we are going to change too, so that we can be around for a long time serving our members.” It’s old school and new school all at once.

Gayle Sato writes about credit unions and entrepreneurship. She is a principal at High Road Publications in Torrance, Calif.

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