Bringing the Board Online

February 2014: Vol. 37 No. 2
by Jackson Hataway, Ph.D.

Strategic planning at a digital pace.

Man walks in a tunnel of data

Credit unions and banks across the country are struggling with a massive, daunting challenge: remaining relevant in an era of digital expectations.

As consumers have moved more and more of their lives into the digital space, everything from banking to media consumption is being increasingly driven by demands for digital accessibility. Products and services have to be available and deliverable to consumers in faster, more seamless and more intuitive forms. The services we recommend have to be directly relevant to consumers who are sending out more data about themselves than ever before (so no more Visa card promotions being sent to members who are already Visa card users). The data we provide has to be contextualized so members can make sense of it and use it—in other words, fewer spreadsheets, more graphs.

As an industry, we’ve largely acknowledged these trends as irreversible, and begun the arduous process of shifting the member-facing elements of our businesses to take advantage of them. At the board level, however, there have been dramatically fewer efforts to deeply adapt to a digital era. Planning and governance remain largely slow, cumbersome and—in many CUs—confusing analog activities. They impede a board’s ability to craft strong strategic guidance that can enable a CU to move with the speed and dexterity demanded by the modern environment.

Even in CUs where strategic planning and governance materials have moved from reams of paper in binders to iPad apps or other digitized formats, those formats are often used in essentially the same way as the binders—static information presented as if it is “on paper.” The only guaranteed benefit to the credit union is less paper. Instead of leveraging digital tools to develop live pipelines of information that call attention to key metrics and enable directors to make better decisions, we recreate our traditional planning and governance models. As a result, the operations and membership of credit unions continue to move down the digital expectation path—but boards and governance remain stuck in an analog environment.

The Real Issue

Despite the digital nature of this issue, it’s much larger than a technology conversation. Technology is necessary but not sufficient to move beyond the limitations of the tried-and-true methods of planning and governance. Just look at Microsoft, a company at the heart of the technology industry. Although Windows 8 may not be everyone’s favorite system, the philosophy and vision behind Windows 8 was a significant change for the software giant. Microsoft committed to release major changes and updates as quickly as they were available for Windows 8, hence the relatively quick release of 8.1. This represents an almost DNA-level change, but it is one that wasn’t driven by technology. It was driven by a need to meet the consumer expectation that Microsoft move faster—as fast as their consumers are speaking, sharing and acting.

Planning and governance models have to be treated the same way. They have to begin to leverage digital in deeper and more meaningful ways to create the capacity for CUs to quickly adapt their strategies to consumer landscape changes. Plans have to be measured against real-time data. This doesn’t mean the tried-and-true annual planning session needs to disappear. But it does mean that such tools as comprehensive board portals and live dashboards mirroring the functionality of solutions like Salesforce.com—which can keep the strategic conversation alive, current and informed—need to be incorporated. Strategies must include more voices, more possibilities and more business ecosystems than ever before, if they are to keep pace with a digital environment. And boards must be brought online to make that possible.

The Data Problem

The most difficult element of all this is, ironically, the same thing that gives it so much potential. Boards and management teams have access to greater quantities and depths of data than have ever existed. Every transaction can be analyzed from endless angles. Aggregated across the entire membership, the power of that data mining and visualizing capability grows exponentially in terms of its ability to inform strategic decision-making. But, instead of becoming a catalyst for strong guidance, the vast amounts of data boards deal with actually tend to further bog down the planning and governance process. The Big Data problem has moved to the boardroom.

The core problem that companies like Salesforce, Adobe, Oracle and countless others are trying to solve for marketers is how to parse through Big Data to find the data that matters. The same holds true for credit union boards; they have mountains of data, but lack clarity around how to extract insights.

Over and over, we see one of two phenomena arising from boards dealing with this dilemma. First, directors begin to feel it is impossible to grasp the full picture of what’s happening because there are too many data points. That leads to uncertainty, hesitancy and a lack of vision. It also leads to management teams feeling as if they lack strategic alignment with their boards.

Second, we see individual directors or entire boards become fixated on one or a few specific data points. This path leads to the “every time” moments in board meetings and planning sessions, where the chorus around the room becomes “Every time we get in here, they get stuck on that…” In reality, that fixation often derives from not having metrics prioritized by their relationship to the strategic plan or vision for the credit union. Directors (and even management team members) in this position will default to the numbers that are most concerning, that have been historically important to the credit union or that they personally believe should be prioritized.

The underlying cause of both problems is also the reason so many boards are uncomfortable with or unable to move as quickly as digital demands: Boards have no lens through which to filter all this data to arrive at meaningful conclusions.

Imagine Amazon without algorithms. Amazon is one of the leading forces behind modern digital consumer expectations. They’ve turned “two-week delivery” into a frightening, stone-age thought, and they’ve revolutionized how consumers find and select products.

Because of its predictive algorithms—the math that tells Amazon to recommend certain products to each user based on a host of personal, peer-based and other variables—Amazon is able to filter out the noise (random product data) that makes shopping at other “online warehouses” so comparatively painful. Instead of a page filled with random items, you get a personalized shopping experience. Amazon curates data, in the form of product recommendations, for you, the end user, based on what it knows about you. Without those algorithms, Amazon would just be swinging wildly with big data in the dark, hoping some product that flashed across your screen would stick.

In the same light, many CU boards are hampered by data because they have no lens–no agreed upon set of algorithms–through which to filter that data and no succinct way to visualize it. As the old saying goes, “If everything is important, nothing is important.” The same is true for boards; if all data is important, no data is important. Instead of increasing the board’s strategic intelligence, data actually becomes a point of drag—drag felt throughout the CU.

Crafting the Lens

Building the right kind of digital lens for board members to begin bringing them online isn’t an easy task, largely because it isn’t a purely technological problem. The first step has to be a fundamental shift in the way credit unions approach planning and governance.

The good news is that doesn’t mean the annual or bi-annual planning session goes away. It means boards and management teams must develop a new tempo and philosophy for strategic conversations. Strategy, not just performance, has to be an integral part of every board meeting. Some credit unions have even begun dedicating quarterly board meetings to comprehensive strategic reviews, with core strategic metrics—some created specifically for individual initiatives—leading the conversations.

At the same time, the philosophy behind those conversations has to be more digital in nature—more like a software company, less like a financial institution. Don’t be frightened by that statement. It doesn’t mean boards need to talk about digital 24/7. Instead, strategy needs to be approached with prototyping as the key operational value.

Software companies fundamentally understand how critical it is to prototype a product, test it, gather feedback (bugs, missing elements, features, etc.), make changes and then release it at scale. And they know how to do all of that rapidly.

That same discipline needs to be applied to board planning and governance. We need to develop an appetite for rapid prototyping at the strategic level. Strategies need to be developed, tested and evaluated based on focused data and then fully deployed when ready. That means the calendar for strategy and governance activity has to be condensed, and the process continuous.

In a typical CU, that might mean moving to semi-annual strategic reviews that serve to evaluate the success or failure of tested initiatives and to then institute either “next” phases or implement new initiatives. The vision and strategy remain consistent, but the initiatives become more targeted within a highly specific time frame. That model will create comfort with a faster operational and strategic tempo from the boardroom down.

For that to be possible, Big Data in the boardroom is a problem that can’t be ignored. Data has to be filtered through agreed-upon key performance indicators that speak to the strategic initiatives and vision the credit union has crafted. Boards and management teams need to take the time to identify those KPIs, even if that means, as indicated earlier, creating new metrics or data analytics capacities that map better to the strategic initiatives than to traditional metrics. The KPIs need to be easily accessed, highly specific and to become the guides of boardroom conversations. The data is there, but we have to make it meaningful by bringing the right data to the surface.

Tools can and should help here. Even though this isn’t a technology conversation, technology still plays an important role. Boardroom software has grown exponentially over the past few years. The critical question is: How well does that software bring together your strategic initiatives with the metrics that matter to them? Is it just a static replacement for binders, or can it provide insight? Does it have the capacity to help the board visualize data and progress in intuitive ways? Does it help you capture and sustain strategic conversations? In short, it’s not enough for the tools we use to be digital—they need to help make boards into a digitally engaged entity ready to lead a digitally engaged credit union.

Board portals, whether they are iPad apps, intranets or a blend of both, are a perfect example of digital tools that are typically not used to their fullest extent—but that could help many boards become much more digitally engaged. Many board portals include discussion boards or dashboard frameworks, fundamental elements of becoming digitally engaged. But for many credit unions, these functionalities fall to the wayside. Getting your board to optimize the potential of these portals—by, for example, creating active data feeds correlated to specific metrics for strategic initiatives—will do more than simply justify the investment in the portals. It will help the board streamline its processes and make faster decisions in (or out) of the boardroom.

Members are consumers first, and so are board members. They’re accustomed to living and working in a world where digital is an integral part of their lives. Anything that isn’t easy and seamless becomes less and less acceptable in the consumer marketplace. The same should hold true in the boardroom, both in the ways we enable our board members to conduct planning and governance and in the ways we encourage boards to think about delivering guidance that will keep credit unions relevant and growing in an era of digital. It’s time to bring the board online.

Jackson Hataway, Ph.D., is a consultant with Strategic Arts & Sciences, based in Kansas City, Kans. He works with credit unions across the country on strategic planning, digital readiness and communication strategy. He earned his doctorate in organizational communication from the University of Alabama.