Ron has a blog post about the downside of being small. Great post with some definite statements about how small is not the panacea for everyone.

First, small and large are relative terms. They are labels we place upon items in order for us to gain some semblance of order. What is small to some will be large to others and the opposite, what is large for some is small for others. Remember the end of the film Men in Black II?

There is another aspect of an organization’s size that is of a prime concern. How it is managed. You can have any size FI and if it is managed well size, though a consideration, is part and parcel of many other goals and strategies. A badly managed organization doesn’t need size to fail.

Small to me means keeping the organization flat, tight, and productive. It means being able to move on a dime. It means ‘fighting’ with 3rd party suppliers that create expensive products that would force you into a strategy or product that is not even a 50% solution. It means quit ‘whining’ and do what you are supposed to do. Small means have staff meetings where the contribution is from everyone so you formulate objectives that are understood and agreed upon so you don’t need a marketing department to push anything. Small means you don’t have to structure meetings to decide on the colour of the toilet paper in the washrooms. The list could go on and on. It is important that the term small does not get translated in the terms most employ. Small by its nature in today’s society looked upon as an anomaly because so much that we are shown (big) is the antithesis of small. That is why I think ‘small is beautiful’.

Ron and Jeffery are right. You need more coming in that going out. A very simple rule of business. But not all mergers have delivered that ideal and so merging sometimes clouds the issue of what is really necessary – changing the management to at least begin to move forward. Sometimes I have seen mergers to build larger empires of senior management. FIs live and they die, nothing continues forever. Try as you might there may be conditions and reasons that are no longer available or valid to continue.

It would be very easy for the Board to say “we need 10% growth and nothing else matters!” Piece of cake. But when they say “we want at least 5% growth, keep the community happy with at least a 7% dividend, make sure donations are 7% of net income, be sure to continue to contribute to the social capital of the CU and the community, and deliver innovative products that are useful, as well as no line-ups in the branch, etc…well that gets a bit more difficult to manage. Keep the bottom line healthy and you can realize all and more of these goals. That is the tough part. Fine tuning all the aspects of what makes you successful. Growing in all of these aspects makes for a difficult and at times impossible situation. But man is it ever rewarding and satisfying when everyone contributes to making it happen. The biggest enemy of being small? Thinking small.

Doug has presented an excellent post about CUs and innovation. But as I commented there is another side.

First I am not saying that all 3rd level CU organizations or 3rd party suppliers fit this pattern. There are a number of organizations and people within these organizations that get it. But in large part most fit the same pattern — keep it comfortable and maintain the status quo.

That pattern and the underlying mantra of most credit unions that their brand is sacrosanct creates the problem for innovation. Please don’t ask me for the answer on this one as I don’t have it. It is almost like the system governs the outcome and there is no reasonable explanation as to why it continues. Why can’t we work together to a greater degree? Because we have a brand to maintain and maybe some collaborative effort will diminish it. Our competitive edge will erode if it was know our CU competitors were involved. Or when we are at the table trying to collaborate we can’t agree because the brands get in the way. Maybe it would be just too difficult to have to re-build something by having to admit previous failures that were never fixed. Common sense doesn’t event get a chance to exist.

When you have a culture of innovation in your credit union it is risky. There are daily challenges as to why you continue to do things as before. In having this view you constantly challenge not only your CU but everyone else. There is acceptance in that you do have a proper product or service in place but that it could always you a bit of tweaking when you have the time and resources to do it. There is always this impatience and not being completely satsified. There is always the frustration of trying to arrive at the right solutions for your members. There is the fear of failure. There is the consequence of having spent so much time on something to see it not working as you thought. But all of this leads to the healthy.

You don’t do anything for the recognition but you do it to serve the members better and to make the staff’s daily routine easier and less mundane. You do it from an open source attitude. If another CU can use what you have and make it better isn’t that something better for all of us? You learn from the mistakes because you are willing to take the risk to make mistakes. You always move forward from a position of the positive. The health of your CU is certainly measured by it’s financial performance. There are also some subjective measures such as what have you produced for the members that they can use and value? Cloning a free checking or youth account doesn’t count. Challenging the status quo both inside and outside the CU is the starting point. Asking a simple 3 letter question is maybe the best way to start. “Why?”

Ron Shelvin has posted something interesting. I would restate it in terms of “Innovation is a credit union’s secret weapon”. Just the nature of innovation makes it positive, dynamic and well — who wants to be called uninovated?

To innovate means to change, to make changes in something already established, to bring or introduce novelties, to alter or renew. It would appear that the major attribute needed is to be flexible. Now how many FIs could be called flexible? We are painted and stuccoed as rigid, certainly not flexible. This is an industry that has regulators, auditors, SWOT consultants, and inflexibility as part of it’s character. Flexibility and innovation can be viewed as risky by this group. But now is the time we can’t afford to be anything else but flexible and innovative. So here are 4 simple innovative ideas.

• open the door 5 minutes before the posted time.
• make sure a person answers the telephone, not an answering machine.
• make sure the phone is answered by the 3rd ring. That means everyone answers the phone including senior people (who have also been trained on how to transfer a telephone call to another local).
• phone and attempt to contact a member before you return any cheque.

Not exactly high points of technology. Just small things that have been changed from actions of the past. The key is that we as CUs have the ability to change, to do these things differently, to innovate. We don’t have the monolithic structure that prohibits us from doing this. So somebody please tell me — what is stopping us? Are we afraid to be different?