By Randy Karnes, President/CEO, CU*Answers

After a recent strategies event with credit union CEOs, I was charged up. One of the main themes for the week was working as a CEO to “see the way forward.” And the best way to see the way forward or be inspired to move forward is to count on what and where your advantages might take you. One of my favorite approaches to how to find your advantage is Bernard Boar’s five basic categories of competitive advantage:

1.     Cost advantage: The advantage results in being able to provide products and services more cheaply.

It can be tough given the X’s and O’s in banking tactics. Where do you use your scale and operations to have a cost advantage? You have them; you have to execute on them. Hint: Cooperative owners set the expected returns (profit expectations): Where do your owners let you off the hook? Did you know they could?

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2.     Differentiation advantage: The advantage creates a product or service that offers some highly desirable feature or functionality.

Also called value-added advantage. This is more than simply packaging consumer things nicely (good tactic), but it might be the flavor of local, or social bonds, or pride of ownership is layered to give advantage. Don’t get too hung up on the products you offer; as a CUSO we work together to build the products needed to remain competitive, but in most cases, we’re bringing these products second to market, and not offering something no other financial institution can offer. Where we find value is in the services we can provide our members and the unique ways in which we can get them involved in the cooperative process.

3.     Focus advantage: The advantage more tightly meets the specific needs of a particular customer.

You should have it, but do you? Hopefully you have learned how to focus on the agenda of the member (customer-owners) and the diversity that makes you special by seeing individuals and seeing them as owners. Where do you focus and how do you put your best people, money, and attention to the things that lift you with advantage.

Have credit unions lost their focus by directing too much of their efforts toward customers instead of owners? Maybe. And that would mean losing out on a key advantage that credit unions have over others in the financial industry.

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4.     Execution advantage: The advantage permits one to service customer needs in a superior manner to others.

Or as I call it, speed advantage. Think hard on this! You want speed on the customer’s (member’s) path FIRST and FOREMOST! This is the critical success factor to this advantage. Not speed for the employee, especially in a world where member interactions are changing and the employee in the middle is lessening. Not speed for regulator accommodations, especially when regulator accommodation is a negative advantage factor. Get fast for members in every channel. Most of that will be changing your mindset about who is doing the work, when, and how the work appears to the customer. Find speed in everything you do.

5.     Maneuverability advantage: The advantage permits one to adapt to changing requirements more quickly than others. Being maneuverable permits one to constantly refresh the other types of advantage, and is the only advantage that competitors cannot take.

Here the world favors the small. Think about how your scale might mean you should be less worried about bureaucracy, heavy-handed rules, and “this way or the highway” type approaches large organizations have to take for basic coordination of too many cats to herd. Do not take on the weight of the best practices of organizations that do not equate to your situation. Design practices to your situation.

Looking at the five categories of competitive advantage, credit unions have reason to believe they all have a way forward. While some may be stronger in certain categories, all credit unions have something they can hang their hats on and leverage their advantage over competitors. To make that happen, we’re going to have to get out of our own way and stop seeing our credit unions as too small, too slow, or too ordinary to succeed.