It’s easy to be cynical about the strategic planning process in many financial institutions. First, it’s usually defined as a “retreat.” Wouldn’t we rather be on the attack? Second, attendees are split into two camps: One charged with finding ways to grow, the other with ways to avoid risk and cut cost. Third, only two or three days are devoted to devising a strategy that needs to drive the organization for at least the next 12 months. And lastly, the relative merits of growth strategies are evaluated in a vacuum, with personal opinion and anecdote taking the place of actual market or customer data.
In no particular order, here are ten key questions you need to ask during this year’s planning cycle:
1. Are you content being a commodity? The all-things-to-all-people strategy may have run its course. It leaves you increasingly vulnerable to competitors and relying on convenience and price to compete. Where can you increase the value you deliver to customers? Can you make your service offering distinctive and compelling?
2. Are you competing to be the best or competing to be different? To paraphrase Michael Porter, each strategy comes with serious implications for long-term performance and resource allocation. The biggest disconnects between strategy and implementation come when tired, conventional tactics are deployed to achieve aspirational goals.
3. Do you know what your customers really want? And do you know why they choose you? We often assume that the latter is the result of the former, which is not always the case and can lead to strategic initiatives that are doomed to fail. You’re making decisions that affect your entire operating budget for the year. It’s worth spending a few thousand dollars on research to better understand the priorities and opinions of your customers.
4. How can you become a trusted, expert provider of valuable solutions to customers in those segments where real growth is available: Small Business Owners and the Pre-Retired?
5. Do you know what your leading competitors are doing? Credit unions and digital direct banks continue to steal share and record higher-than-average customer satisfaction scores; their focused, streamlined strategies make clear promises of value to customers. What are they promising and delivering to customers? What can you learn?
6. Do you have a clear channel strategy in place? Nothing, currently, is defining the customer experience more than customers’ channel use and preference. How will you balance transactional convenience and consultative service? Will you see your branch network as a key to revenue generation or an unwieldy expense?
7. How do you leverage the consumer trust inherent in your brand before it is undermined completely by commoditization and threats of cybersecurity?
8. Are you planning or budgeting? Too often they are both discussed during strategic planning with the tendency being that short-term budget issues dominate at the expense of long-term strategy.
9. Are you being realistic? If you’re setting a 6% growth goal in a market where you’ve managed 1% growth for each of the past few years, what’s changed?
10. Will there be organizational accountability for the goals in the strategic plan? How often will you regroup as a team and systematically report and evaluate performance against every strategic goal? If not monthly, then you might be doomed to be part of the 87% who fail in execution.
Ultimately, strategic planning is meant to deliver a successful business strategy. And business strategy is all about earning superior profits and beating the competition. Will your planning process deliver?