Competitive advantage is a feature (product/service/idea/distribution/culture) of a company that elevates it to have the edge over its competition or market.
Today's finance marketplace is diluted and cluttered by the plethora of fintech and others, making creating competitive advantage seem an act in futility.
Credit unions who may feel dismayed/ beleaguered need to take stock of two important assets they have;
Organizational change defines all the changes that credit unions have made in the past 18 months. Most have deployed a remote working structure as well as increased online access channels. Some surveys say that organizations may have advanced three years digitally during the pandemic. While the change may have been swift and jarring, it was change nonetheless.
Stakeholder Capitalism is a very different asset indeed. The principle of stakeholder capitalism requires business leaders to redefine value creation not as simply creating profit but creating long-term value for members, suppliers, employees, communities, and others.
Credit Unions have this framework already deployed in their mission, and now it is to use it to their advantage.
A recent report from the McKinsey Global institute studied 615 large and mi-cap US public companies and found that those who had characteristics of stakeholder capitalism have outperformed the rest in earnings, revenue, investment, and job growth.
The following is the five-step approach McKinsey recommends to help companies bring stakeholder capitalism to life.
Step1: Understand who the stakeholders are.
Step 2: Understand stakeholders needs and build trust
Step 3: Define and measure ways to serve stakeholders
The significant ways companies can create stakeholder impact, according to McKinsey, are:
financial and operational,
health (both organizational and personal),
Step 4: Define and execute a stakeholder-capitalism strategy.
For each type of impact, companies should consider the priority stakeholder needs by asking, listening, and gathering data. For example, identifying the value a credit union provided to the members will come from understanding buying behavior, click-through, price elasticities, relationship networks, and financial independence. Next is to build out a framework that continues to create and deliver value to the member (stakeholder)
Step 5: Build an operating model that can sustain long-term value creation for all stakeholders.
To generate value creation on an ongoing basis requires accountability, communication, and updating. It is a process, not a result.
Now is the time for credit unions to embrace the incredible changes they have made and start to carve out long-term value creation for ALL their stakeholders. It is evident that change is here to stay, and those who resist it may become obsolete.
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We believe that data transformation doesn't have to feel overwhelming or expensive to be impactful. After helping over 600 credit union leaders launch their data journeys, we have identified several consistent knowledge gaps. We have worked hard to fill these gaps with a variety of educational artifacts:
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Looking for more insights on data and how you can leverage it to transform your members' lives?
Check out Big Data/Big Climb. Written for credit unions by a credit union expert, this book has been hailed as a "must-have". The book cuts through techno-jargon and translates data transformation concepts into a playbook filled with real-world examples, assessment guides, and other tools needed to reduce member friction, analyze actual competition, and identify disruption to improve the lives of its members and gain competitive advantage.