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8/7/2019 CUNA Slides

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The Innovation-Friendly BoardRoles and Responsibilities, Opportunities and Challenges

Facilitated by Jeff De CagnaChief Strategist and Founder, Principled Innovation LLC

2005 CUNA Volunteer Cruise

April 24, 2005 ms Oosterdam Mexican Riviera Cruise

What will it take foryour credit union

to thrive in the 21st

Century?


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Innovation distinguishesbetween a leader and a follower.

--Steve Jobs

By the way, Apple is now the#1 global brand, edging out Google.

Managers are not paid to make the inevitablehappen. In most organizations, the ordinaryroutines of business chug along withoutmuch managerial oversight.

The job of managers, therefore, is to makethe business do more than chugto move itforward in innovative, surprising ways.

Heike Bruch and Sumantra GhoshalBeware the Busy Manager

Harvard Business Review(2/02)


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My credit unionsgrowth dependson innovation.

BCG Innovation Survey (12/04)(500 senior executives in 47 countries and all major industries) 73 percentof companies worldwide will increase

spending on innovation in 2005, up from 64 percent in2004.

67 percentof executives ranked innovation as one oftheir company's top three strategic priorities for 2005.

On average, executives said that their companiesplan to boost spending on innovation by 15 percent in

2005.

More than 90 percentsaid that generating growththrough innovation has become essential for successin their industry.


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Past performance is NO

guarantee of future success

Of the original list of Fortune 500companies from July 1955, only 71are still on the list today, including

only SEVEN of the original top 20.

Leaders CANNOT afford to make assumptionsabout whether their organizations will survive.

What is your credit unionsdoomsday scenario?

What are you doing to prevent,avoid or prepare for it?


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What is your credit unionsdream scenario?

What are you doing to seek out,drive toward or organize for it?

How do youdefine innovation?

What does it mean to you?


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Do you recognize this list?1. Kinder Morgan Energy Partners (pipelines)

2. FedEx

3. Apple Computer

4. Starbucks

5. Alcoa (metals)

6. Nike

7. Fortune Brands (home equipment and furnishings)

8. Pactiv (packaging and containers)9. American Express

10. Procter & Gamble

The unthinkable willnever occur.


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Remember the Walkman?

As of today, Apple has sold morethan 10 million iPods and morethan 250 million songs throughiTunes.

Apple has a 65% share of the USdigital music player market, whereasSony's market share is so small inthis marketplace that they just get

lumped into the 'other' bucket," saysMichael Goodman, an analyst withYankee Group.

Given your personaldefinition of innovation,what are some of thebeliefs you hold aboutwhat it takes to makeinnovation happen?


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Some beliefs about innovation

Innovation and creativity are thesame thing.

Innovation is a one-time orhappenstance occurrence.

Innovation is all about products.

Innovation ignores the customer.

Innovation is expensive.

Innovation involves risk.

True False

Questionsfor leaders

GREA

TERLE

VELSO

FINNO

VATION

RELEVANCE

RENEWAL

RESILIENCE

What will make thiscredit union RELEVANT

in the 21st Century?(VALUE PROPOSITION)

What will RENEWthis credit union for

the 21st Century?(PLAUSIBLE PROMISE)

What will make thiscredit union RESILIENT

for the 21st Century?(DEEP CAPACITY &

VALUES REALIZATION)


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The Sigmoid Curve

TIME

B

DA

CC

C

RELEVANCE

RENEWAL

RESILIENCEDANGER ZONE

Living up to our idealsThe credit union idea has grown tomillions of people, but there is nolimit to what the movement can

achieve in terms of growth, service,and most important, as an

instrument of cooperation andharmony between peopleeverywhere.


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Innovation Values Cycle

Imagination

Insight

Opportunities

Impact

Seven credit union principles Voluntary membership

Democratic member control

Members economic participation

Autonomy and independence

Education, training and information

Cooperation among cooperatives

Concern for community


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Edward Filene

He haddeep faith in the capacity of people toimprove themselves as long as they had goodinformation and the discipline to use it effectively.

What do you think hewould say about the

need for innovation incredit unions today?

Vision is not enough, itmust be combined with

venture. It is not enough tostare up the steps, we must

step up the stairs.Vaclav Havel

Former president of the Czech Republic


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What is your personalattitude toward risk?

What is your professionalattitude toward risk?

Is there a differencebetween the two?

Factors influencing attitudes toward risk

Personal life experience

Family attitudes and beliefs

Attitudes about money

Education/field or discipline of work

Experiences of friends, co-workers

External events in field/community/society

Perceptions and perspectives of people wedont know personally


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Being thoughtful about risk

Novelty implies nothing aboutrisk. Risk is a function of

uncertainty, multiplied by thesize of ones financial exposure.

Gary Hamel

HBR, September 2003

The relationship betweentalent and risk at Google

The best way to manage ourbusiness risk is to have the bestpeople working on the problem.

Thats always the best answer.Eric Schmidt, CEO


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Language is onlysecondarily the means bywhich we communicate.

It is primarily the means bywhich we think.

Dee HockFounder and CEO Emeritus of VISA

What are your thoughts,questions, agreements

or concerns?


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Century?

What are the mostsignificant obstaclesto innovation in your

credit union?


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Cognitive

The inability to escapedenial and nostalgia

Cant see the future

The four biggest obstacles(Adapted from Gary Hamel)

Strategic

The inability to developnew strategic options

Cant overcome CW

PoliticalThe inability to moveresources away from

what isnt working

Cant invest/afford

Ideological

The inability to getbeyond optimization

Cant question what we do

What are the brutal facts of your

credit unions current reality?


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Some of the current reality

The number of credit unions fell 3.8% in 2004,the fastest rate of decline in over 10 years.

Credit union membership grew only 1.4% in2004, the slowest rate of growth in over 10years.

Credit unions have less than 10% market sharein consumer savings.

25% decline in the number of credit unions

since 1994. A decline of nearly a third in the number of

total credit union volunteers since 1994.

How do youdefine innovation?

What does it mean to you and to your credit union?

Innovation lives in the careful

balance of systemic freedom and

systemic discipline necessary fordiscovering and developing ideas to

create new value.


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Innovation is changingWhen I say that innovation isbeing democratized, I mean thatusers of products andservicesboth firms andindividual consumersareincreasingly able to innovate forthemselves. User-centeredinnovation processes offergreat advantages over themanufacturer-centric

innovationsystems that havebeen the mainstay of commercefor hundreds of years.

Considering innovation democracy

BLACK BOXOF INNOVATION

INPUTS OUTPUTS

What happens inside here?


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Innovation democracy at Google

Google has no strategic-planning department.

CEO Eric Schmidt hasn't decreed whichtechnologies his engineers should dabble in orwhich products they must deliver. Innovation atGoogle is as democratic as the searchtechnology itself. The more popular an idea, themore traction it wins, and the better itschances.

Keith H. HammondsHow Google Growsand Growsand Grows

Fast Company (4/03)

Two views of innovation

CORESTRATEGY

TRADITIONAL VIEW

OF INNOVATION

INNOVATION AS AN OPEN AND

DEMOCRATIC PROCESS

CORESTRATEGY

R&D


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Systemic discipline

A shared perspective on the importanceof innovation to the associations future.

A clear framework for understandingthe dynamics and demands of innovation.

A flexible and open system for engaging ininnovation that involves the whole organization.

The leadership will to make it all happen everyday.

Principled Innovation Framework

TECH CULT

FIN INTEL

PACE PEOPLE

REACH

R

ESOURCES

TRANSFORMATIVE VALUE/GROWTH

LEADERSHIP

STRATEGIC

CONTEXT


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Innovation principles I

Strategy is a coherent portfolio of experiments

developed across the organization.

Technology supports the socialarchitecture of distributed innovation.

Organizational culture remains vibrant by

emphasizing variety, transparency and inclusion.

Innovation principles II

Curiosity, inquiry and discovery shape the

organizations intellectual environment.

A high return on engagement is a criticalfactor in directing financial investment.

Organizational leaders create leaders

by distributing responsibility for innovation.


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The view from the boardroom

The principal finding of a McKinsey

Quarterlysurvey of more than 1,000

directors is that having focused for a time

on accounting-compliance issues, they are

now determined to play an active role in

setting the strategy, assessing the risks,

developing the leaders, and monitoring the

long-term health of their companies.

The role of the board I A strategic approach to governance

that does not limit innovation.

A knowledge-driven perspective on thestrategic challenges facing the creditunion.

An open-minded view of the future and

what is possible. The courage to give up a measure of

control in favor of a greater level ofinfluence.


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The role of the board II A willingness to ask management hard

questions about key strategic issues anddirections and to raise the issue of innovation inthose discussions.

A discipline of policy and practice developmentthat is infused with a respect for innovation.

A commitment to the intelligent investment ofcredit union resources through an innovationagenda.

A focus on both qualitative and quantitativemetrics of innovation progress that look atprocess, system and outcome.

The innovation agenda A clear expression of the boards belief

about the importance of innovation.

The endorsement of certain keystrategic innovation priorities in whichthe board is willing to invest.

A tool for management, staff andmembers to use in making decisions

about where to direct innovationefforts.

A mechanism for managing theuncertainty of innovation.


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What are your thoughts,questions, agreements

or concerns?



Century?

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