Finding the Bright Spots & Creating More of Them
In their book, Switch: How to Change Things When Change is Hard, Chip and Dan Heath introduce readers to the story of Jerry Sternin. Sternin, who works for Save the Children, was sent to Vietnam in 1990 to open a new office and given six months to make a difference in the nutritional health of poor Vietnamese children. Sternin started by studying the height and weight of children in rural villages and comparing the growth rates of children from family unit to family unit. In this way, he was able to identify the children who were thriving and those who were not (Heath, 2010*).
The obvious assumption one might make about malnutrition is that the poorer a family might be, the unhealthier the children in that family would be. But, that wasn’t the case in every instance. In fact, the study showed that there were children in some poor families who were actually thriving. These instances became known as “bright spots”. From these results, Jerry and his team decided it would take less time to study what was happening in these bright spot families than it would to study all the possible things going wrong in the families with children that were not thriving. By studying these families, they were able to quickly take their findings and duplicate them in the families where the children were not thriving.
Whether one calls them bright spots, best practices or pro tips, bottom line, when changes are necessary, we need to focus on where we know things are going right and attempt to duplicate those results. Too often, when change is needed, we fixate on what is going wrong and try and fix it. Unfortunately, it’s not always clear why things are going wrong. Let’s say that a credit union is struggling to grow loans. Is it because rates are too high, or is it because the decision process is broken? Is it a matter of a marketing issue, or is it because the closing process is cumbersome for the member? It’s just too difficult to accurately identify the issue when there are so many possibilities.
However, by focusing on successes, even if it is at another credit union, leadership can more quickly determine where changes can be effective, faster. If a credit union is failing to increase indirect loan production, then studying those credit unions that are successfully growing market share may be the fastest route to improvement. But, it’s just as important to make sure that the success you’re referencing is actually the result of solid lending practices. Just because a credit union is growing loans, doesn’t mean that it is booking the right kinds of loans. In the way that leaders should not fixate on their own untested problems, they also should not fixate on the success of others when that success has not been validated.
Let’s go back to Sternin’s study. He found that poor families, where children were thriving, were not feeding the children any more food than the families with children that were not healthy. The difference was in the way they were feeding their children. The parents were paying more attention to ensure the children were, in fact, eating the food given to them, and feeding them the same amount of food per day, but dividing it into six meals rather than three. As a result, their bodies could better process the food into usable nourishment. Often, credit unions assume that they need to re-invent lending norms in order to achieve growth. As a result, many lower their prices to unprofitable levels; others take on more risk than they are prepared to manage. But, the answer isn’t so much in the types of loans that are being booked or the price of those loans, as it is the way loans are acquired.
Let’s not forget the role that Sternin played. He didn’t care more about those children than their own mothers and he certainly didn’t go in with all of the answers, but arriving in the region with fresh eyes and an open mind, he was able to discover important nuances that even the people with the most vested interests overlooked. It may be challenging for a credit union to acquire “best practice” knowledge on its own, especially when its leaders are focused on running the credit union. And, often these best practices are achieved outside the reach of their available resources.
CU Direct has created an Advisory Services group to provide consulting that is focused on best practices based on experience working with more than 1,000 credit unions. Our Advisory Services can analyze a credit union’s entire lending process and compare/contrast it with successful, tried and tested credit union practices, ensuring an improved process and a path to loan growth. Sometimes, it’s not possible to get where we want to go by ourselves. Credit unions are no different.
*Work sited: Heath, C. a. (2010). Switch: How to Change Things When Change is Hard. New York: Crown Publishing Group.