Strategic Planning in Banking: What A Joke

I don’t how USAA would describe its business strategy, but the following would work for me:

Serving the financial services needs of the military.

A strategy purist might take issue with this, asserting that it’s a positioning statement, defining a target market, but not necessarily a strategy for serving that market.

I’d argue that point. There’s a lot implied in the statement above:

1) Members of the military have unique financial services needs that need to be identified and served.

2) Serving the military requires an FI to develop and sustain a set of capabilities that are superior to what other FIs have in order to profitably serve this segment of the market.

3) The military is a sufficiently large segment of the market to sustain USAA.


Peter Drucker once said “strategy is as much about figuring out what not to do as it is what to do.” I once said:

“Firms that don’t decide what not to do find themselves in a lot of doo-doo.”

For the life of me, I can’t figure out why my quote isn’t as widely cited as Drucker’s.

The USAA strategy definition above meets Drucker’s test. Any possible investment of scarce USAA resources can be put to the test: Does this help us attract and serve the unique financial services needs of the military?

Implicit here is that, in order to answer that question, USAA needs to actually know what the unique financial services needs of the military are. And that they truly need to be unique.


Q. What does USAA do every year at strategic planning time?

A. I have no idea. But I bet it does not start from scratch and come up with a new definition of strategy every year (if you know for a fact that it does do this, for g*d’s sake, be quiet, and don’t say anything to ruin my blog post).


Q. What do a lot of banks and (especially) credit unions do every year at strategic planning time?

A. They go through the charade of defining a “strategy” for the next 12-24 months, often based on some overly simplistic and misguided SWOT analysis.

The end result of this “strategic planning” effort is a list of initiatives that are supposed to produce strategic value, direction, and competitive advantage.

WHAT A WASTE OF TIME AND EFFORT. The only good things to come out of this process is a good round of golf and some good food at a nice resort (and for those reasons alone, I’d be happy to come to your next strategic planning offsite).


Having spent (the part of) 2 consecutive weeks in October at credit union conferences, I’ve witnessed the challenge and pain of poor strategic planning efforts that is prevalent among many CU executives.

Part of the pain is caused by absolutely horrendous definitions of strategy. Ask 10 CU CEOs what their firm’s strategy is and 7 are likely to say “Superior service.”

Sorry, but that doesn’t come close to passing the Drucker test (or any other test of strategic definition). Service means different things to different people, provides no guidance on what should and shouldn’t be invested in, and because it isn’t measurable, doesn’t help an organization determine if it is outperforming the competition or not.

The other 3 out of 10 might say something like “Serving our community.”

That sounds somewhat similar to my take on the USAA strategy, so I should be careful about criticizing it, right?


My stab at USAA’s strategy includes mention of the military — which I am claiming and/or assuming has unique needs regarding financial services.

But what is the definition of “community” for a lot of credit unions? Often, it’s a geographically-defined area. Made up of all sorts of people, who are unlikely to have uniquely defined needs.


What’s a bank or credit union to do?

Start by reinventing the strategic “planning” process. The process needs to start with a strategic “discovery” effort — that is, figuring out what the current strategy actually is. This isn’t as easy as it sounds.

Some years ago, I was working for an IT strategy consulting firm, and us junior know-it-all consultants went off  to client’s site to interview execs and collect data to fuel our IT strategy project.

After a week or so, we came back to the home office to check in with the omniscient partner, who asked “so, what’s this firm’s IT strategy?”

We said “they don’t have one.”

“NO!,” he yelled, pounding his fist on the table for dramatic emphasis. “Every company has an IT strategy. It might suck, it might be inconsistent, it might be ineffective, but they have one. Your job is to figure out how to describe that strategy. If you can’t do that, we can’t get help them understand and define a strategy that IS consistent and effective.”

If you can’t describe the strategy your bank or credit union is deploying today, then you won’t be able to figure out what competencies you have or don’t have that would be relevant to some other strategy.


Having “discovered” your current strategy, you need to “evaluate” that strategy.

If you’re not growing as fast as you’d like to be, or not producing profits that you’d like, you might be inclined to conclude that your strategy isn’t working.

But it’s not that easy. You need to determine which of the following four boxes your organization falls into. Your strategy might be the right strategy, but your execution is falling down. Or maybe you’re executing well, but the strategy is wrong.

strategic planning

A SWOT analysis isn’t going to help you with this evaluation, people.


The “discovery” effort has to be done before you go into a strategic planning offsite. It’s a total waste of time to use BOD time to do this. You need to come prepared with the results of that effort.

The bulk of the time in the strategic planning offsite should be spent on evaluation. And you probably don’t even have enough time to do that.

Over the course of a weekend, you would do well do to meaningfully address the following — and only the following — questions:

1) Given what our current strategy is, do we need to change it?

2) If we need to change it, what do we need to change it to?

Any discussion of specific initiatives, or the timing of those initiatives, is a waste of time.


I know of some CU CEOs who might read this, nod their head in agreement, and then consciously ignore every recommendation made here.


Because, for them, the strategic planning effort isn’t really a strategic planning effort. Instead, it might be better thought of as the “beat the board into submission” effort.

If that’s your CEO, sorry, I can’t help you.

Bottom line: Strategic planning is a joke at many FIs because “planning” is the last they need. Lots of the verbs used to describe strategy fall short, as well. I’ve yet to find a firm that has successfully “formulated” strategy.

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