The story goes like this….years ago Southwest Airlines was contemplating offering a chicken sandwich on its flights. Apparently it tested well, with all indications that the sandwich would improve the satisfaction of customers flying on Southwest airplanes.
If you have flown Southwest lately, did you get your sandwich?
No!? Here’s why…
When the concept was brought up to then-Chairman Herb Kelleher, he basically asked how the sandwich would help Southwest remain a low-cost airline.
There was no way to defend the sandwich idea against the context for decision-making at Southwest.
Consider this quote from Kelleher, given in an interview with The Post & Courier back in 2011:
Southwest Airlines as you know was really the progenitor of low fares in America.
Think about that sandwich in the context of Southwests’s low-fare proposition. One sandwich would have equalled increased catering and food costs, increased load/waiting time, increased fuel consumption, extra cleaning costs, and more. It would have undermined the entire Southwest model.
For those proposing the sandwich, the idea was certainly born of a noble cause – increasing customer satisfaction. However, they forgot that a customer’s very decision to use Southwest was not based on the prospects of first-class flying, but on low cost. To offer the sandwich might have improved satisfaction scores, but it would also have contributed a cost likely to be offset by ticket price increases.
Now, I’m not completely clear on the details behind the story, and in fact it could well be some bit of corporate mythology, but nonetheless it is very illustrative of the importance of context-based decision-making.
Think about your own credit union for a moment. Do you have a contextual basis for decision-making?
While you are thinking, know this. Most credit unions don’t. Yes, any given credit union likely has a vision statement, a mission statement, a statement of core values, service standards, or even a combination of all of these things, but rarely does even the combination of all of these statements illustrate a clear basis for decision-making.
I contend that credit unions need to start tearing down all of the posters, plaques, stone tablets, etc. on which the flowery language of vision statements, mission statements and the like are recorded. Trust me when I say that most people forget what these statements say, what they mean, and what they promise.
Credit unions should instead focus on crafting a clear operating context. A clear context provides incredible focus AND creative freedom for your employees, not to mention a specific reason for your members and potential members to do business with you.
I’ll return to Southwest to explain. While all airlines are no doubt driven by making a profit, Southwest has that extra element in their context which focuses them on maintaining their low fare advantage. One of the major challenges for airlines recently has been the increasing costs of fuel. When fuel prices started to rise to disconcerting levels a few years back, most airlines tried to pass higher fuel costs on to customers (not a very successful strategy for many). Southwest, however, made the unique decision to hedge the cost of fuel, mitigating risks associated with an escalating cost of jet fuel as a means of maintaining some stability in its cost structure – and subsequently its ticket prices. During that timeframe it kept its fares low by competitive comparison, and it remained the most profitable US-based airline.
While that strategy hasn’t always been successful, Southwest posted a 3rd quarter 2011 loss due in part to markdowns in its fuel hedges, it does illustrate an organization’s creative response to its defined operating context. Southwest seeks to keep costs low for its customers, and every organizational decision comes back to that context in some way.
Back to my question about your credit union. Do you have a clear contextual basis for decision-making? If not, you should develop one – and soon! While you are at it, get rid of all of the conflicting rhetoric found in visions, missions, core values, service standards, and the like.
Now, think about what life at your credit union will be like where a clear context serves as a daily guide for decision-making. You will be better able to determine when to say “yes” to strategies and when to say “no” (a la the chicken sandwich). You will have a better grasp on what you should promise members their experience with you will be like, and what you should never promise them. You will have employees that finally understand how their daily involvement with the credit union connects to the big picture, and what they might be doing that undermines that picture. And finally, you will have clarity of purpose.
It is as simple as that!
For information about how Glatt Consulting can help your credit union develop a context-based strategic plan, download a copy of our 2012 Strategic Planning Proposal, contact our office at (888) 217-5988, or send us a note using our online contact form.