It’s about that time. We’re at the cusp of summer, and banking executives around the country will soon be preparing to sit down with their colleagues at a big conference room table and once again discuss the future. What lies ahead for the next year? What updates need to be made to our strategic plan? What do we want to accomplish in 2022 and beyond? It’s a ritual everyone is familiar with, but unfortunately, rarely does this practice take us very far. The problem today is that many banks have become very tactical in their planning, failing to bring an emphasis on long-term strategic goals into the conversation. This is a missed opportunity.
Often, strategic planning sessions focus on outcomes — 20% annual growth or a return on assets (ROA) target of 1.3%. It’s admirable to have these sorts of goals, but they skip a step. Strategic planning is about what kind of business you want to be and how you want to serve customers over the long term. There should be no numbers in a strategic planning document except page numbers. Without this commitment to developing an overarching vision, every tactical measure or goal you put in place is in service no real north star. Think about retirement, or rather all the things you might want in retirement — a comfortable home, disposable income, perhaps the ability to travel. Now, think about when you started planning toward that end state. It was probably a long time ago. It’s the same in business — things don’t happen overnight, they take time. Getting a strategic plan in place for your bank means thinking hard about not just the next year, or even three years, but the next decade. Once you’ve done that, you can start thinking about what is needed to get there.
The most successful companies in the world are doing this all the time. Amazon, Google, Facebook — they are obsessed with who they are as companies and how they can align all of their initiatives under their overall vision. They are also acutely aware that this vision may adjust and shift over time. Back to retirement — maybe you were planning on Florida but that was before grandchildren were in the picture. The trick is to design your north star with flexibility in mind and line up all of the tactical measures underneath. Essentially, you are putting the bank in a perpetual state of transformation by which initiatives are introduced and pursued to support an evolving vision. As the vision evolves, so do the measures that make up the roadmap. But the vision always exists, clearly defined and well-articulated, and the tactical elements are always tied into that future state. Amazon famously writes the press release for every initiative before any work begins, for instance; it’s a way of making sure that the direction for the project is aligned with the customer and the company’s overall vision.
Prioritizing tactical measures over strategic vision is an easy trap to fall into. Let’s be honest, quick wins feel good. Really, really good. The problem is that this approach is short term in nature, and only a long-term view will breed real sustainability from a business standpoint. We all know this, and yet, somehow, the shiny object a few feet away is always more immediately attractive than the promise of something bigger, later. But it’s time for a shift in mindset — fintech competitors, as well as those big tech firms just mentioned, are changing the landscape in financial services, and they all put their mission at the heart of their operations. Competing now will require adopting a similar approach. Start with what differentiates your business and use that as a foundation — maybe it’s culture, maybe it’s exceptional service. Every bank has something that makes it special; identify what that is and then build a plan around it.