Leveraging Core Competence

Is your credit union truly competent in a way that sets you apart? Unfortunately, many credit unions today struggle to identify and leverage a distinct core competence. As original common-bond sponsorships have diminished, operational costs have risen, and business models have become fragmented. While credit unions generally perform well, their focus is often diluted across competing priorities, hindering the development of a truly leverageable competence.

This article will help you identify and leverage your credit union's core competence to achieve long-term success in an increasingly competitive market.

Understanding Core Competence

Competence is the ability to do something successfully and efficiently. However, true organizational competence goes beyond mere efficiency; it requires a strategic focus on a specific business model that aligns with your strengths and market opportunities.

Drawing from Michael Treacy and Fred Wiersema's "The Discipline of Market Leaders," we can categorize business models into three distinct types:

1. Operational Excellence: This model prioritizes cost-effectiveness and efficiency, enabling you to offer products or services at lower prices than competitors. Examples include Amazon and Walmart.

2. Customer Intimacy: This model emphasizes a deep understanding of customer needs and preferences, fostering strong relationships and personalized service. Examples include Nordstrom and Ritz Carlton.

3. Product Leadership: This model focuses on innovation and the development of cutting-edge products or services that revolutionize the market. Examples include Apple and OpenAI.

To achieve greatness, your credit union must choose a model that aligns with its strengths and commit to developing excellence within that framework.

Identifying and Leveraging Your Credit Union's Competence

To establish and leverage your core competence, follow these key steps:

• Identify your core competencies: This is often the most challenging step. Reflect on your credit union's strengths, past successes, and areas where you consistently outperform competitors. Consider which of the three business models resonates most strongly with your organization's culture and capabilities.

• Create real value for members: Once you've identified your core competence, leverage it to deliver tangible benefits to your members. If your focus is operational excellence, this may involve offering lower loan rates or minimal fees. If your focus is customer intimacy, this may involve providing personalized financial advice and tailored solutions.

• Differentiate yourself from competitors: Your core competence should set you apart in the market. Communicate your unique value proposition clearly to members, highlighting how your focus on a specific model translates to superior benefits for them.

• Capitalize on new opportunities: Leverage your core competence to guide your decision-making when exploring new products or services. Ensure any new offerings align with your chosen model and contribute to your overall strategic positioning.

The Importance of Focus

Many credit unions today attempt to excel in multiple areas, striving to offer both the best rates and the best service. While admirable, this approach often leads to diluted efforts and mediocre results. To achieve true excellence, you must choose a primary focus and align your resources accordingly.

By identifying and leveraging your core competence, you can create a clear and compelling value proposition for your members, differentiate your credit union in the market, and achieve long-term success. Remember, it's not about being everything to everyone; it's about being the best at what you choose to do.