By Frank J. Diekmann
Television’s Shark Tank show has birthed too many mini-versions of its idea pitch/investment competitions at conferences to count, and that includes when credit unions get together (again).
Getting one member from the shiver of sharks to share their business insights and acumen with CU leaders is equally popular, and usually with good reason.
Take Shark Damon John, who recently spoke to Alloya Corporate’s recent meeting (allowing me to write headline this FUBU Guru To CUs: ‘Could Be You, Too’).
People often wait on the various Sharks to deliver some business nugget that will allow them to give their two weeks’ notice, grow a hipster shadow beard (even the women) and have those IPO checks sitting in the Lambo’s glove compartment before next Christmas.
But as most successful entrepreneurs will tell you, it usually isn’t the hot new app idea and resulting success that leads to disciplined personal habits, it’s the other way around.
In John’s case, he told credit unions that beginning from a young age he has on every day read from a list of goals he has made ranging from health to family to money.
“I read them before I go to bed. I want them to be the last thing I think about before I go to bed. I read them when I wake up, because I want them to be the first action I take,” he said. “I never hit my six-month goal because I set them so high. You have to envision those goals. You have to mediate. You can’t say ‘I want a house.’ You say the door is shaped like this. What is the door knob made from? What’s in the backyard? It is an ocean, a desert, is my dog there, is my child there? You have to envision it. Because what happens if we don’t set goals for ourselves? We let others set them for us. Oprah Winfrey says you become what you think about all the time. People say, ‘I want a million dollars.’ What do you want it for? Its why athletes and lottery winners end up in bankruptcy. They had no goals.”
What is atop John’s list? It’s not investing in a start-up—well, actually, it sort of is.
“This is the kicker,” he said. “The goal is so I can be around for my three beautiful little girls. Goal setting is the most important thing you can do.”
Do You Have 2-5 Words?
Stepping outside personal objectives, John said there is a goal credit unions should focus on as organizations.
“Younger people want culture,” John told the meeting. “They want to know what you are fighting for. What are the two-to-five words you stand for? Just Do It? Think Different? If you don’t know the two to five words you stand for, then you leave it up to us. Why is that more important now than ever before? When we grew up we would shake a hand and check references. Today, we’re thinking about this device that will never be more than three feet from us for the rest of our lives. Kids today want community. People don’t trust any kind of system and believe they are working for someone else’s dream. If they are going to be a part of a system, they want to know what does the system do, how does it create change?”
Can You Defy The Laws of Economics?
You can’t get much past the first four or five paragraphs of any financial services reporting before you are tripping over the word “merger,” and not just in credit unions. And as you already know the reasons for all those combinations are more numerous than the “if only’s” muttered with each sports wager tickets torn in half and littering the floors of Vegas sports books.
But here’s a reminder of one of the fundamentals of the business helping drive those mergers, courtesy of Dr. Elliott Eisenberg. Eisenberg, known as the “bowtie economist” and a popular speaker before credit union groups, told the Northwest CU Association’s recent MAXX Conference that, “Banks and credit unions are disappearing because the economies of scale are astounding. You have to have a lot of lawyers and IT people and like four people who deal with the green pieces of paper.”
For credit unions not looking to merge, Eisenberg offered a frank assessment.
“You have to think about what your plan is. Are you going to expand and grow? Are you going to stay the same size and manage? Do you have a plan and understand the economic consequences of those plans?” he asked. “You have a social purpose, I get it, but you can’t defy the laws of economics indefinitely.”
Eisenberg added there is one other related business with similar scales: “money laundering.”
Gather Round Kids, I’ve Got a Story
Credit unions are returning to in-person events and as they do they are confronting one of those “new normals” we keep being told about, in this case in the hospitality industry.
In addition to his comments about mergers, Eisenberg told the same meeting that one thing that happened during the COVID pandemic was the furloughing of many hotel/restaurant workers who came to realize their jobs “sucked.”
At the main conference hotel for the NWCUA’s MAXX meeting, guests were told there would be no daily maid service unless you requested it. Instead, it was self-serve and guests were greeted by industrial rolling racks in the hallways with towels and sheets if you wanted them (at right).
My prediction: Unless you’re in a premium property, one of the delights of staying in a hotel—returning to your room to find your bed made, towels collected and everything freshened up—is a thing of the past you can tell your grandkids about someday.
The DEI Chicken & Egg
Have you ever had that experience where you think you’re alone with a question when someone else raises their hand to reveal you’re not alone?
Thanks to an anonymous (and virtual) hand-raiser, I had just that experience last week during a webinar hosted by Filene at which it unveiled first-of-its-kind research on whether implementing DEI policies and practices has a direct effect on the bottom line.
Filiene’s conclusion, released by its Center for Diversity, Equity and Inclusion in a report titled What’s the Bottom Line? Diversity, Equity, and Inclusion (DEI) Practices and Credit Union Performance, is yes, there is a correlation between credit unions that in DEI and ROA/net income.
But hold on just a causal-relationship minute, I found myself thinking: Of course, the research found credit unions with DEI programs in place are posting positive net income. DEI initiatives are an admirable goal and practice, but c’mon, those most likely to be able to invest in such initiatives are larger credit unions that have the budget and the bandwidth, and as the data shows every single quarter, positive net income in CUs has nearly become the sole domain of credit unions of $500 million or more in assets.
On the flip side, for many smaller CUs DEI stands for Desperate for Extra Income.
That’s when someone watching the Filene webinar raised their hand—sorry, posed a question in the chat—asking the same question I had about whether DEI was really contributing to net income, or was it not perhaps the other way around.
McKenzie Preston, a doctoral candidate in management at the Wharton School at the University of Pennsylvania who was/is involved in the Filene research, said the researchers too that market reality into account.
“It’s an important question, he said, “We are controlling for size of the credit union, assets, and resources available,” Preston said. “We’re trying to compare credit unions of equal size to each other. When we take away the chicken and egg (question), even when comparing smaller credit unions with smaller credit unions we do see there are performance gains.”
Frank J. Diekmann is Cooperator in Chief of CUToday.info and can be reached at Frank@CUToday.info. Mr. Diekmann is also author of several new book, including the brand new “The Last Lyric,” a humorous satire about a murder investigation at the Rock & Roll Hall of Fame in which every line of dialogue is either a classic pop/rock song title or lyric. Available on Amazon, Apple iBook, Barnes & Noble and Smashwords. Mr. Diekmann is also author of a non-fiction compilation of the very best & worst he has seen and heard in covering more than 500 CU meetings and conferences, “501 Name Tags: How Everything You Need to Know About Business Can Be Learned at a Conference & Forgotten in the Trade Show.” It is available on Amazon, Barnes & Noble, Apple, Lulu, and Smashwords.