A Lesson for Credit Unions: Avoiding a “Kodak” Moment

by: Scott Butterfield, CUDE, CUCE, CCUE, Your Credit Union Partner

Do you remember your first Kodak camera, that affordably cool little Kodachrome that always kept you coming back for more film. Today, this milestone of American business, Kodak, is on the verge of bankruptcy and is trading at penny stock levels. Taking note of what happened at Kodak may be a valuable exercise for credit unions that desire to remain relevant through the next century.

What Happened at Kodak
How did this icon of American business with more than 120 years history become irrelevant?

The short answer is a long series of managerial mistakes and entrepreneurial failures. They failed to come up with newer versions of itself and even though one of their own electrical engineers is credited with inventing the digital camera in 1975, they failed to exploit this new business opportunity. Kodak failed to anticipate how fast digital cameras would become commodities, with low profit margins. An ever-smaller percentage of pictures were being taken on digital cameras, being gradually displaced by cell phones and tablets’ cameras.

Kodak’s past successes fostered an unimaginative executive culture. In the 1990’s (15 years after they invented the technology), Kodak planned a decade-long journey to move to digital technology. However, there was little implementation of the new digital strategy. Kodak’s core business faced no competitive pressure, and since Kodak executives could not comprehend a world without traditional film there was little incentive to deviate from that course.

Three Learning Opportunities for Credit Unions

• Limited Vision – Learning from Kodak’s mistakes, it’s our responsibility to look into the future to comprehend  and plan for the changes that will certainly occur. It’s our choice to determine whether or not we will remain relevant in the market and in the lives of our members. Successful credit union leaders will spend more time forward thinking and less time focused on past success or on challenges of the day.
• The Status Quo – Credit unions can’t afford to be too comfortable with the status quo or be resistant to change. We must ask ourselves whether or not our past successes have fostered an unimaginative culture. One way to measure this is by how many times you hear “but, that’s the way we have always done it here”. That mindset is a killer of innovation and puts vision at risk.
• Poor Strategic Execution – Many managers are comfortable planning, but lag when it comes to actually putting the plan into action. Frequent reasons cited are; overwhelmed staff, poor leadership, increasing regulatory oversight or tight margins. Regardless of the reasons or their validity, credit unions lose when they fail to execute strategy. Successful leaders will find ways to overcome obstacles and hold themselves and their team accountable for poor execution.

Credit unions want to avoid having a “Kodak” moment, missing opportunities or making decisions that put their future and charter at risk. Fortunately, there is historical precedence demonstrating that credit union’s can be successful and relevant during tough economic times. Consumers are struggling and need credit unions more than ever.  Perhaps the best advice for navigating the future comes from our past, when Louise M. Herring said, “we must remember what we started out to do and then find ways to do it with the modern techniques available”.

Scott Butterfield, CUDE, CUCU, CCUE is principal at Your Credit Union Partner, a consulting firm specializing in strategic business planning and program development. Your Credit Union Partner provides affordable access to expertise and most clients consider Your Credit Union Partner an extension of their management team.  www.yourcreditunionpartner.com