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Structures for Innovation

Many credit unions are either experts at “exploiting” the systems and processes they are good at or they tip to being great “explorers” for the next innovation. Few businesses find the perfect balance of organizational ambidexterity.

Executive Summary

Popular business history is littered with the bones of companies that became extinct or irrelevant for reasons only obvious in hindsight. Kodak failed to capitalize on digital technology it invented in the 1970s. Xerox PARC invented the computer mouse only to let Steve Jobs’s upstart Apple turn it into the blockbuster Macintosh story. And speaking of Apple, the company that blew up the music industry with iTunes could very well lose out to upstart Spotify in the massive new market for paid streaming music. Every company must find the balance between nurturing mature businesses and finding new ones. If only it were as easy as walking and chewing gum.

Credit unions are no different. Incremental changes since the passbook and personal loan days have led credit unions into activities as diverse as mortgage lending, mobile banking, and branch building. Since the 1970s, only a minority of credit unions have made that transition cleanly. Rather than being swamped by one big change as outlined above, credit unions have had to recalibrate to many small shifts along the way. Over time, the survivors are those whose leaders managed to grow stable balance sheets while responding to shifting consumer demand for products, services, and delivery channels.