Tag Archive for: #complexity

The whole world is facing the need to deal with increasing VUCA. Volatility. Uncertainty. Complexity. Ambiguity. Credit unions and their boards included. Directors must flex this muscle and practice dealing with all of these to bring their organizations into a future where they can continue to make a difference in their members’ lives.

By Kevin Smith, a full set of Encyclopedia Britannica and the full interwebs.

Being a credit union board member in today’s financial landscape is a bit like being the captain of a ship caught in a hurricane – except the hurricane never ends, the maps are outdated, and the crew occasionally votes to change course mid-storm. Welcome to the world of VUCA: Volatility, Uncertainty, Complexity, and Ambiguity.

If you were hoping for a stable, predictable environment where the hardest decision is approving the annual picnic budget, you may want to reconsider your life choices. But since you’re already here, let’s talk about how to steer your credit union through the financial chaos with grace, strategy, and perhaps a little gallows humor.

VOLATILITY: When Things Change Faster Than Your Meeting Agenda

Volatility in the financial services industry is as predictable as an overambitious budget proposal – inevitable and usually requiring last-minute adjustments. Interest rates swing, inflation rises and falls, fintech disruptors appear out of nowhere, and regulators seem to enjoy changing the rules just when you’ve finally understood the old ones.

How to deal with it:

1. Stay agile, not reactive. If you jump at every headline about the economy, you’ll exhaust yourself and confuse everyone around you. Instead, focus on long-term trends and build flexibility into your strategic plans.

2. Think in scenarios. When planning, don’t assume a single future. Have multiple game plans: “If rates go up, we do X. If they go down, we do Y. If the regulators invent a new acronym that changes everything, we call an emergency board meeting.”

3. Make peace with volatility. Just like how no one really knows what the stock market will do tomorrow, no one can promise you a smooth ride in the credit union world. Accept it. Adapt. And maybe invest in stress balls for your next meeting.

UNCERTAINTY: Otherwise Known as “Why Is This Happening?”

The financial world has a habit of delivering surprises. Maybe it’s a global event that upends the economy (again), or a new competitor that suddenly offers zero-fee everything. Maybe it’s just that nobody knows what younger generations actually want from a financial institution anymore.

Uncertainty is like being blindfolded and asked to hit a pinata except the pinata is moving, and you’re not sure it even exists.

How to deal with it:

1. Gather intelligence. No, you don’t need a spy network (although that would be fun). Just make sure your board is regularly reviewing industry reports, talking to experts, and keeping an eye on economic indicators. The more informed you are, the better your guesses will be.

2. Invest in adaptability. Uncertainty isn’t going away, so structure your credit union to handle surprises. Can you quickly shift resources if a new opportunity arises? Can your leadership team pivot if regulations change? If not, start building that muscle now.

3. Communicate with confidence (even if you’re guessing). Members and employees don’t want to hear, “We have no idea what’s happening.” Instead, try, “We are carefully evaluating multiple scenarios and will act in our members’ best interests.” It sounds better and prevents unnecessary panic.

COMPLEXITY: Where Everything is Connected, and Nothing is Simple

Remember when running a credit union just meant collecting deposits, making loans, and sending out newsletters with smiling stock photos? Those were the good old days.

Now, complexity rules. Regulatory requirements are labyrinthine, cybersecurity threats lurk in every corner, and technological advancements demand constant upgrades. And let’s not forget the delightful complexity of member expectations, which range from “I want personalized financial advice” to “Why can’t you just be an app on my phone?”

How to deal with it:

1. Don’t try to be an expert in everything. You’re a board member, not an omniscient being. Surround yourself with specialists – whether it’s compliance experts, cybersecurity professionals, or fintech advisors. Your job is to ask the right questions, not to have all the answers.

2. Simplify where you can. Complexity is inevitable, but unnecessary complexity is a choice. Look for ways to streamline governance, decision-making, and member services. If your processes resemble a Rube Goldberg machine, it might be time for a redesign.

3. Leverage technology wisely. Yes, AI, automation, and digital banking are important. No, you don’t need to invest in every shiny new tool that crosses your path. Be strategic – what actually benefits your members and makes operations more efficient? If the answer isn’t clear, it’s probably not worth the investment.

AMBIGUITY: The Art of Making Decisions with Half the Information

Ambiguity is what happens when the rules aren’t clear, the outcomes aren’t predictable, and no one agrees on what’s happening in the first place. It’s like trying to play chess when half the pieces are missing and the other half are actually checkers.

Maybe the government is discussing new regulations, but nobody knows what the final version will look like. Maybe your competitors are testing a new product, but it’s unclear if it’s a brilliant innovation or a financial disaster in the making.

How to deal with it:

1. Get comfortable with discomfort. If you need perfect clarity before making a decision, you’ll never make one. Ambiguity is part of leadership. Accept that some decisions will be made with incomplete data.

2. Lean on principles, not just policies. Policies tell you what to do when the situation is clear. Principles guide you when it’s not. If your board has a strong mission and clear values, those can be your North Star when ambiguity clouds everything else.

3. Be willing to course-correct. No decision is final. If new information comes in that changes the situation, don’t cling to a bad choice just to save face. Adapt, adjust, and move forward.

Final Thoughts: Thriving in VUCA

If you’ve made it this far without resigning from your board seat in frustration, congratulations. The truth is, VUCA isn’t going anywhere. Volatility, uncertainty, complexity, and ambiguity are just the price of doing business in modern financial services.

But here’s the good news: credit unions are uniquely positioned to handle this chaos. Unlike big banks driven by shareholder profits, credit unions are built on community, trust, and adaptability. If you can embrace change, make informed decisions, and stay focused on your members, you’ll not only survive in a VUCA world – you might even thrive.

And if all else fails, there’s always coffee. Lots and lots of coffee. If you’ve met me, you know that this is my go-to strategy. :-)