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The Credit Union Difference – My Discussion with Wellington Holbrook

Recently, I had the opportunity to chat with Wellington Holbrook from Connect First Credit Union. I’ve known Wellington for many years and was really excited when he found a role in cooperative finance working in Calgary. Wellington and I chatted about how credit unions are different, our ability to innovate for the customer and how we can be a catalyst for local economies. Have a listen:

Apple Podcast

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Let me know what you think. Drop a comment below

My Conversation with Hilton Barbour

A couple of weeks ago, I had the pleasure of meeting Hilton to talk about transformation in the context of leadership and culture.  It was a delight to get to know him and read some of his previous interviews with Microsoft, Starbucks, Southwest, Tangerine and Coca-Cola, to name a few.

Here is our discussion:

CULTURE & TRANSFORMATION – Building a Culture of Agility and Resilience at Community Bank Conexus

Within Canada’s ecosystem of financial services organizations, cooperative banks and credit unions hold a special place. While most people are familiar with Canada’s “Big 5” banks, as they all have an international presence, there are over 700 credit unions and cooperatives operating in Canada today. Uniquely, the principal difference is that the members of these financial institutions actually own the bank and aren’t shareholders like the publicly traded “Big 5”. I had the opportunity to chat with Eric Dillon, CEO of Sakatchewan-based Conexus Credit Union and discuss how the unique structure – and culture – of community credit unions gives them significant advantages over their larger public competitors. We also get into the critical need for CEO’s to put on their mask first and how a culture transformation can, and should, feel like a 61-hour drive. It was a fun and fascinating chat from start to finish.

HB: Morning Eric. Appreciate you getting up early for this chat. I deeply admire anyone from Regina Saskatchewan in the middle of a Canadian winter because I imagine it’s always -40.

ED: It’s not -40 all the time, we got up to -20 the other day. <Laughs> No denying we’re a hardy bunch out here in the Prairies.

HB: No offense but I think I’ll postpone my visit until July. Getting started can you tell me a little bit about yourself and a little about CONEXUS for folks that might not be familiar with the business?

ED: Sure. In the simplest terms, and the way I talk with our team, is I’m head coach and chief cheerleader.

That that’s really how I see my job and my role. Beneath that I’m the CEO meaning I’m ultimately accountable for how the organization shows up, how it behaves and the results we deliver to our customers and members. We were talking football before the call (Go Bills!!) but the classic, perhaps over-used metaphor, is I’m like a quarterback; when things go well, we get too much credit. And when things go poorly, we get much of the criticism. The reality I’m just the one face of a thousand people that are working their asses off every day to do interesting things. Since leaving University I’ve worked in the cooperative banking industry.’ve been in this role for almost a decade at Conexus and prior to that at another Credit Union called Servus.

HB: I’d love to flesh out co-operative banking, particularly against the backdrop of other financial services institutions. What makes the sector different and in particular, what makes Conexus different even within the cooperative banking group?

ED: Happy to. The easiest way is to describe cooperative banking vis-a-vis others in the sector. So versus the publicly traded or very large banks, there is a point in my mind at which the interest of a financial consumer and the interest of a shareholder diverge. The beauty of cooperative banking is the owners of the bank are also the customers. So, it’s much easier for me, as the CEO of a cooperative bank, to build the organization in alignment with the needs of the consumer and the shareholder. Cause they’re the same person. I think the challenge for the CEOs of publicly traded banks is there comes a point at which those two audiences diverge, and we know, in that model, the shareholder is often the one meant to win.

One of the other significant advantages for co-operatives is the capital is much more patient. There’s no quarterly earnings call that we need to meet. We’ve got people who were invested in the institution who really want us to build generationally for the next generation of member owners.

That’s a real luxury for us as leaders that you’ve got this kind of patient longterm view of how to build the organization. One of the other areas we’ve got clear alignment with our board is to really root ourselves in purpose and redefine, what does it mean, in 2021 and beyond, to be a community credit union. And what role should we play as a catalyst for economic activity.

HB: I appreciate you must breathe a sigh of relief not being tethered to a 90-day analyst call but that doesn’t mean there isn’t real pressure to perform and grow at Conexus. Some people, mistakenly, think of Credit Unions as these slow and lumbering organizations which couldn’t be further from the truth. Talk to me about those drivers and where you see growth coming from.

ED: I think that (mis)perception does exist. However, the subtle but important difference is that our race is not around quarterly earnings. Our race is around relevancy and to make sure that the organization really delivers on what it means to help people with money, not to see consumers as a source of profit, but to see an opportunity to actually help people be more healthy financially.

Conexus has completely stepped into this different view of what does it mean for somebody to succeed financially and to ask our members “what’s your definition of financial wellbeing?” Interestingly, in some intensive research we commissioned, what’s more important to people is a kind of emotional connection with money as money enables them to live the life they want to lead. Not their Net Income. And the realization that the life you want to lead will be different from mine and will be different from others.

At Conexus that’s 150,000 different people with 150,000 different lives. That’s the basis on which we guide the company, not seeing people as a source of the next credit card sale, or a mortgage sale, but rather to see the family, you know; Susie and Jim and their kids, and here’s their picture today and how can we help them be more successful financially? Or particularly in times like this, perhaps more resilient financially, which we believe is a really important.

HB: I adore that orientation that goes deeper than seeing your members as more than a walking product up-sell. Putting my bias on the table, I’m going to say that deliberate strategy inherently has got a culture that supports it. So, Eric, I’d love to understand what does culture mean to you as a business driver and how have you, as the CEO of Conexus, seen it as something that allows you to deliver your strategy?

ED: Well, as you and I talked earlier, we’ve been very deliberate and conscious about the strategy and the culture we need to enable the strategy we have. But I think its vitally important to ground any culture effort against what’s happening in the market – and where is the market evolving – so you can build a culture with that resilience and adaptability. While it might be a cliché to talk about the VUCA-world we’re living in (Volatility, Uncertainty, Complexity and Ambiguity) I think there’s an unbelievably big competitive advantage for institutions, cooperative institutions of our size, who are really close to the customer to be able to quickly meet what the market expects and to do that in a way with direct customer feedback and direct engagement as a member owner. For the enormous financial institutions that agility is harder, if not impossible, to pull off.

So, if you accept that hypothesis, I think it’s a natural kind of extension to say what’s the culture that the organization needs to act like?  Even though we are a 90-year old company, we must act like a startup that’s nimble and agile, that’s close to the consumer, is naturally curious about what they need and how we must orient ourselves to deliver on that.

We set out 10 years ago to radically change the way the organization behaves to try to capitalize on that strategic opportunity of quick and close to the consumer. I think we’ve made some progress for sure, but we have a long way to go.

HB: It’s absolutely a journey changing an organization, refining or modifying a culture. Talk to me about some of the explicit things you’ve done to move your people and culture along that journey?

ED: Couldn’t agree more and, to your point, we had to be intentional and explicit about it. The first thing we put our thumb on was organizations don’t change, key people inside organizations change. So, if we’re going to be markedly different in terms of the culture that we wanted, we knew we needed different kinds of people or different skills in the people that we had.

We made no bones about that and used unambiguous language like “leaders will change or leaders will change.” And I have to hold myself to that ethos and attitude too. As you and I talked about previously, my biggest personal fear is not evolving myself quick enough to keep up with what the organization will need in this VUCA world.

Case in point, I was doing interviews last week for an executive level role, and I was really poking at the candidate to show me a time where they’ve done something completely different, something unique to the industry where they were sophisticated enough to figure out the risks or the consequences and took that idea over the finish line to production in the market. You’ll be shocked at how few people with a legacy in banking can actually articulate those things. It’s remarkably few and far between to be honest.

HB: I love the notion of leaders will change or leaders will change. There’s something deliciously unambiguous about that. Coming into this role where you’re sandwiched between the Board, your employees looking for direction and reinforcement and your members looking for service and returns, how do you drive that thinking into the culture?

ED: My observation is that the natural inclination of many leaders is to go in quickly, steal or borrow content from others, and then try to adapt it to their new role. Fair enough, maybe things aren’t that strategically differentiated in some categories. However, I would say on things that matter greatly to strategy, where you need people who are actually going to create things and try things that have never been done before, you’ve got to be more deliberate, more conscious and definitely more patient.

Bizarrely we found when we started our journey that there was not a universally accepted definition of financial wellbeing in the history of banking. A category that is 350 years old. So, this tiny little bank from Saskatchewan Canada went out and built one. It took us four or five years to get our heads around it, but, but we built it from scratch. And, today, that “purpose” is the absolute rallying cry for the entire organization. And it’s not just some glossy picture hung up, you know, in offices across our province. If you were to call any of our employees and say, what do we stand for? It would be the first four words out of their mouth. There is absolutely no question about that. And what’s interesting is, from a talent attraction perspective, the people we’ve brought into the organization recently cited helping advance that purpose as a key reason for applying. That purpose absolutely connects us internally. So, it has become a magnet for people who feel similarly about the opportunity and what we’re trying to create at Conexus.

HB: That’s remarkable. I congratulate you Eric, because it is substantively different to numerous organizations who pontificate, but sadly don’t have the proof or evidence beneath the pontification. So congratulations, mate, congratulations.

ED: Thank you Hilton. If I had a nickel for every time, I pulled down a strategic plan, read it and thought my God, that sounds fantastic. <Laughs>. I talk openly to our team that people can think strategically, but strategically doing, you know, that’s what separates the average from the great in my mind. We’ve certainly had our own struggles figuring out a way to deliver on this beast but, I would say, that’s what differentiates the great organizations from the average. It’s the difference between saying, and the much harder task of actually finding ways to build that in to how they deliver to the customer.

When you start to think about here’s our strategy, the next question naturally is, what’s the culture required to deliver on that strategy? And then the most difficult question is, okay, how do we actually move the entire organization? Now you’re talking about recruitment, performance management compensation system and rewards systems, the way the organization communicates, how leaders show up to formal and informal events. The list goes on. It’s really easy as a leader to go, “Oh my God, that sounds hard to have to reinvent all these things”.The goal is not to blow them all up. The goal is to take them and consciously be moving all of them towards some desired future culture that’s never done. Don’t let the fact that it’s so daunting get in the way. Rather, be really clear about the culture that the organization aspires to have, and then just take small, but deliberate and meaningful steps towards that constantly and making that clear to the organization.

At Conexus, we talk openly about our strategy journey being like a trip from Regina to St John’s Newfoundland. (Dear Reader – That’s a 61-hour drive or 5,375 kilometers) Metaphorically, we’re not sure if we’re going to fly walk, drive, take some time to hike, or camp out for a few days. We’re not sure. All we know is that the direction is East. And we all need to be going East together. And, from time to time, we’ll decide together if we need a rest or we need a plane or we need a truck or whatever it is we need to get there. It’s inevitably going to change, but we’re constantly taking those meaningful steps towards Newfoundland and our final destination. It’s been a useful metaphor for us.

HB: That’s a brilliant metaphor. Purposeful but it does take the pressure to get the culture and transformation piece right straight out the box. Switching gears, one of the common refrains I hear about innovation or agility in the banking industry is how hampered organizations are by the wall of regulations they face. Is that a fair observation?

ED: There’s no denying we face regulations and regulators in this industry. And we should, we’re entrusted with other people’s money and their futures. However, I’ll give you an analogy that I use when I speak to our team about this. When my Conexus colleagues say the regulator is not going to permit this or that, my answer back is that we sound like (with the greatest respect) taxi cab drivers arguing about Uber. My unwavering perspective is that our customer’s expectations are going to drive the evolution of our business, not the regulator. And our job is to find smart and savvy ways to deliver on those consumer expectations while obviously maintaining trust and integrity of the systems. That’s our responsibility.

A recent example inside Conexus would be venture capital and running it inside a community bank. It has never been done before in Canada. And of course, the first conversation we had with the regulator, they had questions about how we were going to manage this business. Did they just come out and say, here’s your blanket approval go forth? Of course not, but we found sophisticated ways to demonstrate to them that we understood the businesses. We could manage the risks. It was consistent with our purpose, we’d hired the expertise to do it well. We’ve just had our first venture exit and had a hundred percent return in 130 days, that’s a very successful start to that business.

To my mind it’s just lazy and convenient to accept that “no” from the regulator and stop pushing. That’s not the culture we’re building here at Conexus because our customers and members in Saskatchewan are demanding more from us. Particularly around venture capital and nurturing home-grown start-ups. I can proudly say that the burgeoning start-up community in this Province could stack up against anything in Toronto, Montreal or Vancouver and we (Conexus) want to be a central part of that economic growth and that financial wellbeing.

HB: That’s an excellent example Eric. For readers outside of Canada who might not be familiar with Western Canada, particularly the Prairies, there’s a real can-do attitude that seems to personify the West. Is that just a romantic illusion? What role does that play in creating can-do cultures?

ED: Well, it certainly takes a certain resilience to face our winters – and our black flies. <Laughs> One of the really interesting things that came out of our research was that some of the best incubators and ecosystems in the world are located near farming communities. There’s an entrepreneurial reality about working in agriculture that isn’t immediately obvious but it’s definitely there. Farmers know all about facing left turns, whether that’s the weather or that’s prices or that’s international trade. So, I think to your last point, it’s definitely a bit of a roll up your sleeves, get shit done, kind of mentality here on the Prairies. So, in the people we hire, the people we attract, the customers and entrepreneurs we serve, it’s certainly part of our fabric.

HB: Love it. I always ask my interviewees what advice they have for their CEO peers staring down the barrel of the same challenges you do on a Monday morning?

ED: Sure. Maybe let me start with a bit about kind of current state, because it’s a very challenging time to lead companies. First and foremost, you need to kind of put your own mask on first in terms of wellness. You can’t set up for the organization and coach it through a very challenging business environment if you don’t find personal time to get fresh air, find time to think, find time to disconnect. This “working from home” thing has propagated a very dangerous “always on” mentality and that doesn’t lead to high performance. As CEO you must find time to rest relax, rejuvenate, and most importantly think.

I think the second thing is just be gracious. Always. Recognize that we’ve never operated in times like this. I’m going to make mistakes and I’ve made lots over the last 12 months of leading through a pandemic. My colleagues have made mistakes, but you just need to be gracious where, you know, everyone is genuinely trying their best. Anything we do that doesn’t look perfect, it’s not because of bad intent. It’s just because we’ve never seen, experienced, or lived through something like this before.

The last thing I would say though is, if as CEO, you think you’ve done all your learning and growth and development, it’s the contrary, it’s now that you need to be your most voracious learner reader, grower, developer of yourself, your knowledge. Again, my biggest fear as CEO is that I’m not going to reinvent myself as quickly as the organization demands and needs. It’s taxing as a leader to, you know, run the business and then reinvent yourself and you’ve got to still learn, read, explore.

Just like you’ve got to put your mask on first to be, you also got to put your mask on first to show the organization that this constant reinvention (of yourself) is now the new normal. I don’t think there’s any way around it if you want to genuinely lead your people.

HB: What a brilliantly pragmatic Prairie’s answer Ed. This has been a thorough delight. Appreciate your time mate. Stay safe and stay warm out there.

ED: Thanks Hilton. That was lots of fun. Appreciate you giving me an opportunity to tell the Conexus story.

The gravity around “being competitive” and why it’s hurting uniqueness – for companies and for leaders

Recently, I was asked to join the BC Young Leaders Group to participate in their annual conference this year. I am always honoured to be asked to hang out with the young, bright minds working in the credit union system. The energy in the room and the passion for the purpose of cooperatives is a great way to fill my cup for a few months.

Their conference is titled “Executing Innovation” and they specifically asked me to talk about things like:

  1. How do you help your organization move forward when your superiors may be creating roadblocks?
  2. How to pitch ideas and generate buy-in
  3. How to develop an Innovation Mindset

I decided to call my presentation – Changing the “That Hasn’t Been Done Before” Mindset.  

Here’s why 🙂

When I was in business school (both times), there was much discussed about how to “be competitive” and “measure” your success. The challenge was that the measurement or comparison was always against others in the industry. The measurements in banking were not that hard to figure out — return on equity, return on assets, assets under management, efficiency ratio, productivity, etc. In fact, I would suggest that if you look at the balanced scorecards of multinational banks, community banks you’d likely see much of the same. If you went further and examined financial cooperatives you might also be surprised to see a small collection of the most used metrics that describe success.

In the businesses cases that I worked on in school, the success of the fictional business was a measurement against peer groups or others that competed in the same “vertical” industry. Both the Professors and the Students continually made reference to “being competitive”, “chasing the competition” and “closing the gap”. In today’s world, we are bombarded with Google alerts, Twitter lists and hashtag mentions of competitors, that we then use to immediately compare and contrast against the businesses that we lead.

The comparisons don’t stop with the businesses we lead either. The comparison and chase extends to the leaders in those businesses. The gravity for each of us to look, feel and appear like others is palpable. We likely all have leaders in our lives that we admire or perhaps even want to be like. I am no different. There were and still are many leaders that I look up to and hope that one day I could grow and develop to be more “like them”. It’s fine if you aspire to achieve the leadership outcomes that other great leaders achieve. I want to be more patient, more open minded, a better listener and more of a catalyst type of leader. I know leaders that do all of those things exceptionally well and I admire them greatly.

But the chase is dangerous for leaders.

It’s one thing to want to be better as a leader or business and then look for examples of what better could look like in one area or another. But the development and growth of both the leader and the business has to be in the context of being a better version of myself (or itself for businesses). As I said above, I want to be more patient. But I cannot let the pursuit and growth of being more patient tear away at the passion that I know helps me to succeed. Here is where the challenge lies. If I admire the patience of other leaders and just look to re-create that for myself, I might wake up one day very different than the “Eric version” of the leader I aspire to be. It’s the same for businesses and the evolution of the businesses we lead needs to be the same. There are other businesses I admire as being super innovative. I want to create a more innovative credit union, but it has to be a more innovative version of Conexus not just recreate a version of Conexus that looks like a different business. If we did, we might wake up one day with a business that is not aligned to our purpose or strays from our values un-intentionally. I had a great mentor very early in my career that made this point to me in a very direct way:

“As you grow as a leader, you still need to be yourself, everyone else is taken”

I realized later that was originally an Oscar Wilde quote, but it resonates with me and I use it frequently with those I mentor and coach.

The chase is also dangerous for businesses.

I was at a presentation a few years ago by Youngme Moon. She was speaking about this very issue which was highlighted in her book Different. I vividly recall a picture she showed during the presentation. It was something like the one below and she asked the conference participants which one of these we were as a business and how will we create a sense of uniqueness in the mind of our customers and potential customers.

How would you position yourself if you were the CEO of any one of these products? I know when I buy water, I care about which one I see in the cooler, how it is packaged (recyclable or not) and the size of the bottle compared to my thirst. That’s it, that’s all. I also don’t want to be a leader in any of these businesses where the consumer cares so very little about the choice. I appreciate that finding a financial partner and buying water is different and personal finance is certainly more emotive, but it was a great reminder of why uniqueness matters.

It was a sobering question when you really think about how you create competitive differentiation in the cluttered mind of the consumer. It’s also a question about how you go about the growth and development of the business and the leaders within and the danger of the “chase”. There is tremendous gravity around the chase, and we all need to be careful about allowing it to pull us places we don’t intend to be.

If you have or develop a bunch of leaders that look like each other and those leaders look, act and talk like those that work in many other businesses in your industry, what are the chances of you creating something unique, special and distinct for those that you seek to serve, either as customers or as employees (customers of the leadership environment you create)?

Very small indeed.

It’s hard enough to create new ideas, new strategies and uniqueness in business. It’s harder yet unless you are completely aware and conscious of the gravity to “sameness” and think regularly about how to grow, develop, learn and create in the context of being unique and in the case of leaders, being themselves.

I was reminded of this early by the very same mentor when he said:

Be careful. If you chase the competition, you might just catch them. Then what?

May we all celebrate those around us (business and leaders) that are unique and revel in being themselves, first and foremost.

To the BC Young Leaders – see you in a few weeks 🙂

What is competitive advantage today? Culture!

I grew up in the business world expecting that anything worth doing of any consequence could be easily studied, analyzed and the range of any expected outcomes was completely understood. The only way that there were outcomes or risks that were not understood was if you missed thinking about them as part of your work. If something unintended occurred, it was because you overlooked finding examples of where that had happened previously in other organizations or worse yet, in your own organizations with other change efforts.

The world has changed in so many ways but perhaps most of all around uncertainty. Today, as leaders, we are faced with a very VUCA world. Information is overwhelming and it is hard to keep pace with the amount of change taking place in real time, right before our eyes. As a lifer in the cooperative finance space, at one point, I felt pretty comfortable with knowing most of our organization, how it worked and how value was created for our members.

Fast forward to today.

Today, leaders spend considerable time operating in the blender of volatility, ambiguity, complexity and uncertainty. New information emerges daily, consumer expectations change by the moment and to top it off, your technical expertise has eroded considerably as the business has evolved over time. How are you feeling now as a business leader. Uncomfortable?  Ummm…Yup.

The good news is that other things have changed as well that work in our favour. Here are a few:

  1. The capability of employees has increased drastically over the same period. What I learned in graduate school is now being learned much earlier (i.e. high school or undergraduate programs) by emerging leaders and their level of skill and ability is much greater than mine was when I was younger in my career. Emerging leaders are being exposed to innovation, entrepreneurship and courage as a way of life and are more apt to be comfortable in the business environment of today. The challenge will be whether the leaders of today will enable the level of creativity and curiousity that will be necessary to engage emerging leaders but also to harness their skills in a way that has tremendous opportunity to drive value inside of organizations.
  2. Risk Frameworks are so much better defined than they ever have been. In purpose built organizations, like the one I work within, boundaries have been established both around how people behave as well as where organizations are intended to play within. This helps create a playing field that is well established and well known by all. So while employees are more entrepreneurial, there is also a known “sandbox” for all to play in.
  3. Purpose has emerged as the key attribute of best in class organizations. It is no longer possible to have sustainable competitive advantage for extended periods of time. The cost of technology has been reduced to near zero and now organizations that are best in class in creating value are being asked to have cultures that support the continuous creation of value, iteration, innovation and partnerships with others (people, communities, governments, other organizations). The question now is not whether you have a product or service that is unique, but rather, do you have an organizational culture that is unique and can “out quick” your competitors in creating value. This is a very important shift in how organizations can sustain themselves through a very disruptive time.
  4. Leading requires much less technical expertise than people think and more of engaging with people, stakeholders, communities to help deliver on #3 above. The biggest job of leaders today is to create environments that can harvest the diverse perspectives of teams (more on that in another post 👍) and then create a safe place for the group to think critically about how to create value in today’s volatile world. CEO’s are still required to think critically, but in high performing organizations, the critical thinking happens in a group setting. Critical thinking is now a team sport and the CEO or Leader is the Head Coach.

The new competitive advantage is building organizations such that they can continually scan the market, meaningfully engage with customers to define business problems worth solving and then quickly get solutions into production and not stopping there.  From that point, you must continuously refine the product/service through real time feedback with customers. The critical thinking / debate / exploration has to happen in a way that enables speed and innovation and that mindset has to existing throughout the organization. If it does – it becomes the competitive advantage that we all long for.