Managing In The Dark: The Impact of Scarcity on Leadership

Years ago when I worked in training I recall being in an training development committee meeting in which we were within weeks of rolling out the pilot training for new managers on how to coach front line staff. Everything looked like it was set to move forward when one of the committee members, a senior branch manager who had been part of our profile group, said, “I have to admit I don’t know how I can afford to do this once we roll this out. I have eleven people in my branch and I still have to do my real job.”

Silence entered the room as each of us absorbed the potential reverberations of what one of the pilot designers had just thrown onto the table. The chairperson started going around the table asking for input from other members to see if they had similar concerns and then one young leader (who later stated she was nervous on speaking up because she was only a coordinator and not a “manager”) said, “I have around eleven people on my team and I can’t afford not to do these things with my team. So we have been doing this for the last year.” With that simple statement it became clear to me who the real leader in the room was.

This example also drove home to me the lesson of mental focus and how it can shift our deliberations. In how we can have people we trust operate from a scarcity mentality and if left unchallenged can limit the options on the table for our organizations. Take the example stated above. When that branch manager stated he couldn't afford the time to do something he enabled himself to place that task beyond reach. It shifted from being difficult but obtainable to simply not relevant as there was no perceivable manner in which the task could be accomplished.

Compare that to the 2^nd leader who by concluding she couldn't afford not to do it she changed the very focus of the leaders who were gathered around the table. She had concluded that she had to afford it and worked towards that goal. When we ask “How can I afford to do this” it shifts the playing field from scarcity in not doing the task to scarcity in not completing the task.

For many in the credit union industry this same type of scenario happened last year when new regulations required members to opt into courtesy pay. Some organization decided that they simply could not afford the time and effort to re-opt everyone into courtesy pay so they simply discontinued the service. Other organizations came to different conclusions as they realized that they very much needed the non interest income that courtesy pay provided to their credit unions. For them the question became the 2nd “How do we opt all our members into courtesy pay and still continue to do everything else we had planned?”

These leaders realized that there is a need to be able to see and operate in the dark. To take steps forward trusting in the talent of the organization to provide the next lamp of light before the last one fades. New ideas were presented, resources reallocated, and operational focus shifted. These leaders were able to decide what they wanted to accomplish. Too often we as an industry look to large credit unions or Big Banks to see what the options are and then follow in their lead. In effect we wait to be told what to choose.

I still marvel at the courage of Unitus Community Credit Union for charging a modest fee for personal financial management tools for their online members. The normal choice on the table is to offer it for free and simply let the membership of the whole credit union absorb the cost. Yet, what if the credit union is trying to keep rates low and still grow net worth. It would be very easy to come to the conclusion, “that we can’t afford to offer PFM for the online members.”  Instead they came up with a third option that goes against what everyone else in the industry would tell them they could choose.

One of my favorite chapters I have read recently is the first chapter of Rich Dad Poor Dad by Robert T. Kiyosaki who wrote of the dynamic of hearing two different world views from his parents.  He had been exposed to two opposing attitudes in thought that played out like you see below.

• One Dad thought that the rich should pay more taxes to take care of the less fortunate. The other said, ‘Taxes punish those who produce and reward those who don’t produce.”
• One Dad recommended, “Study hard so you can find a good company to work for.” The other recommended, “Study hard so you can find a good company to buy.”
• One said, “When it comes to money play it safe and don’t take risks.” The other said “Learn to manage risk.”
• One believed, “Our home is our largest investment and our greatest asset.” The other believed, “My house is a liability, and if your house is your largest investment, you’re in trouble.”
• One taught me to write an impressive resume so I could find a good job. The other taught me how to write strong business plan so I could create jobs.”

I think for many leaders who sit at our tables we have similar disconnects as some have one view and others have the opposite view. As our economy begins to pick up and Big Banks begin to rev up front line operations, acquire our talent and look to cross sell within their branch networks to our members we will find ourselves having to make decisions on how we will compete in an improving economy.  We will face similar questions and diverging worldviews.

• Is our goal to take care of the less fortunate or to go after more affluent or younger members?
• Is our goal to grow organically or to use our capital looking for a sweet out of state merger opportunity?
• Is our goal to conserve capital to appease our regulators or is it to push and manage risk for higher margins?
• Is our goal to help members get into homes or is it our goal to manage our pipeline to what mortgages we can sell to banks because we can’t afford to have low interest mortgages on the books for 30 years?
• Is it our goal to decrease cost by slashing jobs or is it our goal to increase sales and service, deepen wallet share to the point we have to create more jobs due to growth?

Whatever our choices are it is critical that we understanding how we arrived at them. To add a service or not add a service, to fee checking or not fee checking, to close branches or open in new markets, all of these questions are impacted in how we form our deliberations. Did we come from a place of scarcity to arrive at our conclusions? Are we certain we haven’t just looked across the banking divide and blindly allowed our Big Bank counterparts to tell us what to choose?