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Change helped CUNA Mutual grow, navigate the economic crisis

Rick Roy has one simple rule in prioritizing projects as CIO at CUNA Mutual Group in Madison.

“It's all about the CEO's priorities, stupid!” Roy said. “If a CIO can't translate initiatives to the CEO's priorities, you better stop spending money on it. You're out mowing the front lawn and the house behind you is burning down.”

The message struck home with Kerra Guffey, CIO at Madison's Meriter Hospital.“That will follow me into my work day,” she said following Thursday's keynote at the Fusion 2009 CEO-CIO Symposium, produced by WTN Media. . “I really enjoyed having the CEO and CIO perspective. This is a little bit of a different group to speak to because we're all in different industries, but that message hit the mark.”

>Roy shared his perspective with CUNA Mutual Group's President and CEO Jeff Post in their tag-team talk, “The CEO - CIO Relationship - Navigating Unprecedented Uncertainty.” They outlined frankly how they executed a three-year plan to change and grow the company, the financial services firm founded in 1935 and employing 4,700 currently, 2,000 in Madison.

Post, who joined CUNA Mutual Group in 2005, led a change-resistant organization through a three-year process that instituted change and is helping the firm today navigate the economic crisis. In the transformation, the company that already had a 95 percent market share grew by 8.3 percent in revenue delivering $300 million in transformation benefits to the company and at the same time raised benefits to its customers by more than $700 million, according to Post. CUNA Mutual had net income of $184 million on revenues of $2.8 billion in 2007, but a loss in net income of $148 million last year.
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“Change is somewhat a four letter word at CUNA Mutual Group,” explained Post. “CUNA Mutual Group had the reputation of being the country club of Madison, and not a lot of people like to move out of that. When I walked in and said we need to change, I had a lot of people saying why?”

Using input from customers and employees, Post said the transformation launched with the aim of improving sales, the investment portfolio, operations and corporate governance. In communicating changes to CUNA Mutual Group employees and board members, Roy said the company came up with concept.

“It doesn't mean you're going to win, it doesn't guarantee success. It's the cost of being in the game,” explained Roy. “We knew we would need to continue to change our company. This became the anchoring point for stakeholders.”

Change is good

Post's aim was to change a change-resistant organization. And things did change, evidenced by the numbers at the end of 2008, which concluded the “ante” period, and the company's position in today's market. In 2008, the company had $2.81 billion in operating revenue, achieved without acquisition of other companies, and an operating gain of $172 million during a 3-year average without raising rates. That was up in 2005, - - the beginning of this change - of $2 billion in revenue and a $112 million operating gain, Post said.

“Had we not gone down that road in the economy we're in today, CUNA Mutual Group probably would not be here,” Post said. “Today capital is king. We undertook this just in time. This was a very successful transformation. Little did we know how the end game would change.”

What did Post and Roy learn during the transition? Change is hard, and some will resist while others will embrace it. A third group, Post noted, will be open to change, while still not liking it. Leaders must commit to change, and results need measurement, such as tying compensation to performance

“What we said is, folks, just showing up isn't good enough. We're in a competitive world and we need you to outperform,” explained Post.

Creating a change strategy is the easy part; it's more difficult executing that plan, according to Roy. It takes people to make it all happen, and those people have to adapt to new ways to work and handle customers.

Agility rules

In today's economy, there's no greater skill for a technologist than agility, Roy said.

Oskar Anderson, CIO with the Wisconsin Department of Administration noted that agility is “even more important as more things are up in the air.

“One thing hasn't changed with IT is we deliver it too slowly. Do you have any special tools you're using to become more agile,” asked Anderson.

Roy said while there's no silver bullet, IT leaders need to recognize that there's value not in projects that produce return on investment, but cash flow. He encouraged thinking about results that are years away.

“Break up projects into smaller components. It sounds simple, but multi-year multi-million dollar initiatives have to be broken up and done quicker,” Roy said. “You may never get to year two or three, but that's OK. We put in place a six-month rule,

Roy encouraged CIOs to have the “ability and the fortitude to stop (projects) before you start five new things.” It's a skill that's more valued now, and one that IT leaders will need to develop.

Giving his perspective on the economic crisis, Post noted that companies continue to deleverage as the asset to debt ratio is completely out of balance. Firms today face a completely different business model than they did just 12 months ago. And the dramatic change leads to clear questions of where the values of assets are on balance sheets.

Although Wisconsin is not in the real estate crisis of states like Florida, Arizona and California, where in some cases values have fallen 70 percent and are still not considered to have reached bottom, Post said that home values here have fallen, too.

“We're fortunate because we never had housing values blown up. But I would guess if you had to sell your house, it would be 15 to 20 percent below what it was a year ago,” Post said. “At CUNA Mutual group, our concern is that as you move past sub prime into a prime crisis of assets, everyone is impacted.”

At this unprecedented time of economic change Post said he's glued to the news, keeping watch on the dynamic situation.

“There isn't one CEO whose number one goal and only goal is surviving this economic downturn. This one is different,” Post said. “We're clearly looking for ways to help our credit union, and help people who are challenged. But it's a world that has a very uncertain future right now.”

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