Report
Impact Taking Root
Introduction
This time a year ago, we invested several pages in our 2024 Annual Report describing our “theory of change,” attempting to answer the question of how we see our business affecting the change described in our mission. Twelve months later, my eyes are a little wider open to the realities of how impact comes to life.
Well-intentioned white papers and strategy are great, but real impact is proving to be less theoretical…and much more tactical.
This year, as we think about impact, there’s a series of realities that lay bare why making positive and lasting change of any sort takes time and discipline. Growing businesses in our world are shaped by the incentives offered by the system they exist within, so it’s no wonder that most organizations (despite best intentions) often default to a familiar short-term, profit-driven form. To go the other way is to cut against the grain, which inevitably comes with friction. Here are some varieties of friction we’re learning to navigate ourselves, in case you find yourself trying to chart a course down a road less traveled.
Innovative Businesses Require New Mental Models
At its best, Walden can drive substantial social and environmental impact (and possesses, as a result, a sustainable competitive advantage) by straddling the line between categories. We’re a bank, but without the baggage. We’re a start-up, but we have heavy regulatory obligations. We’re mission-built, but not a nonprofit.
Given our multiple personalities, we’ve attracted a team with a more diverse set of backgrounds than you might expect — from career bankers (like Debbie, our CFO) who value the simplicity of black and white and like to minimize risk, to creatives (like Amanda, marketing manager) who prefer ambiguity if it’s in service of beauty or ease of use, to technologists (like Avril, integration engineer) who are driven by logic and think in systems. Getting those worldviews to coexist — and actually complement one another — takes intention.
One shape that intentionality takes: new and different mental models. When a problem or opportunity arises, it’s easy to respond with “How did this work at my last job?” But that misses the opportunity to create something new that better blends the unique elements of Walden’s identity. We win when we have a bigger toolbox of problem-solving paradigms to draw from. Instead of “how has this been done before?”, we could ask: “what’s best for our partners? What’s simplest? What minimizes the chances of the worst-case scenario?”
One way we’ve operationalized that ethos is “Code Blues.” In situations where defaulting to the status quo feels misaligned, we intentionally slow the process down. We’ve recognized we can’t do that every time, but when the stakes are sufficiently high, the investment is worthwhile. We define the problem, challenge assumptions, explore alternatives, and then choose a path that fits who we are — even if it requires more effort upfront. In our early days, we called partners any time they moved $5,000 or more in or out of an account for the first time. After a “Code Blue,” we came up with an alternative to verify the request that mitigated risk even more effectively — while reducing friction for partners and our internal staff.
Deviation From the Norm Means Discomfort
Most businesses handle themselves similarly, because doing things differently (even if it sounds better on paper) is like swimming upstream. For example, the same split personalities mentioned above make decisions like the selection of a software vendor unexpectedly complicated. In some cases, we’re choosing from providers designed for community banks, who (generally) aren’t growing as fast as us, have physical bank branches, and care relatively less about things like mission and digital experience. In other situations, we're choosing from options designed for non-banks, who operate with less concern for regulatory and compliance considerations. In both circumstances, we’re square pegs in other peoples’ round holes. Picking spots where it’s worth creating something new that fits us perfectly versus making do with what’s available is an art form we're still mastering.
Prioritizing the Long-Term Means Short-Term Sacrifice
From inception, Walden was designed to serve long-term interests in a world that often prioritizes quarterly returns. The decision to pursue a bank charter in our mutual structure, for example, did not represent the most direct path between point A (idea) and point B (launch). As the first new mutual bank nationwide in 50 years, the regulators reviewing our application were familiarizing themselves with concepts that were decidedly not “modern.” But the friction was worthwhile because the mutual structure’s cooperative nature better aligns incentives with our long-term goals.
Each year, those same tradeoffs are weighed in our budgeting process. Even with our mutual structure, early supporters of the bank (“Special Depositors” — who provided the seed capital necessary to meet our reserve requirements) will eventually be owed a dividend that’s based on profitability. Every dollar reinvested in people, technology, or interest rates narrows our profit margin. Ultimate approval of the budget (and striking that balance) sits with our Board of Directors. I’ve gone into those discussions personally with skepticism; how different can we really be from everybody else — subject to the same market forces?
But the members of our Board (from my observation) are much more missionaries than mercenaries. When there’s been a hard choice to make about short-term return vs. long-term commitment to the mission, they’ve held the line.
Confronting these types of tensions can counter-intuitively feel good — in that they provide evidence that we’re on the right path. If it was easy to do things differently and create the type of social and environmental impact we’re working for, there’d be a lot more people doing it. That’s our aspiration: to contribute to the collective effort to carve a new path, one that’s less traveled, but that makes all the difference.