Archive for October, 2015

Classic Reinvention

Friday, October 30th, 2015

Gucci Classic Loafer1







It is over 60 years since Gucci first launched their classic loafer. Yet the almond shaped loafer remains timeless. Each generation has seen the snafflebit shoe undergo reinvention and adaption to the contemporary tastes of new and existing buyers, sales and pricing are higher than at any point in the product’s history. .

On Wall Street, Leadenhall Street and Queen’s Road bankers, brokers and investment managers, some of the brand’s most fervent fans, are immersed in urgently re-casting and re-inventing their own “classics”. Products and services that have been a cash cow for the firms’ success (fixed income instruments, catastrophe reinsurance and ETF’s) are at risk falling out of fashion, indeed in some cases obsolescence. Accelerants such as new sources of capital, new technologies and new regulations loom large in the rear view mirror. New products and services offering more impressive outcomes flirt and seek to lure loyal fans and their money. How do firms respond quickly and effectively? How do they ensure that their classics remain relevant for a new and “old” buyers alike? Here is the jump off point:

1. What is the ultimate result our ideal buyers want to achieve today and in future? (capital preservation, capital growth, financial security)

2. What alternatives exist with our existing product or service to meet this goal? (unbundle, re-package, re-cast)

3. What alternatives can we create with our existing product or service that better meets those goals? (new markets, new modes of distribution, new ways to integrate new technologies, capital and regulation)

4. What are the risks and rewards attached to each alternative?

5. How do we best minimise or control the risk and maximise the rewards?

6. How much risk is the organisation willing to accept in return for an appropriate level of reward?

To paraphrase, Albert Einstein, we cannot solve our clients problems with the same thinking we used when we created them.  In much the same way we need to first change our thinking about our clients needs and the utility of our best selling products and services to solve them.

© James Berkeley 2015. All Rights Reserved.




All Black Execution

Monday, October 26th, 2015

People talk about champions or champion teams.

World-class execution under pressure, whether in sport or businRWC Semi Finaless is largely about positive behaviours and experience rather than skills.

The ability to stay in the moment, to respond swiftly to opportunity and to think clearly in adversity.

The New Zealand rugby team, the world champions, on Saturday faced with being bundled out of rugby’s showpiece event at the semi-final stage provided a “master class”.

Bouncing back from an underwhelming first half of rugby on Saturday (too many penalties) and playing with 14 men, for 10 minutes they shackled their opposition in their own half.

When opportunity presented itself they resorted to the pragmatic taking a rare drop goal and changing the momentum of the entire game and triumphing over arch enemies,  South Africa. They did this largely by changing their mindset and stopping giving away penalties. The inspiration coming from the experience of their captain Richie McCaw, Dan Carter and Conrad Smith.

Copyright James Berkeley 2015. All Rights Reserved.

Are You Thinking What I Was Thinking VIII

Thursday, October 22nd, 2015
  • The propensity of successful fiftysomething and sixtysomething executives and celebrities to suddenly grow a full beard for the first time as if they are “reinventing” themselves hides a million truths.
  • The driverless car is novel (Apple, Google) but the combustion engine is not going anywhere anytime soon.
  • The visceral connection between political unions (EU Membership) and trade agreements (TPP) and the impact on people’s daily lives is rarely well made (how they are better off or personally better supported).
  • Businesses fawn over the power of data and analytics (“big data”) to transform their future, yet routinely overlook that the fact that their future is informed by the six inches that lies between the ears of their customers, managers, employees and shareholders. Data alone is largely useless in adapting human behaviour.
  • When you leave your iPhone or Blackberry on in a meeting or social occasion, what you are really saying is “At any point in the next 30 minutes you will not be my priority. Be warned.”
  • “Conceptual” collaborations are rarely mutually rewarding. Luxury Hotels that exhibit artists, auction houses co-hosting social events with media publications and UHNW wealth managers sponsoring polo events. Sorry, “exposure” is way over-rated, sales pay the bills.
  • We have spent kizillions enabling technology to mimic the human mind (artificial intelligence) but pennies enabling the human mind to mimic technology (critical thinking skills). Such that we are “outraged” when a referee at a major sporting occasion fails to interpret visual evidence correctly in real time and apply it to the laws of the game.
  • Debretts, the social arbiter of style, runs etiquette courses for new money that aspires to act with the “grace” of old money. Yet old money has rarely acted with great judgement (forced sales of estates and other inter-generational issues). When will they run a course for old money that aspires to have the wisdom of new money?
  • People readily confuse activity with results (Corporate incubation labs). Nowhere more so than in reinventing business models in response to convergent forces (high tech, alternative capital, new methods of distribution etc.)
  • We are in a period of politics with no visible end in sight, where “brand”, career progression and fundraising  are so powerful and inter-connected that unremarkable “insiders” (Trudeau, Bush, Trump, Clinton) can trump impressive “outsiders”.
  • The concept of “celebrity” driving a brand has become so contrived (Instagram selfies, staged photos in glossy mags, charitable appearances in the Philippines) that Howard Hughes would be seen as leading a normal life today.

© James Berkeley 2015. All Rights Reserved.

An Interview With Me: Management Today

Friday, October 16th, 2015

How well do you really know the US market and the likely impact on your firm’s future? In a recent conversation with Management Today’s reporter, Jack Torrance, James shares a critical insight that separates those who storm the US market and those who are forced into a hasty retreat.

How To Crack the American Market

Profiting From Control

Tuesday, October 13th, 2015

Your clients need you but not in the way they think they do, or in the way you insist on telling them they do.

A prospective client stopped me in the middle of a conversation about his plans to integrate a newly acquired $750 million financial services business. “What I want is a spy, do you think you could play that role? My fear is the newly acquired executive team are feigning interest in their future within our firm beyond collecting their retention bonuses.”

When I responded by asking him why are you asking me, why now and why with the suggested role, he expressed surprise. The mere thought of “push back” from me stunned him (he was used to hiring acquiescent people) but it had the desired effect. We swiftly moved on from his random suggestion to examining our shared perspectives (business outcomes), our shared abilities to “control” the future (alternatives, risks and rewards) and his need for my help (ideal action).

Look at the transactional clients of advisory firms in the global financial services sectors. There are thousands of clients, shareholders and business partners daily wanting greater control in an increasingly ambiguous economy.

  1. A great many wealth managers, asset managers and brokers are so immersed in “selling” to the masses, they are disregarding their unique perspective to bring greater control to their ideal clients’ future (greater trust, higher margins, happier clients).
  2. A great many clients’ current perspectives are informed through an increasingly narrow prism (past experiences, market chatter and gut instinct). The “open-minded” clients (the more cerebral and secure) willingly let in and accept challenging points of view. The “close-minded” clients (often the more strident and insecure), put up the barricades and shut out views that deflect from their own viewpoint.
  3. I can make a powerful case in almost every sub-sector that a client’s actual “control” (or the lack of it) is directly correlated to their diversity of learning sources and their volition to apply the learning without fear of failure.

We have had the “sharing” economy, the future is about the “control” economy.

Transactional advisory firms have choices about what perspectives they share, when they do so, why and how to mutually-benefit from doing so (greater client control for a more profitable and rewarding client-adviser relationship).

If you do nothing else, ask yourself and your colleagues:

  1. What “unique” perspective (past experience, insight, contacts) can we bring to our ideal clients’ situation that will demonstrably enhance his or her immediate control (speed and quality of resolving a problem, making a decision, assembling a plan)?
  2. How do we best articulate it? (ideal manner, ideal time, ideal location, ideal conditions)
  3. How do we know if and when we are successful? (what should we listen out for or expect to see)
  4. Should we be minded to, how do we best transition from sharing the perspective to providing formal help? (ideal follow up response, ideal next step, ideal time/date/venue)

“CCAG”: As a catalyst for giving your clients greater “control”, you create greater client “confidence” to reinvest (repeat business), you create greater client “aptitude” to experiment (innovation) and you create greater probability of meeting or exceeding the firm’s “growth” expectations (increased profit, more referrals, stronger brand).

© James Berkeley 2015. All Rights Reserved.

Time May Change Brokers But They Can’t Trace Time

Wednesday, October 7th, 2015

Ch-ch-ch-changes!” exclaimed David Bowie, “turn and face the strange“… Could a record be more apt for the top management in the reinsurance broking industry today? Faced with a surfeit of supply (capital) and insufficient demand (risk) their traditional broking operations are faced with unprecedented amounts of uncertainty and competitive threats.

But I’ve never caught a glimpse, Of how the others must see the broker“…. To listen to the self-talk and thinking of C-level executives in many large and boutique reinsurance brokers on both sides of the pond is to wonder whether they are willing to be intellectually honest about how others see their attempts to provide value to customers and clients in return for equitable remuneration. It is time to truly reconcile the symbolic (another cyber liability report or data research product) and focus on the truly meaningful and immediately useful (a cedent’s improved condition, solve the under-insurance problem, harness high tech to lower overheads).

Just gonna have to be a different man“…. To paraphrase Michael Palm, the wise Centre Re sage, they need to be great at more than “hitting a nice approach to 18 and mixing a fine dry martini”. They must properly define the skills, experience and behavioural traits that are critical to address existing market needs (matching wholesale capital with wholesale risk), anticipated market needs  (demographic and social changes) and the creation of new needs for reinsurance. When the industry bemoans the gap between insured and economic losses in South Carolina, a State where the world’s finest minds have repeatedly focused their energies and actuaries have modelled risks to death, quite why is it so? Have brokers overly relied on existing needs for reinsurance (another cat layer) and failed to create the “need” for appropriate risk transfer? Do they lack powerful language skills to control the discussion with the economic buyer and the ensuing relationships? Are their value propositions suitably attuned to the forward-looking needs of their key constituents (clients, shareholders, employees, business partners and so on)?

Are immune to your consultations, They’re quite aware of what they’re going through“…. is the thought leadership of most reinsurance brokers sufficiently provocative and informed to change their ideal prospects and clients’ behaviours and ultimately, their beliefs? When everyone is largely hanging out with and saying the exact same thing to mostly the exact same group of people (Monte Carlo, Baden Baden), it is high time reinsurance brokers became an increasing object of interest and a centre of expertise to a more diverse and impressive group of peers. How many brokers truly have “trusted adviser” relationships and create a seductive rapport (intellect, language, social) with key institutional shareholders, Board Members and top management in their ideal clients? I am reminded of the head of one large broker, who used his former consulting firm’s  ties with top management in a major financial institution to secure an exploratory meeting, and within five minutes, according to an eyewitness, the banking executive responded to the broking head, “I just don’t see how you are relevant to our firm’s future!”

Broking firms must hope that their top management possess the skills and volition to move in miles, not inches (reinvention) before their clients and customers state “Where’s your shame, You’ve left us up to our necks in it”….

© James Berkeley 2015. All Rights Reserved.

7 Advantages For Foreign FirstTimers in USA

Tuesday, October 6th, 2015

Foreign “first time” entrants to the US financial services, insurance, investment management and asset management market would have you believe that they are starting from a disadvantageous position. My observation and experience working with countless foreign firms is they are often wrong but not for the reasons you imagine.

  1. Your physical presence given the distance you have travelled will often elicit time made available on buyers schedules at very short notice. It is a courtesy rarely extended to US competitors unless there is a very compelling story.
  2. The US market is a “mosaic” made up of diverse leaders and diverse businesses with often sharply different sets of “needs”. As a foreign entrant unencumbered by a historic presence, brand perception, legacy systems and sometimes, regulatory advantages, you are uniquely positioned to “unbundle” your service offering to address a specific need for your ideal clients that is tough for your US competitors to match.
  3. There is an implied novelty amongst buyers with new foreign entrants. You have the advantage with a largely unknown brand to present fresh thinking, innovative ideas and appeal to customers and employees who want to be part of something “exotic” or different. Use it (marketing, presentations, client dialogue).
  4. World view and international platform. Contrary to popular opinion US buyers are more open to global views of investment opportunity, alternative uses for excess capital and intellectual property than any time in history. With your origin and your “past” (experiences, culture, expertise) you instantly bring a perspective to the open-minded US buyer, capability and relationships that many of your domestic competitors cannot.
  5. Money is made in the real world. Many of your domestic competitors can intellectualise about the transference of US approaches in a foreign market but they cannot talk with experience about what may happen to that money when it is invested. For example, a Pittsburgh investment management company would struggle to explain “first hand” to investors the perils of investing in a Tianjin rubber plant. If you are a Greater China private equity GP building a presence in the US, you would in all probability have far greater credibility.
  6. You are not trying to “crack America”, you are trying to appeal to the maximum number of your ideal clients in the US market. You can take a more laser like approach to your marketing, sales, delivery and business model than many domestic competitors, who with a need to support expensive people, established offices and other overheads are forced to play in the “mass market”, to make it pay.
  7. As a newcomer, you are not fighting internally lots of beliefs (past experiences, historic views) about “why” a particular approach will not work. You can focus on proving a new concept without the “drag” effect that inhibits many domestic competitors. In convergence opportunities with digital businesses, new forms of capital or new methods of distribution you can invariably move swifter, assuming you have the volition and support to do so. Don’t blow the opportunity.

© James Berkeley 2015. All Rights Reserved.



Competitors Leaving Christmas Presents

Friday, October 2nd, 2015

One of the joys of autumn in England is escaping to the countryside at the weekend and taking a lazy walk that often ends up at a friendly watering hole. On many of those walks at this time of the year, you pass bushes laden with ripe blackberries and horse chestnut trees laden with conkers. Inevitably, you are not the first to spot them and indeed, many of the obvious places have been stripped bare. On occasion, where the light has created a shadow or stinging nettles have made it difficult to reach them, a plentiful supply of “virgin” berries and conkers sit waiting to be picked with a little ingenuity.

I see the very same situation with many of my best clients. They have an uncanny knack of looking where their competitors have partially or fully withdrawn and spotting difficulties their competitors face that hide profitable growth opportunities for them. What they are skilled at is deciding whether their competitor’s growth difficulties are important. If they are, they dig to find the cause, what are the business fundamentals (market demand, marketing, sales, delivery etc), what has changed in one of those fundamentals to turn the competitor negative on the opportunity and what would we need to do to profit from their difficulties.

When you receive feedback from your sales team, your clients, your prospects, analysts and media reports, can you spot profit in your competitor’s growth difficulties? If so, jump on it immediately. Christmas has arrived early.

© James Berkeley 2015. All Rights Reserved.