Archive for November, 2015

James on Insurance Tech and Corporate Venturing

Monday, November 30th, 2015

Wyn Jenkins, Managing Editor of leading global insurance media publication, Intelligent Insurer, interviewed James about the 675% increase in capital flowing from global insurers into corporate venturing since 2013 in search of the next Uber.

Surfing The Corporate Venture Wave

Interview With Me, Thinking Like An Entrepreneur

Thursday, November 12th, 2015

The global marketing and technology firm, IDG, known for its’ research and surveys on success practices,  has interviewed me for a piece on changing the self-talk and thinking amongst executives in large organisations and creating a meaningful environment for innovation to flourish in. Highly relevant for businesses  experiencing sluggish growth and needing help with strategic redirection (hit the growth accelerator) or strategic reinvention (soar to the next level of growth).

Beyond the flim-flam: “Thinking like an entrepreneur”

Real Time Learning

Wednesday, November 4th, 2015

In all the talk about data and analytics far too little attention is being devoted to the benefits of immediate information, access to various platforms and the application of valuable information to existing and new forms of knowledge. The wealth management industry is an obvious case in point. Fintech innovation is and will spawn a variety of platforms that can generate information immediately, from the daily movements of portfolio values to the best life insurance rates for a 45 year old HNW business owner with a congenital heart condition. These technology platforms are readily accessible by investment managers, insurers, relationship managers and clients. The challenge for many clients and their advisers is access to too much information. How do you distil it down and customise it to what each client needs to know, not what they can access at the click of a button? How do you maximise the effectiveness of the hour in front of the client (results, not information exchange)? How do you balance that goal with the need to adhere to appropriate regulatory standards?

What it means for wealth managers:  speed will be as important as the quality of their advice.

The skills, behaviours and expertise to identify small amounts of valuable data, format it into valuable information and apply it to the client’s existing knowledge and their desired objectives will be even more valuable. Equally, the ability to not get lost chasing a strand of interesting information that leads to no discernible benefit for the client (poor usage of the client’s time) will also be prized.  Wealth managers self-talk and thinking about the value the client walks away from them with will need to change (educator and collaborator, not a salesman) in an increasingly digital age. Their marketing approaches will need to evolve faster than they can probably imagine (promote their ability to help clients live the life they want to have, client testimonials, references, case studies etc). Beyond the increasing ability to customise their products, services and relationship to the individual client needs, they will need to reinvent their business models to economically accomplish that in a regulated environment. Their remuneration basis will needs to better align with the value the client perceives they are receiving from the relationship manager, not the investment approach. Their use of powerful language and education skills will be a point of differentiation with their ideal clients in accomplishing that objective.

Internally, wealth managers and advisers organisational structures will need to adapt to faster dissemination of valuable information, at the right time, in the hands of the right person. Superfluous people, technology and processes needs to be abandoned. They need leaner and more agile organisations. They need new collaborations internally with asset class experts and external expertise merged with their own to allow the clients to make smarter lifestyle choices.

The concept of real time learning feels “foreign” to many in the wealth management business, whose desire to help their clients make wise decisions is tempered today by a wall of regulatory requirements. Shouldn’t the focus be on making sure we and the client have ticked the appropriate boxes? Yes of course that is important but your future is also about speed (responsiveness, value “in the moment” and meeting or exceeding your clients expectations). Time not money is your clients scarcest commodity. Your ability to maximise the return on the client’s time invested in accomplishing their personal goals is your future success metric.

© James Berkeley 2015. All Rights Reserved.

The Generalisation Trap

Tuesday, November 3rd, 2015

Don’t you just love it when when you hear statements like “the millennial generation are different, they don’t want what we want.” Excuse me but don’t they want peace, prosperity, rising health and education standards, and a better quality of life? Generalisations are the lazy and intellectually dishonest way to make sense of the world we live in.

The same holds true about different types of ownership. “Ah, private equity ownership confers being a slave to an accountant” or “VC’s want your sole and to eat it”. Yet the PE and VC ecosystem is a very broach church. There are firms and partners (EQT, Sequoia and JZI Capital), whose track record of long-term investment, high levels of engagement with top management and collaborative success is far preferable to trade investors.  Indeed, they might look, speak and act much more like an investment fund.

Different forms of capital: The oft repeated one in today’s reinsurance business “the Pension Funds and the Insurance Linked Securities providers are unproven capital”. Sorry but these folks are mostly highly conservative people, whose investment bets in other asset classes dwarf the minuscule reinsurance sector. Indeed, they have hired many of the very same experts who the traditional reinsurance sector has relied on for smart underwriting decisions.

Doing business in different countries: “Americans are more direct and will not beat about the bush. Brits dance around the tough issues”. Sure, there are US clients, business partners and colleagues in my 25 year career that have those behavioural traits but there are a great many analytic and amiable characters, who in a negotiation or client relationship are highly prone to avoid confrontation and join the list of world champion procrastinators.

My point here is be careful generalising your way into an intellectually dumb corner. Come with hard evidence or strong anecdotal information and carefully apply it to a particular situation.  “Ah the Spanish, it is always mañana”

© James Berkeley 2015. All Rights Reserved.



Producing and Rewarding Loyalty

Monday, November 2nd, 2015

I am always fascinated by the differences between “producing” and “rewarding” loyalty.

In a great many financial services businesses, particularly in post merger integration or when members of a leadership team walk out, there is a huge confusion between the two. You cannot motivate an individual to stay. Motivation comes from within the individual.

He or she makes a determination that their self-interest is best served by being loyal to their direct report and the firm’s strategic direction. In return for their contribution to the firm’s future health and well-being, the employee has expectations (pay, incentives, affiliation, career development and so on) that must be met or exceeded.

This is not Alcatraz. Legal “lock up” remedies that demand “compliance” are largely ineffectual.  Equally, peer pressure,  for example, midway through the sale process, “we are best served by sticking together”, only works where there is hard evidence or strong anecdotal information to support it (peer pressure).

To understand how you produce loyalty, turn the question upside down, “what would most likely cause the individual to walk away?” Write down a list of 10 probable reasons. Highlight the five most probable reasons. Delete the other four most probable reasons and work on the top reason. Once addressed, move on to addressing the next most probable reason.

Ask yourself, “what alternative exists or we could quickly create to meet this objective?” and then, “How easy is this to implement?” (timing, approval, flexibility)

Of course, your accuracy and probability of success is dramatically enhanced by having this conversation with each individual in-person on neutral territory.

If you think that by hiding from having the conversation you are safer, you are deluding yourself. Silence is not golden, it is merely a retreat into a higher risk and more obscure position.

The default position for many owners of newly acquired businesses or businesses responding to a mass departure of executives is to throw money at it. A belief that a one time retention bonus alone will “secure” the businesses prized assets (people, clients, intellectual property and so on). I am sorry that is crap. You are dealing with human behaviours.

Financial incentives in the form of carrots need to be frequent to impact human behaviour. One off payments do very little to engender loyalty other than to negatively impact the firm’s expense growth and cash resources. You are making disillusioned key employees richer but not more committed to the firm’s future.

Indeed, retention bonuses in isolation are often counter effective. People believe what they see happening not what they hear or read in the organisation.

You immediately create the “have’s” and the “have not’s” in the acquired or ongoing business (divisive behaviour). The “have not’s” lose trust and respect for the “have’s” (a belief, often correct, that their loyalty has been bought). You are encouraging leaders to protect THEIR nest egg (short-term thinking) ahead of furthering your interests (future growth and expansion).

Money alone is rarely the reason someone leaves a financial services business with the exception possibly of a heavily commission-orientated trader, broker or relationship manager. In 75% of cases I observe it is about the relationship with their direct boss. Therein lies the biggest clue to producing loyalty, develop great bosses who engender high levels of trust and respect from their subordinates (an honest-to-god belief that they will do the right thing for their subordinates).

In the acquiring company, make it a risk management priority in the due diligence phase to go through middle managers’ past performance in making smart people decisions and managing crises. Does the business have middle managers who command high, moderate or low levels of respect from key subordinates? Find the “glue” (answers) and you will be on the fast track to making smart decisions about securing the firm’s prized assets.

© James Berkeley 2015. All Rights Reserved.