Posts Tagged ‘investment priorities’

The Perils of Hazy Horizons

Tuesday, March 8th, 2016

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One of the senior politicians in the Brexit debate urged voters on British television last night to give serious thought to the type of country and life they want to have in 40 years time. Predicting what will happen in 3 years time, as anyone sitting in the executive office of a global bank in 2004 will attest to is fraught with huge inaccuracies and serious consequences! The pace of change has never been as dramatic (technology, capital, supply of talent, societal changes and so forth).

The art of management is to balance short and long-term profitable growth and make informed decisions about the health and well-being of the organisation. To effect change successfully and bring employees with them, mid-level managers in particular need to understand how they must adjust their own behaviours and actions in highly ambiguous situations.

To make serious predictions about the long-term and to put the risks and benefits and action in the appropriate context anything more than a 5-7 year horizon is really an intellectual not a commercial debate. Even in government funded infrastructure projects and macro inter-governmental policy initiatives (climate change, energy, healthcare, education and so forth). That is why I smile when I see organisations such as Lloyd’s of London’s (2026 Vision) and other global organisations expecting that their best laid plans will be taken seriously by their key constituents. It is a collection of predictions, which the forecasters will never be held accountable for and those asked to implement it struggle to grasp what it really means for them or their colleagues.  Fact.

Let’s get back to pragmatic outcomes, alternatives, assessment of benefits/risks, timing and action within the proposed investment parameters.

© James Berkeley 2016. All Rights Reserved.

Conviction and Reinvention

Monday, March 7th, 2016

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I have long been fascinated by how people and businesses apply “conviction” (beliefs, investment, action) when there is an immediate requirement for “reinvention”.

In 1999, opposite where I worked on Hollywood Road in Hong Kong was a large commercial real estate company, whose business was fitting out and renting shared service offices. For many years it had a unremarkable name and neon sign over the 1960s building, overnight it added the sobriquet “.com”. Curious I asked a friend who worked in the building what was happening, “Oh the Chinese owner thought because tech is red-hot right now, why not change the name of the company. Don’t worry as tenants we have seen no changes.”

Now you might not be as brazen in convincing your target audience à la Donald Trump and Mitt Romney that your polar opposite views are instantly credible but there is a mindset change needed first to kick start reinvention. Here is 3 simple questions, apply it to any situation you personally or the organisation are experiencing:

  1. What are the beliefs that inform my convictions today about how I and/or the business needs to look in 12 months time? (relationships with clients/investors/ employees/regulators, changing customer base, financial condition, valuable and profitable offerings, discretionary time and so forth)
  2. How do I apply those convictions today to where I/we plan to invest tomorrow? (capital deployment, people, innovation, strategy implementation)
  3. How do I best put today’s convictions into action tomorrow? (priorities, organisational structure, process, exemplars, skills, behaviours, expertise, technologies, accountabilities, rewards system, communication and feedback and so forth)

I can barely think of a sector where the nature of work is not changing dramatically today. With it comes fear (irrelevant, loss of clients or even, unemployed) and opportunity (new investment in new products and services, new markets and new roles).

People believe what they see, not what they hear or feel. If you really want to convince me today that you are serious about reinvention, I want to see immediate changes of attitudes and behaviour amongst influential figures in the business and new, impressive results fast.

If you are willing to be intellectually honest, click on the link below. Ask yourself where do our current attempts sit on the chart and where do they need to be in the future. The distance between the two points is indicative of the small step or giant leap your business and key people need to take.

 

Conviction and Reinvention pv only

Endless needs analysis informing our future strategy (AIG), managers preoccupied for hours creating and talking to the media about our “new culture” (Anthony Jenkins at Barclays) or changes to the plaque over the building door won’t cut it for customers, investors, employees and regulators, however, well intentioned. It isn’t easy but I need to see in your actions that you really believe what you are saying, not merely spouting platitudes to buy time or protect your ego.

© James Berkeley 2016. All Rights Reserved.

Inside The Executive Office: Compelling Stories

Monday, February 22nd, 2016

I have spoken to in excess of 750 customers of financial services, insurance and business services advisory and brokerage firms globally over the past 12 months. Hear are the 3 most important questions your clients want to know:

  • Your ability to fix a human problem
  • Your ability to satisfy a human need
  • Your ability to ignite the human spirit

5% of customers report firms providing “absolute clarity/absolute conviction” to all three questions, 55% report firms providing answers that are “opaque/self-doubt” and 40% of responses that are “totally unclear/disingenuous”. If you are an executive in the last two groups (the overwhelming majority), you have a lot of work to do, fast, to change your customer’s perception of your business, your people and the perceived value.

Look at your marketing collaterals, exhibits, media comments, speeches, client and prospect conversations and ask

  1. Internally and externally (clients, business partners, media partners), where can we improve in 1 week?
  2. What needs to change first? (priorities, quick wins)
  3. How will we know we are successful? (what ideally do you want to see, hear and feel)
  4. How can we sustain that level of improvement? (better accountability, enhanced performance, changes to feedback and rewards system)

© James Berkeley 2016. All Rights Reserved.

Behind The First Meeting: The Activist Investor Within

Thursday, February 18th, 2016

I detest the way the debate about activist investors and their motives has descended into a force for good or evil. It is corporate pantomime. A round of boos please after the activist has said their lines. Cheers and name calling after the “innocent” CEO or Board Chair rebuttal. AIG, Sothebys, P&G, Yahoo, and the list goes on. The myth is that the activist investor has an agenda and management and the Board don’t. Sparks fly at the first meeting because that is what the activist wants to see happen. This is rubbish and not supported by hard evidence in many situations. In a lively debate on CFO.com this week, titled, When The Activists Attack  here is a perspective I shared from my first hand experiences with businesses and management brought to book by activist investors:

When the Activists Attack

Interview with Me: Economia

Wednesday, February 17th, 2016

Nick Martindale, a senior reporter with economia, the “go to” publication for the global accounting profession and their clients, interviewed me on the logic and emotional challenges top managers face when they decide to “go global”. Specifically, the fears that distorts their decision-making and the consequences for their growth objectives. The fears are largely similar in large and small firms, what is different is the impact the consequences may have on top line revenue growth, profit, cashflow, brand perception, employees, investor relations and clients.

http://economia.icaew.com/finance/february-2016/foreign-riches

 

Resilient Growth

Monday, December 21st, 2015

Why do annual budget discussions reveal so little about the growth prospects of the business and so much about the fears of those running the business?

I have come to observe that more energy is exercised in the haggle and obfuscation between line managers and their direct reports than the value derived from the process.

Should we have objectives and goals? Absolutely.

Should we place greater emphasis on a set of tactical targets that in of itself are arbitrary (based on a “best guess”) or a set of broader strategic outcomes that more profoundly describe what we want the business to look like in 12 months time?

In many high growth, mid sized businesses, where the overriding imperative for the owners is to build equity or transition the business (divestment, IPO and so on) I think there is a compelling case for the latter. Yet that is very rarely the case. The business may have doubled or quadrupled in size but the management focus and discipline and rewards system is largely unchanged (tactical targets).

I come across a lot of strong and dynamic businesses who are in self-congratulatory mode.

Senior Manager: “We have met or exceeded our budget for the last 8 quarters.”

Me: “Great, what SHOULD you have achieved in the prevailing conditions?”

I am met typically by quiet silence or a “what do you mean” response.

My point here is are you really focused on what really matters to the Owners (building equity or preparing a transition)?

Here is a quick set of strategic outcomes, my best clients use to drive their business:

1. Sustained Sales and Profit Growth (over past 3 years).
2. Market-leading Sales & Marketing Processes (array of rainmakers, leverage high tech, increasing market gravity, abundant mindset, room to accelerate growth)
3. Compelling value proposition and market position. (impressive clarity internally and externally about how the firm’s ideal clients are better off or better supported after using the firm’s products and services)
4. High Quality Management & Employees (high level of familiarity, clarity and implementation skills, behaviour and expertise supporting these strategic outcomes)
5. Breakthrough Client Relationship Approaches (acquisition, innovation, retention, profitable growth)
6. Market-Dominating Fees & Value (zero aged debt, 50%+ fees “banked” next 6/12 months, balanced growth, low working capital needs)
7. Intellectual Property Institutionalised (proprietary IP copyrighted, constant creation, internal R&D “laboratory”, systematic approaches)
8. Tremendous Loyalty (seductive rapport with key people, impressive career growth, diverse and dynamic environment, aligned rewards and value creation)

Go back to your 2016 business plans and accountabilities for key managers.

Producing Results Are each of the requisite improvements in each area set in stone? Are there influential exemplars lined up to reinforce this behaviour daily (mid-management)? Is the frequency and quality of performance assessments appropriate?

Rewarding Results Does the rewards system appropriately support or hinder your future health and well-being (bonus, long term incentives, recognition, promotions and so forth)?

I strongly suspect many people will be shocked how loosely the wheels are bolted onto their bus and how susceptible their best laid growth plans are to unforeseen events. Waste no time, take action now if you want to increase your resilience.

© James Berkeley 2015. All Rights Reserved.

The 10 Traits of A Great Investor

Wednesday, December 16th, 2015

For 35 years since the day I started giving horse racing tips to seventeen year olds willing to lose their pocket money, I have been fascinated by what makes a great investor beyond the obvious (trust). While the skills, and expertise should, and will, vary dependent on the discipline, I have come to observe from watching hundreds of investors that behaviour is arguably the most important factor.

Whether you are evaluating an investor to back your business, invest in their fund, co-invest with them or hire an investor, I think you want to see a high level of the following traits:

  1. Intellectual Curiosity: they have a depth and breadth of curiosity that is unlike most people. Most people have a concentration in particular areas in business, science, culture, sports and so forth.
  2. Commitment to constant learning: they are ferocious in their continual search for new ideas, insights and new ways of doing things that challenge their past beliefs. They assertively find people who have got something to say, aggregate and connect the dots.
  3. Creativity: they are particularly interested in the future, and how that works and what are the change agents in the future. Their inclination is to think, feel and act on lessons learned from past successes, failures, recombinations and so forth and apply that to the future.
  4. Resilience: their beliefs and attitudes demonstrably enhance their resilience. They rebound relatively quickly and they are not damaged “permanently” by losses or failed investment decisions.
  5. Self-esteem: they are able to continually feel good about themselves irrespective of whether they are experiencing success or failure.
  6. Perseverance: they possess the personal focus and discipline to see investments through to a natural conclusion. They are not rolled over by unforeseen events, easily distracted or quit at the first sign of failure.
  7. Love: they implicitly love what they do. I draw a distinction from “blind” or “fake” love. The investor who even though they know it to be wrong ignores reality or feigns interest.
  8. Faith: at the heart of an investor is a belief system and an implicit faith in their own judgement. It is based on a set of shared values, which others will readily sign up to.
  9. Courage: they are not afraid to provoke and indeed, they seek contrarian positions and points of view. They are willing to lead when everyone else sees just fog. For the investor ambiguity spells opportunity, not fear. 
  10. Forgiveness: they don’t hold personal grudges. They are supportive and willingly reward people, who show the right behaviour not just those who achieve success.

You are right if you say there are very few people with this combination of behavioural traits. That is why there are so few exceptional investors. Choose carefully, you’ll profit from reading this before investing a dime, penny or euro.

© James Berkeley 2015. All Rights Reserved.

 

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

http://ow.ly/Vih0A

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.