On Wednesday a Linedata Exchange 2013 panel session titled Asset Management: A View from the C-Suite explored the relationship between risk, regulation and business strategy. Moderated by Gary Brackenridge, global head of hedge funds business line for Linedata, panelists were asked about problems with the major ongoing themes that have gained momentum this year including big data, outsourcing, and platform consolidation.
Dushyant Shahrawat, senior research director of capital markets at CEB TowerGroup, responded that while we've heard a lot of talk about innovation, the capital markets is still years behind many industry leaders, particularly in the less conservative areas of social media. "If you don't allow employees access to social media channels that shows how out of touch you are," he had said, adding that 60% of people under 30 check with friends on Facebook about what stocks and funds to buy. It's not a solid investment advice, he admits, but it is a mistake for banks to not even be part of the conversation. "If you hope to reach growth projections we have to make substantial changes in how we think of technology. "
Frozen by Uncertainty
Geoff Colvin, senior editor at large for Fortune Magazine, and former anchor for Wall Street Week served as the keynote speaker. His engaging presence amplified his message: In this ever changing environment, someone is going to win and it might as well be you.
He opened with two important messages. The first; The importance of a single person, one's human capital, is greater than it ever used to be. "A CEO's worst day is when he announces he' stepping down, with no successor is named, and stock goes up. That's a bad day," he jokes, referencing Microsoft. Secondly; We can not be frozen by uncertainty. The challenges we're facing are extraordinary, and we need extraordinary solutions in order to win.
Brilliant information tools are available to us, he continues, and businesses are all influenced by them. "They have to be used intelligently. They are available to everyone, including your competitors. Many times you have to have them to be in the game, but you have to use them better."
Finally, culture effects everything we talk about. CEOs understand that culture is at the heart of the whole game. "Corporate culture is what people are doing when nobody is telling them what to do… In most businesses, nobody is telling you what to to do minute to minute or the exact words to say… Culture determines these things."
The Winning Combination
What do you what most in your business life? That's the question Colvin likes to ask. "The answers are consistent," he says. "People usually say what they want is some kind of sustainable competitive advantage. They say that because in this area, there is no advantage, even the greatest ones turn out not to be sustainable."
For example, the cell phone market has been dominated by more than 5 players in 12 years. That didn't used to happen, and even giants like IBM are inflicted with uncertainty. "No industry is as impacted as much as this one. And it's not stopping… The regulatory policy ahead is incredible. You want something to hold onto in that environment."
So what's the solution? He offers up four things successful businesses are doing to win:
1) Innovate the business model: "Business models used to last for decades, not anymore, and the competency to change business models doesn't really exist… The newspapers model didn't change for 200 years, why would we suppose this generation knows how it's done? They don't! It's a competency most companies need to develop." He adds we can take a lesson from Thomson Reuters, which got out of newspapers and went electronic in 2000, the all-time best year for newspaper ad revenue. "They looked crazy at the time. Today they're genius… Changing the business model when it needs to be changed will often look nuts at the time. It takes courage but it's what companies are learning to do."
2) Integrate the enterprise around customer experiences: This means bringing all parts of the enterprise together. "We can see this happening with slogans used internally - they're all the same: One X. One Microsoft! One Deloitte! They're all feeling the same thing… They want to bring everything together for the best experience for customers." This includes the people who create best experiences, like design and produce experiences, who are in the enterprise but typically down a few layers from the managers. The goal is to bring together the creative geniuses for more simultaneous decision making instead of a sequential process. Colvin says the best company at this is Apple. "This is what Jobs did well. Historically he will be regarded more for managerial innovation than product innovation. He managed it at a way that it's integrated all parts of business and geared it towards great customer experience."
3) Never stop building human capital: "We are all going to have to realize that we need to keep building human capital all the time. When times are uncertain companies cut travel & entertainment, advertising, and training and development." The recent financial crisis was no exception, but Colvin says the best companies never stopped building human capital (training and development). Ford was highlighted as a company skilled at evaluating their staff and distinguishing great performers.
4) Get radically customer centered: "This means creating offers that are different for different customers. Most companies don't actually do that, and they can get themselves in trouble… If mangers don't know that, or think they know it or are wrong about who is who then they are guaranteed to misallocate resources in a serious way. They are starving the best customers of attention they deserve, making them vulnerable to being pulled away... Being genuinely customer centric make sense of this. In practice this was hard until recently, but because infotech tools have become so much better any company can do this. Amazon does this now, and we can all learn from them."