Why does culture matter for the Investment Management industry?
Posted by Pierre-Yves Rahari on 18 July 2019
Why does culture matter and what does it mean? Let’s borrow from Groysberg & Al. to define culture: “Culture is the tacit social order of an organization: It shapes attitudes and behaviours in wide-ranging and durable ways.” Why is this relevant to the Investment Management industry? Because the industry finds itself in the midst of contextual changes that will significantly impact and shape its culture for decades to come. What’s more, these changes are coming at an ever-accelerating pace, that requires the industry to adapt rapidly. As a result, “how things are done over here,” which is another way of defining culture, will change dramatically. Whatever your role in the industry, it is important to understand these changes and their implications, in order to operate efficiently, for your own benefit and the benefit of all your stakeholders. This means culture sets a benchmark and a standard while allowing innovation and change to flourish.
What are the contextual changes impacting the industry culture?
Generating returns for the benefit our shareholders remains the raison d’être of the industry, but the route to delivering these returns are paved with new challenges that the industry needs to understand and factor into its strategic and operating considerations. In our view, some of the key changes impacting the industry and its culture include:
- Geo-political shift: The world is no longer Euro-centric and the shift in geo-political dynamics is disruptive and poses many questions
- Shifting investors and regulatory requirements: Transparency on costs, risks and returns have become non-negotiable
- Investment strategies: Shift towards passive investments, and shift towards new asset classes are non-reversible and well underway
- Emerging investor requirements: Sustainability and impact investing are high on everyone’s agenda
- Operational shift: With the emergence of FinTech and new, pioneering operating models and platforms, we are truly in a digital era
- Stakeholder shift, both as investors and workforce: We have a new generation of millennials entering the workforce who are digital natives with a new set of sensibilities and priorities, chief amongst them being diversity & inclusion; at the same time, this generation will also form the ranks of the investors serviced by the Management Investment industry
How do we approach the question of culture in our consulting process?
At AlgoMe Consulting, we know each firm is unique, with its own set of attributes which impact culture: shareholder & stakeholder structure; management model & philosophy; geographical & operational set up; operational & product line-up; competitive & regulatory landscape etc. When we go into consulting engagements, we will connect with our stakeholders to understand as intimately as possible key aspects of their culture.
This is very important to us, no matter the nature of our consulting engagement, we continuously work with our clients to ensure their culture aligns with the contextual, tectonic changes that are shaping the industry. This is essentially a root and branch exercise, examining the organisation in great detail, with honest and critical reflection, with a view to gain actionable insight. This is self-awareness on a corporate level.
How do we achieve results for our clients? We always make the effort to understand the ramifications of new developments and what the implications for the future are. While we get to grips with the bigger context, every organisation’s unique culture remains at the heart of our thinking. Our experience of navigating cultures and understanding what drives change means that we are able to apply ourselves with speed and efficiency. Using emotional intelligence rather than rigid methodologies is very important to us. We work hard to understand idiosyncrasies and spot anomalies, which makes us agile and adaptable to constant change.
Please refer to our forthcoming articles, which will present how we apply this unique approach to culture in our post-merger acquisition engagements; in our approach to innovation; and in our approach to governance models in the industry.
 “The Leader’s Guide to Corporate Culture,” B. Groysberg & Al., HBR January-February 2018
Posted by Pierre-Yves Rahari on 7 August 2019Read post