What It Takes to Create a Great Firm Asset Management Forum - - PowerPoint PPT Presentation

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What It Takes to Create a Great Firm Asset Management Forum - - PowerPoint PPT Presentation

What It Takes to Create a Great Firm Asset Management Forum Montreal October 23, 2014 My Opportunity Clean slate: free to decide Free to dream Long-term focus Inspiration of J.P. Morgan: First-class business in a


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SLIDE 1

What It Takes to Create a Great Firm

Asset Management Forum Montreal October 23, 2014

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SLIDE 2

“My Opportunity”

  • Clean slate: free to decide
  • Free to dream
  • Long-term focus
  • Inspiration of J.P. Morgan:

“First-class business in a First-class way”

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SLIDE 3

Reality

  • One chance – and only one
  • No experience in great firm
  • No guide books on great firms
  • No exemplars as great firms
  • Better figure this out – and fast!
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SLIDE 4

Asking Around Again & Again

  • Other than your own firm, which

firm is best… –To work for a great career? –To work for you on a major problem

  • r great opportunity?
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SLIDE 5

First Surprise: All Agree on Best Firms

  • Auditing: Arthur Andersen
  • Consulting:

McKinsey

  • Law:

Cravath, Swaine & Moore

  • Healthcare:

Mayo Clinic

  • Investing:

Capital Group

  • Banking:

Goldman Sachs

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SLIDE 6

Second Surprise

Across very different professions…

  • Not different
  • Not many
  • All essential

same “secrets” for every great firm

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SLIDE 7

Olympic Athletes Are All The Same

  • About 20 Years Old
  • Great athletes
  • Great competitors
  • Strong commitment to excel
  • Moms worry
  • Dads worry
  • Friends wonder
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SLIDE 8

All strive to Excel

  • No medal: “Olympian” forever
  • Bronze medal: “Olympic medal winner”
  • Gold medal: “Won the gold medal”
  • Silver medal: “Lost the gold”
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SLIDE 9

Great Firms: All About Serving Clients

  • Mission
  • Culture
  • Recruiting
  • Training
  • Innovation – micro
  • Innovation – macro
  • Leadership
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SLIDE 10

Mission An Inspiring Long- Term Purpose

  • Capital: Serve investors’ long-term interest
  • Mayo Clinic: Needs of patient come first
  • Cravath: Be most effective firm
  • n most difficult cases in U.S. law
  • McKinsey: Help management discover,

define, and solve major problems

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SLIDE 11

Culture

  • How we do things around here
  • Take a pad - always
  • firm vs. Firm
  • On weekends vs. never on weekends
  • Sandwiches at desk vs. Partners’ dining room
  • Always jackets vs. never jackets
  • Never say “I”
  • Funeral service for partner
  • Teams and teamwork always at core
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SLIDE 12

Recruiting

Getting really right people: Absolutely priority #1

  • Senior executive’s personal top priority
  • Systematic, full court press – year after year
  • 20-30 interviews – both parties learning
  • Not “Top Quartile;” Not Top “Decile”
  • “You go to Stanford”
  • Can’t be the best firm unless have best people
  • Recruiting today will determine firm tomorrow
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SLIDE 13

Training and Developing People

Educating and organizing for excellence

  • Cravath: “Come for the training”
  • “Nobody at Mayo could ever be as good
  • utside Mayo.”
  • Capital: 360 annual reviews at 60, 65, 70, 75…
  • Pine Street at Goldman Sachs
  • McKinsey: Regular feedback at age 50 & 55 –

for Personal Plans

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SLIDE 14

Client Relationships

Ties that last because clients always come first

  • Capital: Paternalism for investors
  • Goldman Sachs: Takeover defense
  • McKinsey: Depending on client “insiders”
  • Mayo Clinic: Single destination medicine
  • Cravath: Transferring clients early – even IBM
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SLIDE 15

Micro Innovation

Changing how the game is played

  • Capital: Multiple-counselors
  • McKinsey: Geography, industry & function
  • Mayo Clinic: Group practice
  • Cravath: Lock step, Discovery attorneys,

Goldman Sachs: Private client services

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SLIDE 16

Macro Innovation

Changing the game itself

  • Investment banking structure
  • Internationalization
  • Multiple hospitals; Global technology
  • Global network
  • Dealer in commodities, currencies, etc.
  • Cravath system; Recruit fewer first years
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SLIDE 17

Leadership

  • Bring all the secrets together all the time
  • Identify trouble early and act boldly
  • Levels of leadership:

– Transaction leaders – Process leaders – Servant leaders

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SLIDE 18
  • Product vs. service focus
  • Investment managers proliferate
  • Intermediaries proliferate
  • Efficient markets vs. Performance investing
  • Extra fees vs. Extra returns
  • Indexing
  • ETFs
  • Target Date Funds
  • Internet Intermediaries
  • DB into DC

Challenging Investment Managers

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SLIDE 19

Changes Over 50 Years I

  • NYSE: 3M 4B
  • Derivatives: 0 4B+
  • Institutional: 10% 98%
  • Commissions: 40¢ 3¢
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SLIDE 20
  • Turnover 20%

100% +

  • CFAs: 0 120,000
  • MBAs and PhDs
  • Global, Integrated Market

Changes Over 50 Years II

  • Internet
  • Bloomberg
  • IT
  • Algorithms
  • Reg FD
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SLIDE 21
  • Promise: Beat market!
  • Hero fund manager
  • Performance data
  • Defined “product”
  • Strong offense
  • Economic success via sales
  • Great business

Old Active

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SLIDE 22
  • Promise: Client focus
  • Professional service
  • Define problem
  • Engineer solution
  • Economic success via loyalty
  • Great profession

New Active

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SLIDE 23
  • The exemplary professional firm in 1960s
  • Excellence on every dimension
  • Lost focus on professional excellence
  • Silent shift to profit focus – again & again
  • 44 steps in self-destruction
  • DOJ indites; Supreme Court negates

What About Arthur Anderson?

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SLIDE 24
  • Mission – Client focus
  • Culture – Teamwork at core
  • Recruiting – Those who will excel
  • Training – Accelerate to excellence
  • Innovation – Adapting to change
  • Leadership – Servant leadership

Great Firms in Changing Times: Same “Secrets” Always.

– Persistent – Active