Sat, Dec 3, 2016
A large non-U.S. investment house has brought to life a new internal entity that deals with higher risk and higher reward than anything the firm has experienced. Further, it is imagined as an imminent global powerhouse in New York, Europe and Asia.
- Why might this laudable internal intrapreneurial effort work?
- Because they have hired new people with great experience, expertise and networks of relationships
- Because there is a pool of analysts in the system who can be tapped to support those hired in the new entity
- Because the senior people in the parent have worked hard to win approval of the first deals proposed (precedent-setting)
2. Why might this effort fail?
- Because the parent views compensation demands by the new people as beyond the pale and politically explosive when known by their traditional investment people
- Because there is already market-based evidence that top prospects have rejected the most recent compensation offers
- Because there are few (no people?) people on the decision-making committee with relevant risk/reward experience
BLINDING GLIMPSE OF THE OBVIOUS
It is always a thrill when people in my client organization express an insightful observation concisely. The parent organization hired a relatively junior person for the local analyst pool who has lived all over the world and has experience in the higher risk/higher reward activities. Consider the brilliance and brevity of his remark:
“An additional employee in the parent is seen as a cost increase to be minimized, an additional employee in the new unit is seen as an investment requiring a return.” The first leads to either underpaid or under-qualified managers. The second allows for “best athlete” or at least “major league player” to be considered.
This bit of concentrated wisdom is so obvious that it was not fully understood by decision-makers.
LESSONS IN LEADERSHIP
When conceiving a departure from the status quo, fresh eyes and people with conceptual and analytical skills can alter the plan from the get-go. Whether they are existing staff, new hires, new senior advisors or consultants, there is a high return on investment for their participation.
For a terrific example of a young start-up CEO in network software, read Adam Bryant’s interview (First Principle Thinker) in the Sunday NY Times (December 4, 2016):
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That’s just my view. What’s yours?