Lessons from tech and military: Why asset managers need to be agile to stay effective and relevant

Asset managers must promote diversity of thought if they are to future-proof their businesses and provide clients with great service. They can learn valuable lessons on how to do this from tech companies, military leaders and ancient philosophers, writes Apiramy Jeyarajah, head of UK wholesale at Aviva Investors.

Lessons from tech and military: Why asset managers need to be agile to stay effective and relevant

“It’s laughable to say: ‘Tell me what to do!’ What advice could I possibly give? No, a far better request is, ‘Train my mind to adapt to any circumstance.’ In this way, if circumstances take you off script, you won’t be desperate for a new prompting.”1

These words belong to Epictetus, a Greek philosopher of the first century AD. But they are strikingly relevant to life in a modern, globalised economy, where sticking rigidly to a predetermined plan can lead to disaster. When faced with the complexity and uncertainty of the modern world, Epictetus teaches us it is better to be adaptable and flexible; or agile in business management speak.

Technology companies have incorporated agile principles into their business structures

Organisations are relearning this ancient wisdom. Most notably, technology companies have incorporated agile principles into their business structures. Take music streaming giant Spotify: the firm is split into small teams with people of different skills, known as ‘squads’, which operate as part of larger ‘tribes’. Individuals maintain connections with members of other squads who share their areas of expertise, forming ‘chapters’ and ‘guilds’. By arranging teams in this way, Spotify is seeking to ensure information flows seamlessly across different parts of the business.

Military lessons

The US military – where the authority to make decisions has historically been determined by seniority of rank, is also changing the way it works. It created a new, decentralised structure during the Iraq war, whereby forces were split into flexible units that could respond dynamically to enemy movements, and authority was delegated to units in the field, who were empowered to make tactical decisions based on new information without waiting for approval from their superiors.2

Some asset managers have recognised the need to do away with strict structures focused on particular asset classes

These examples provide lessons for companies struggling to break free of their own organisational constraints.

Take finance. In recent years, some asset managers have recognised the need to do away with strict structures focused on particular asset classes, such as equities and bonds, among their investment teams to respond quicker to market shifts. The rise of responsible investment, which takes account of the impact of an investment in areas such as the environment and society, has played a role in this.

The factors driving responsible investment cut across asset classes, and require better information-sharing between investment specialists. We have reorganised our structures and have found we are better able to determine clients’ needs, respond quickly and effectively to their requests with personalised solutions, and identify problems before they arise.

Because the new teams are small, the personal touch is retained from the old model; each member can build relationships with clients, offering a partnership based on trust and credibility while drawing on the expertise of the wider group.

Diversity of thought is a crucial aspect of the agile approach

Diversity of thought is another crucial aspect of the agile approach. It makes no sense to assemble teams whose members look and think alike. The presence of different skills and perspectives fosters creative thinking and productive discussion. Diverse teams are also better placed to recognise and satisfy the needs and expectations of an increasingly diverse client base.

Changing leadership styles

This approach also requires a different kind of leader. Everyone is different, with contrasting backstories and motivations, varying strengths and weaknesses; we are all the sum of our parts. Managers need to understand this if they are to retain talented people and encourage them to give their best.

Revising traditional practices requires bravery and patience – but the rewards are worth it

The old ways are stubbornly persistent, and revising traditional practices requires bravery and patience – but the rewards are worth it. Just like a Greek philosopher, an agile organisation will be primed and ready to adapt to any circumstance.

Three points to remember

  • Tech companies and the military have learnt that adaptability and flexibility in decision-making offer the best means of tackling challenges
  • We have reorganised our business to encourage knowledge sharing among our employees so that they can deliver the best possible service to our clients
  • Diversity of thought is another crucial aspect of this new approach. The presence of individuals with an array of skills and perspectives fosters creative thinking and productive discussion

References

  1. Ryan Holiday and Stephen Hanselman, ‘The daily stoic: 366 meditations on wisdom, perseverance and the art of living’, Profile, 2016
  2. Stanley McChrystal, et al., ‘Team of teams: New rules of engagement for a complex world’, Penguin, 2015

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