Business Model



Culture and leadership resonate

Culture is recognized as a high-impact driver of organizational performance. Leadership is critical to the effective development and exercise of culture, as well as the creation of successful strategies and business models. These co-dependencies, and the syncing of strategy and culture, are central to the future of all investment firms.


  • In the Purposeful Capitalism scenario, reputation is built less on performance track record and more on trustworthiness, ethics, communication, and transparency. Investment firms could achieve better outcomes for their business and clients if they focused increased attention on these areas. The tacit nature of culture makes it problematic to manage because it is subject to more opinions than facts. Yet, awareness of a firm’s culture as a force for good makes it a candidate for improved management attention.
  • In the past, investment firms produced only limited descriptions of culture, emanating from leaders who only had a surface-level understanding of the cultural forces at work in their organizations. The industry’s future depends on firms’ leadership understanding cultural issues and taking actions that are consistent with making cultural forces work positively. In global firms those issues are even more complex, because leaders must understand multiple national cultures and contexts. Cultural factors in Asia vary considerably from cultural factors in the US.
  • Models of leadership are set to evolve. Leadership through top-down control is increasingly seen as ineffective for investment firms that are essentially intellectual capital businesses whose people assets respond much better to autonomy than hierarchy. The leadership model that resonates will be one that serves others, distributes responsibility, mediates fairly, and communicates passionately.
  • Development of culture is impaired by short-termism that puts pursuit of near-term business results ahead of a far-sighted passion for sustainable client value. A reduction in short-term thinking will be necessary for culture and leadership to harmonize.
  • Critical leadership and management concepts, such as methods to analyze the employee value proposition (EVP) and client value proposition (CVP), are likely to emerge and form a growing part of management’s toolkit. An effective management model includes the pursuit of clear business objectives, operating with enlightened strategy, syncing with culture, and validation by strong EVPs and CVPs. Investment firms align more to reporting through narrative, particularly Integrated Reporting, than financial statements and traditional annual reports.
  • Leadership voice must be loud and bold. The Future State of the Investment Profession pointed out how end investors and end consumers want corporate leaders to publicly promote their values. This is consistent with the community increasingly requiring investment firms to demonstrate their clean “license to operate.” In a world of commoditized offerings, organizations can differentiate themselves by their value systems.