There are times on a consulting assignment when new problems to solve seem to pop up every minute.  Similarly, when performing due diligence on an investment firm, the questions often pile up faster than the answers.

They can come from almost anywhere — and aren’t limited to the functional area that is the main focus of the review.  My motto is:  “Everything is connected.”

That might seem obvious, but it is a fundamental principle that is all too easy to forget.  In large firms, the core functions of operations, investments, and marketing/client service are isolated from each other, with limited interactions.  In a recent white paper, Jim Ware and Keith Robinson of Focus Consulting Group talked about those different subcultures, which they called “investment tribes.”Focus Consulting Group | This is the PDF.  If you’re interested in the culture of investment organizations, you should be on the email distribution list at Focus.  Each has its own cultural attributes, aspirations, and values.  And given the standard approach to managing investment decision makers (that is, not managing them much at all), even within the “investment” category it is difficult to have a commonality of purpose.

That is also true at smaller organizations.  Even when key people wear multiple hats and have a better understanding of the issues across the business, the functions tend to be viewed discretely.

That’s one of the biggest mistakes a firm can make.  There ought to be an unbroken conceptual thread that connects the elements of the firm.  If you’re doing due diligence, some of the easiest clues that you can find are those that linger at the intersections of the three main functional areas.  The actions and statements of the people involved — and the audit trails of activity in each area — provide fertile ground for understanding the reality of the professed philosophy and the sustainability of the performance.

As a generalist, it is natural for me to think that way, and I’m not surprised when an assignment leads me in unanticipated directions.  A project to evaluate a firm’s investment process (or to translate it into an effective marketing message that clearly and faithfully represents a firm’s capabilities) can turn quickly into a focus on operations if important questions linger there.  An independent reviewthe research puzzle | The last posting featured an explanation of why an independent review can add value for any investment decision process. of a firm — whether instigated by its own desire for improvement or performed by someone on a due diligence mission — should not be limited by preconceived notions of what matters and what doesn’t.

Everything is connected.  Whether you are evaluating an investment manager or trying to improve your own approach, you need to explore it all to see the whole picture in high definition.