Wednesday, March 23rd, 2016
work issues

The February 28 edition of the New York Times Magazine was titled “The Work Issue.”  The articles within it received widespread attention, especially the lead one about Google studying what makes for “the perfect team.”New York Times Magazine | Yet another example of the supposedly moribund mainstream media driving the discussion.  The best content often comes from the same old places.

While perfection is a lofty goal, its research showed that the best teams tended to have two things in common.  “First, on the good teams, members spoke in roughly the same proportion, a phenomenon the researchers referred to as ‘equality in distribution of conversational turn-taking.’ . . . Second, the good teams all had high ‘average social sensitivity’ ”” a fancy way of saying they were skilled at intuiting how others felt based on their tone of voice, their expressions and other nonverbal cues.”

In contrast, a group of very smart people that is “optimized for peak individual efficiency” usually struggles to act as a true team, meaning in practice that the group does not become “more collectively intelligent,” which is, after all, the reason for working together in the first place.

If we stop there, in your experience, which of the last two paragraphs most aptly describes how investment professionals operate in organizations?

I dare say the collective opinion of readers would be overwhelmingly weighted to the individualistic approach.  That begs the question as to whether the verbal-cage-match culture at many investment shops is better suited to the task at hand than the softer way advocated by the Google study (which, according to the author of the article, “led to the same conclusions that good managers have always known”).

Google focused on a data-driven approach to studying teams, which ought to appeal to investment types, but the conclusions are an anathema to many, who want nothing to do with talk of culture except in marketing presentations.  An analysis of what works sounds like a good idea until it comes face to face with long-held beliefs about the nature of the business.

Communication, empathy, and “psychological safety,” the underpinnings of productive group effort, seem totally at odds with the performance game as it manifests itself in most firms.  Tradition, a lack of training in organizational behavior, and, yes, an old-boys-club environmentthe research puzzle | Some responses to the article pointed out what it hadn’t:  The qualities most missing in teams are those often most associated with women.  This link is to an earlier piece I wrote on that topic. all contribute to the perpetuation of norms that yield the spotty end results that characterize most investment organizations.

The magazine included a number of other pieces of interest, including ones on meetingsNew York Times Magazine | Are they thieves “of joy, or productivity, of mental freedom,” necessary evils, or opportunities? (and the cultural divide between Managers and Makers), balancing personal and work issues, changing workplace environments, the power of lunching together (you want your local firefighters to cook and eat as a team), and a rethinking of the low-cost-wins assumption in the service industry.New York Times Magazine | A great look at an innovative cleaning service, Managed by Q.

Of particular interest for investment decision makers is an article about Kensho.New York Times Magazine | Finance “has more jobs at high risk of automation than any skilled industry.”   It should be an eye-opener for individuals in the business and for their organizations:  “It is one thing to make a few analysts redundant, but automation could put whole business models in peril.”

Disruption is in the wind.  Competition among investment firms is intense, yet fees are high and there is too much capacity in most parts of the industry.  Organizations find themselves struggling to demonstrate compelling long-term value propositions.

Which brings us back to the main topic of this posting:  Looking inward even as the storm clouds gather externally, should the leaders of organizations be reforming them in ways that could make them more sustainable and resilient?  Or is the old model of managing investment entities, defined by a foundation of individualism and a focus on short-term results, best suited for the investment world?

If you are looking for a partnership, which kind of organization do you think will perform better over time?  Why?

It is not an academic question.  Is an “investment team” really a team?  If you lift up the lid of promotion, what is inside?

It’s time to compare how things are done with the available evidence of what works.