Wednesday, August 16th, 2017
maps of the world

“A single map can convey enormous amounts of information,” said George Friedman in The World Explained in Maps,Mauldin Economics | The ebook also serves as a marketing piece for Geopolitical Futures, Friedman’s paid service. an informative series of “geopolitical cheat sheets.”  The maps and the short explanations that appear along with them provide an easily-accessible wealth of information.  In the brief amount of time it took to read the ebook, I saw some global issues in a different light — and was reminded of my boyhood love of maps.

But, as Shane Parrish has written, “Maps are necessary, but flawed.”Farnam Street | Farnam Street, Parrish’s blog, is essential reading for those interested in the process of decision making.  A map can’t faithfully represent the world in every last detail; it can’t replicate reality.

A good map can aid in understanding — as those in Friedman’s collection did for me — and serve a navigational purpose too.  That point is emphasized by Dave Gray:  “You can make a map for yourself or for others, but map-making implies exploring and diagramming a terrain in a way that may be useful later.  Think of Lewis and Clark, finding their way west.  The purpose of that journey was both to explore and to make a map that others could later follow.”XPLANE | This piece offers Gray’s classifications of maps, models, and canvases.

The navigational considerations are the inspiration behind a series of postings (essentially a book in progress) by Simon Wardley on the creation of maps for strategic organizational decision making.wardleymaps | This is the first chapter; links for subsequent ones are found at the end.  The approach came about because of Wardley’s frustration with the surfeit of consulting frameworks12Manage | Here’s just the “strategy” section of a site that deals with concepts and frameworks that get applied in organizational analysis and management circles. which, despite their obvious popularity, in his thinking don’t get at “the why of movement.”

While a geopolitical map works off of a fixed landscape (for the most part; there are feats of civic engineering that can change that landscape in important ways over time), social and economic systems are forever in flux.  Maps of them (and maps of strategies dependent on them) should reflect that movement.

But they very rarely do.

Thus, maps of the world in which we work are often out of date.  Consider three territories that the leaders of an investment organization would want to map.

1 ~ The players in the investment ecosystem are very diverse, and the competitive environment in which a particular one operates likely looks a lot different today than it did at the turn of the millennium.  As one obvious example, consider the rise of the big independent advisory firms over that time.  They have gained much more power and their businesses have morphed in important ways.  Using an old map to navigate a new landscape doesn’t work.

(I’m reminded of a statement by the leader of an advisory firm at the Investment Management Workshopthe research puzzle | My last posting concerned my experience as a participant. who commented that Vanguard had become both a close partner and a fierce competitor.  Neither of those relationships would have been in place not that long ago.)

Trying to map out the field of battle in this business can be exceedingly difficult.  Everyone seems to be invading everyone else’s space, and if you try to calculate the size of a particular part of the industry, you soon find that the daisy chain of agents involved means that assets under management get counted and recounted in different ways and places.

A recent search for an outsourced chief investment officer (OCIO) that I led for a foundation provided a stark example of the collision of competitive categories.  Vying for the business were organizations that had their historical roots in at least seven different types of firms, most of which wouldn’t have been competing before, but now they are all chasing the hot OCIO market.

2 ~ Another layer in the three-dimensional puzzle involves mapping the investment opportunity set.  In the last edition of my newsletter for institutional asset owners,The Prudent Fiduciary Digest | The newsletter is aimed at decision makers on investment committees, etc., and those who work with them. I linked to a piece on the evolution in asset class definitions at university endowments.  That analysis could be extended to strategies within those asset classes.  Again, there have been significant changes over time in the options available and, in fact, where we draw the lines.the research puzzle | I wrote a piece in 2008 about “where we draw the lines.”  It’s easy to underestimate the importance of those shifts.

3 ~ One realm that hasn’t seen much movement is organizational design.  While the external environment has been in motion, most organizations have remained fairly static in their construction.  Functions and roles haven’t changed a great deal; it’s as if we stumbled on to the optimal design decades ago.  (I think not.)

These components — the competitive environment, the asset classes/strategies, and one’s own organizational construct — are interconnected.  Talk about a difficult map-making task.  But the difficulty also reflects an opportunity for those who can better assess the environment, where they are, and where they are going.

You should inspect your current maps of the world (be they laid out in some definitive form or floating around in your head).  Are they out of date?  Do they approximate the reality of today’s situation?  Do they acknowledge and reflect the movement of the landscape?

The world has changed a lot and the pace of change has quickened.  A re-mapping project is likely in order.