Here's a short thought piece about the importance of reliability in your brand and the processes that lie behind it.
I just returned from a tour of the Middle East. I hadn't been there in a while so I made time to catch up with some friends.
In Dubai, I spent some time with a buddy who told me all about his new life in the gold industry. He shared his passion about taking the company he runs to the level a top quality gold trading business.
What he was telling me really got me thinking about how the mechanics of building reliability works and how it can be transposed to any industry. The gold industry is probably as good as it gets when it comes to building a solid brand. The end product may be a commodity, but becoming the first choice counter party is entirely based on reputation.
He spoke about building that brand of excellence by always delivering the perfect shiny gold bar that weighs exactly 1 kilogram, not 999 grams but one perfect kilogram. A gram is worth US$55 at today's gold price, so precision is everything. So, in the end, it is all about running a repeatable process that results in that perfect shiny bar. Be off by 1/1000th and your reputation is shot. Extreme!
A lot of our conversation was about building strategic partnerships. I learned that in the gold industry, the best refineries are typically businesses that only focus on this essential part of the value chain. However, they would be nowhere without the traders. So, even if my friend is very good at trading gold, his best option is not to risk dropping the ball when it comes to refining gold into a deliverable product.
Precious metals have been traded for as long as we can remember. Gold is still the leading asset class in demand by investors in developing markets. This means there is much to learn for asset managers by leaning in to take a close look at how this industry fits together. Our industry is really not that different because in the end it is all about credibility and reliability.
Let's look at a more intuitive example; when you buy an airline ticket, you need to believe that the carrier not only knows how to safely operate an aircraft, but also has the ability to do so on an ongoing basis. Airlines don't build their own planes but focus on operating them safely. The Airline industry is probably as competitive as it gets so it is always serves as an interesting example. Even supermarkets don't make their own products, they just focus on selling them, and it works.
Despite all the talk about 'open architecture', for some reason, our industry is still obsessed with manufacturing its own products. Mediocre investment performance by big brand players still trumps excellent investment results driven by smaller boutiques. In the end we may be confusing our clients, the end investor. There is enough evidence that this is exactly what is happening.
Face it, in most asset management businesses, marketing and investments live together like a difficult marriage. They may keep up appearances, but in the end it is always an ongoing compromise.
Is that really the right formula to build a reliability that is recognizable?
About the author Baldwin has been active as a business developer in the investment industry for more than 20 years. He is a partner at Silk Invest, a fund manager dedicated to the frontier markets. He was an early adapter of social media within the investment management industry. His efforts have helped position Silk Invest as one of the leading managers in the frontier space. In collaboration with Perfecta Partners, Baldwin also helps other financial services companies improve their content marketing and social media strategies.