Recently, the great state of Texas experienced a power and water crisis due to extended periods of below freezing temperatures, snow, and an unprepared electrical grid infrastructure. Politicians immediately started playing the blame game and pointing fingers, scheduling state and federal investigations, and in one notorious case, flying to warmer climates. The Electric Reliability Council of Texas (ERCOT) worked to restore power to 3 million consumers and 12 million people faced water disruptions due to broken pipes and failing systems. In the short term, the citizens of Texas worked hard to find alternative ways to feed their families, keep them warm, boil water and snow, drive on icy roads, and survive until the crisis was resolved with warmer weather.
Does this all sound familiar? An unexpected event leading to infrastructure failures, which lead to short-term workarounds, interim fixes, and (hopefully) to a long-term strategic solution. The investment management industry recently experienced a similar crisis with the COVID-19 pandemic leading to some communication and infrastructure failures which triggered short-term workarounds, interim fixes, and for some firms, a hard look at their operations and technology strategy. As noted in our 2021 Outlook paper, some firms weathered this “storm” fairly well while others faced more difficulty.
We’re still dealing with impacted operations nearly a year after initial lockdowns, but most firms have found ways to maintain business-as-usual in a remote setting. What comes next is the decision to review target operating models (TOMs) and systems architecture to build an infrastructure that can better handle the unforeseen. A strategic review of your TOMs and system architecture is an excellent method of ascertaining your firm’s sustainability in the face of unexpected events. Now is the time to make the effort to assess and create an unbiased view of your current state, identify your issues and anticipated pain points in the face of future growth, and chart a course for where your firm needs to be to sustain and foster that growth in the next generation.
When it comes to support for an operating model redesign, there are many vendor and outsourcing options available which can lead to a myriad number of strategic design solutions. However, it’s important to build an infrastructure that is scalable and redundant—but not overly complex. There is often a compulsion to rush the strategic assessment process in favor of a quick fix during crisis or of implementing a shiny, new technology. This approach often leads down the path of undue complexity and operational risk—the very issues that can push operations to failure during a crisis. While quick fixes were necessary for many managers last spring, now is the time to design and build a more solid foundation.
As we close in on a year of remote operations, I would urge you not to let your interim fixes become your business as usual. Instead, use this opportunity to make an investment in an operational strategy that can weather an unexpected storm.