Succeeding in a Temporary State


One of my favorite pieces of management advice gleaned during the pandemic is "Don't make long-term decisions in a temporary situation." The advice appeals to my pragmatic side and, if I'm being honest, supports the idea that we are going to get back to "normal" at some point. Sound advice but how then do we view the high impact, long-term decisions that are currently being made across the industry? Large and small acquisitions are everywhere. Scores of firms are conducting fundamental operating model assessments. Leaders are re-evaluating and re-re-evaluating location strategies. Are those not long-term decisions? Yes, they are. Are we still in a temporary situation? I'd say that we are but the pace of industry change hasn’t relented.

The easiest explanation for why my trusted guidance doesn’t fit our industry mold is that COVID-19 and the recent elastic market rebound has accelerated key trends that were present before 2020. Industry consolidation, leveraging cloud and third generation data architecture, greater adoption of front to back platforms, and adopting more working location flexibility were all part of our lives in 2018 and 2019. To me, the past 20 months has been the equivalent of hitting the pedal of an electric car for our industry: No torque, just pure power delivery and acceleration of what had already started. So while conditions may feel temporary, I'd argue we need to expect more of the same going forward (and yes, I'm choosing not to use the term "new normal").

So what's the secret for successful firms making the right long-term decisions in our hyper-speed market? In short, picking the right interim targets and executing plans to achieve them, especially when things are unsteady. A clearly articulated business strategy that taps into or leverages the next big trend is incredibly powerful, but achieving short-term goals that iteratively drive towards the bigger picture is an extremely valuable commodity today. We see examples of dedication to our short-term targets in many contexts: James Clear's focus on systems rather than outcomes in Atomic Habits does a good job of articulating how to address today, not dreams of utopia (great read, by the way). Championship American football dynasties taking a laser-like focus on "the process" is another example. In short, firms don't need to be greater and more efficient in ten years, they need to do it this quarter, regardless of outside influences. Leading managers define achievable milestones, gauge how fast they can travel based on current conditions, and move forward with certainty and acceptance of making "the best decisions at the time."

An analogy: A golfer can imagine the optimal approach to a particular course, or individual hole, and can train for years to succeed, but in the real world, the player needs to deal with course conditions, stress, fatigue, and other influences in real time to achieve success. In the end, preparation is critical to knowing what to do in an extreme situation...but not more important than executing on the next individual stroke. Right now, the industry is playing golf in a very stiff breeze but the tournament continues and firms need to “play it where it lies.” Knowing where to miss isn't a bad thing either.

In the end, we're all in a temporary situation in some form. Our consultants continue to offer our asset management clients uniquely valuable support in making long-term decisions and are equally capable at tuning into current conditions. They are attuned to picking out critical change "cues" and helping firms focus on hitting interim marks that collectively will define the optimal path forward. As we see, the secret sauce is not in the target model decisions alone, but in the ability to execute on tangible milestones in changing conditions.