Late last night, we received call from a family friend panicking about the value of his investments. He is in his early senior years, and for all of his life, his investments have been managed largely by others. Now, with sharp currency fluctuations and market declines, he is worried beyond belief about his asset base and ability to maintain his lifestyle. He had selected a new advisor a year ago. The advisor, of course, as is common these days, is collecting a fee of about one per cent of the asset base’s valuation — which has been declining sharply. What should he do?
Meanwhile, earlier in the day, I drove to the home of a hospital construction procurement executive implicated in a scandal. He is near retirement age. In the snow, I could see decorations for what appeared to be a warm Christmas experience. A few days later, in early January, he became a media celebrity of an unwelcome sort after process servers delivered the writ alleging fraud. (I am not hiding his name here and you can read the writ in this Ottawa Construction News article.) This executive — and others named in the writ — have problems beyond worrying about retirement financing; the hospital has called the police and the media continue to dig out dirt.
Neither of these stories, obviously, reflects on any degree of happiness or security. The investor, of course, isn’t nearly as bad off as the many individuals who put trust into dishonest advisors such as Bernie Madoff — and who discovered their wealth had been siphoned off in fraudulent schemes. His problem is more his lack of knowledge and market panic. He can recover with some patience, calming advice and recognition that bad news doesn’t go on for ever (but it can get much worse before it gets better.)
There are other sides to the less-than-happy stories, though many will be invisible in the current environment.
Some people are free from worry. That hospital administrator, if he hadn’t followed the slippery slope, would have been secure in retirement with a solid government-funded pension plan (plus savings from a legally earned six figure income large enough to fund supplementary retirement investments.)
A few are going beyond being free from worry — they are taking calculated risks; perhaps allocating a small portion of their investment reserves in opportunistic purchases. They may not be buying at the bottom, but they can afford to take some more losses — when things get better, they’ll be able to brag about their insights. They are not panicking but responding quickly to the circumstances. They are agile.
This is the message of a McKinsey, and Company report that says: “New research show the trick for companies is to combine speed with stability.”
Our goal was to discover how often leaders and managers moved quickly when challenged and how rapidly organizations adjusted to changes and to new ways of doing things.
Taken together, these two sets of questions, old and new, provided the foundation for a simple matrix, comprising a speed axis and a stability axis. The matrix turns out to be a surprisingly strong predictor of organizational health and, ultimately, of performance.
I would add integrity to the mix. While a con-artist might be considered agile for escaping uncaught, unlike the honorable agile entrepreneur, public scrutiny and investigations of the success will make him a hero rather than cause him to risk a prison term.
There are boundaries, basics, and choices in life (and business). We can get stuck in our ways, or believe in our brilliance when we have simply been endowed with exceptionally good luck. I’m sure a couple of years ago, as the construction executive enjoyed the client-funded Baltic cruise, or caught the big fish with another client at an expensive resort (presumably with travel costs paid by the client), he didn’t see the clouds on the horizon and the crash that would soon experience. (The allegations cited here have not been tested in court yet.)
Our family friend, without knowledge or personal understanding of investment processes, may have seen everything as okay in a different environment with currency and stock market valuations, and all he could see were the bottom line numbers, and they looked reasonably good. Now, the numbers have turned south but he doesn’t understand the “why” or “what to do” — this isn’t agility; this is fear.
Lessons learned: Be knowledgeable. Be patient. Be ethical. And when the time is right, be agile. These are the times when success beckons and opportunity is at its greatest.
What do you think? Do you recall experiences where you were agile, or made the right ethical choice? You can email me at email@example.com or comment here.