Taken from software development practices, agile is an organisational framework that lets professional investor organisations optimise portfolio performance faster. The route to agile relies upon solving for three dimensions (see Exhibit 1):
Most professional investment firms are already semi-agile. They have process, people and asset manager networks in place, but their backbone toolkit is out-of-date. Their journey is typically supported by performance databases, MS Office and a shared folder on the corporate server to collaborate. For them, the transition to agile is a small step with large returns.
Whilst there’s no perfect time to transition to agile, COVID driven lockdowns and working from home has introduced new operational constraints that need to be solved. The calculus today is ‘no change and slower outcomes’ versus ‘change plus upside’. Adoption has logically accelerated to relieve the pressure.
In practice, a 30-50% improvement in operational efficiency can be expected when agile. This can translate into 10s of basis points additional net annual alpha across a portfolio of active external asset managers. The decision is made easier by the fact that all outcomes of agile are positive by design.
The magnitude of the upside metrics depends on which toolkit is used to support the execution of your value chain by your people. Outdated tools limit maximum value-creation.
In contrast, a digital toolkit unlocks interrelated beneficial outcomes for time budgets, employee engagement and decision quality. Which positively impacts individual, team and portfolio performance. It acts simply as a transfer mechanism, or enabler, for achieving maximum organisational value creation.
Digital tools shift the evaluation possibility frontier outwards along 3 correlated axes. (See Exhibit 2):
Efficiency, productivity and governance gains are measurable across all firm sizes, but for different reasons. For Smaller firms, technology helps leverage small budgets and limited resources. For larger firms, collaboration gains compound decision robustness. As such, the motivation for embracing agile may differ. But the benefits are real & tangible, and our agile solution is plug-and-play.
