Fintech and the War on Incrementalism

Frank Slootman, the former CEO of Snowflake and Service Now, built a career on executing bold ideas.? His book, Amp It Up, is a great read on building teams and how to own strategy and execution as a leader.? ? ?

One of his hot topics is his “war on incrementalism”. He challenges us to not believe that success is always done in small bites.? ? ? ? ? ?

“I've seen how incrementalism can suck the life force out of people and organizations. In too many internal meetings, managers articulate their goals in terms of the delta from where they are today. “We want to have 30% more customers in two years.” That sounds safe and respectable, but why not 100% more? Why not 1000%? How big is this market? Are you planning to go from 1% to 1.3% share? If so, what would it take to get to 5% or 10% share?”

Some efforts can kill your business but others are less risky where getting it wrong leaves you right where you are, the status quo.

So where can we make these upside leaps? ? One example came to me after talking to several large allocators and asset managers who are each reassessing their entire tech stack.? ? ? ?

The big question is what can investment managers and allocators do to avoid incrementalism?? Here are a few thoughts:? ? ?

Bring Tech Accountability to the CEO Level

For many organizations the big, strategic tech decisions are left to the COO/CFO/CTOs.? They typically round up stakeholder input from the investment and ops team with a final, mostly budgetary, nod from the CEO.? We need to flip this around as today’s CEOs need to know as much about the technology landscape as they do in investing, sales and partnering with clients. ? ? ? ?

If you are the CEO or in a top seat at an investment firm be curious as the world is changing.? Private equity firms expect better and faster data from their portfolio companies and allocators are extracting more data than ever. ? ?

Make a Bold Multi-Year Strategic Plan

Once you have your CEO at the table it’s time to look into the future.? Identifying what slows you down and knowing what your main competitors are doing is critical.? Today’s top firms are running a marathon of sprints addressing pain points on process, data capture and structured data conversion.

The good news is fintech is at a pivotal moment to make better use of the data we have within our four walls.

There are many single point solutions and platform plays to address common industry challenges.? Some questions that often come up:

• Where can we automate our investment process lifecycle from research, investment approval to cash movement?
• How can we get better/faster Alts data into my OMS?
• How does this data recycle into our existing investment/manager research?

I also believe there is potential to find hidden pockets of alpha before the inefficiency window goes away with the wholesale adoption of LLMs.

It is time to think big.

Have a Strategic Technology Budget

Many organizations without a dedicated technology team treat the annual cost of their SaaS as their tech budget.? To compete in today’s market, investment firms need real annual tech budgets.

Client mandates will rise and fall depending on how firm’s consume and prosume the data it receives.? The next generation of RFPs will have a section on your competitive advantage with data/AI as well as the associated security measures in place.

Budgets are also needed during this watershed moment in our industry.? The growing adoption of alternatives by global asset management firms seeking sticky asset with higher revenue streams.

But adoption is not easy.? The use cases, technical requirements and processes are wildly different than buying equities and fixed income.? For example, forget T+1 as trade and settlement dates vary by general partner.

The competition for market share today is as fierce as ever. ?So get your CEO involved early on, make bold plan to stand out and have a real budget to support it.

What do you have to lose?