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Why Your Fund Marketing Strategy Isn’t Working

helpIn manager selection, most investors will look beyond your fund’s track record and give weight to organizational factors that provide them with confidence that the business is well-managed and likely to succeed long-term.

If your strategy and marketing efforts have qualified your fund for an investor’s short list of candidates, then business management factors can either close the deal or disqualify you from further consideration. And with so many funds competing for attention, investors are always looking for any reason to bump funds off their “watch” list.

Like all types of business, your fund’s organizational strength is based on tangible and intangible factors related to the quality of its leadership, the consistency of its operational disciplines and the depth of its customer focus.  On a more granular basis, here’s what those 3 factors entail:

Quality of Leadership: Investors Bet on the Jockey

  • Articulating the Vision…This task is far more complex than sticking a mission statement in a pitch deck or website; it’s a belief system that drives the business. According to Fast Company magazine co-founder, William C. Taylor, leaders at high performing companies are “able to explain, in language that is unique to their field, and compelling to their colleagues and customers, why what they do matters and how they expect to win.” Taylor claims leaders who think differently about their business invariably talkabout it differently as well. Your fund must “talk the walk” to inspire and convince internal and external audiences.
  • Building the Culture…A company’s culture is shaped by how its leadership “walks the talk,” and has a great impact on organizational health and longevity. Some businesses succeed financially in spite of a poisonous or opaque internal culture, but never reach their full potential because the people who work there are not truly engaged. Beyond depicting the traditional org chart, your fund needs to explain to investors how it manages human capital, and must demonstrate how it fosters transparency, communication and teamwork.
  • Thought Leadership…This overused marketing term is typically associated with blog posts and publicity. But bona fide thought leadership is less about self-promotion, and more about acting as a serious student of one’s own professional discipline; whether that be asset management or auto mechanics. Your fund must demonstrate that it’s much more than a one-trick pony with a smart investment formula. Investors want to engage with people who are constantly exploring new ideas and better approaches in their pursuit of excellence.

Operational Discipline: Investors are Business Detail Junkies

  • Working ON the Business…Most business owners are so focused on working AT the businesses (i.e., managing the fund), that they fail to create or properly manage all the internal disciplines necessary for the enterprise to succeed. More importantly, according to Michael Gerber – author of “The E-Myth: Why Small Businesses Don’t Work and What To Do About It” – your fund’s intrinsic value and ability to survive is based on how well it has defined, documented and perfected all of its internal systems and methods. There’s a reason why McDonald’s french fries taste the same in all of its worldwide locations: they constantly work ON the business of sourcing, preparing, cooking and serving french fries.
  • The Outsourcing Challenge…For many businesses, the outsourcing of middle and back office operational functions can make great economic sense. But investors need to know that your fund isn’t simply a “virtual” business composed of a contractual network of various 3rd party providers. If your fund outsources any critical business functions, it needs to assure investors that you (not the outside providers) are 100% accountable for those functions. More importantly, your fund must demonstrate rigorous internal disciplines for oversight that ensure the accuracy, timeliness and quality of all outsourced functions.

Depth of Customer Focus: Investors Need to Like You

  • Accessibility/Affability/Ability…These “Three As” of consultation, taught for decades in medical schools, have application across all service businesses, including fund management. Every type of customer – whether they’re shopping for legal representation, tax advice or portfolio alpha – is influenced as much by your likeability as they are by your college degree, your fancy office or your IQ. Irrespective of its track record, if your fund (as individuals and as an organization) doesn’t come across as friendly, easy to work with and professional, investors are unlikely to explore a relationship. Ego and attitude can be brand liabilities for any business, and fund managers who display those personality traits risk losing out to competitors who may be less talented, but far more likeable and marketable in the eyes of investors.
  • Managing Customer Experience…Many funds don’t even think of investors as customers, but rather as potential beneficiaries of their market insight, trading genius or financial returns. This stilted point of view is often reflected in how those funds communicate and behave, both with prospective and current investors. But the most successful funds understand that investors are people, regardless of the size of the institutions they represent, and that nurturing personal relationships matters. Your fund would be well-served by following the advice of Bruce Temkin, founder of The Temkin Group, and a recognized authority in customer experience, who suggests that all companies:
  • Focus on your customers’ needs, even when internal priorities push them to be ignored.
  • Orient your thinking on customers’ journeys, even when the organization cares about individual interactions.
  • Design for customers’ emotions, even when success and effort are often the better understood parts of an experience.
  • Develop innovative ways to treat customers, even when the status quo seems to be good enough.

Selling performance alone is a dead end for funds, and is the #1 reason why fund marketing strategies fail.

Increasingly, investors are more interested in how funds create and sustain a successful business enterprise. To build a company that provides investors with the confidence to put capital at risk, fund managers must be held to the same high standards of leadership, operational discipline and customer focus that private and public companies face in seeking to attract equity investors.

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5 Secrets to Ray Dalio’s Hedge Fund Success

Hedge Fund Craftsmanship

By most measures, Ray Dalio has achieved great success during his 65 years on earth. Unlike Donald Trump, Dalio didn’t inherit wealth. As a middle-class kid, he delivered newspapers, shoveled snow and was a caddy during the summer. The company Dalio established in his apartment in 1975, Bridgewater Associates, is currently the world’s largest and most successful hedge fund manager, with more than $87 billion in assets under management. Recently, Dalio was ranked by FORBES as the 30th wealthiest person in America, and the 69th wealthiest person on the planet, with a personal net worth of $15.2 billion.

So in a highly competitive landscape populated with nearly 10,000 hedge funds, how has Bridgewater been able to rise to the top of the investment management world and remain there? It’s unlikely that Dalio and his team know more about the markets, across every asset class, than all other hedge fund managers. It’s unlikely that Dalio simply has had a luckier hand in the bets he’s placed over the past 4 decades. And it’s also unlikely that Dalio has sold his soul to the devil.

In fact, Dalio makes no secret about Bridgewater’s success, and it’s articulated in great detail on his firm’s website. Dalio even provides a “Principles” playbook that you can download.

Briefly, here are 5 “secrets” to Dalio’s success:

He’s built a values-based organization – Dalio understands that Bridgewater’s ability to get 1,200 smart people to sing from the same songsheet requires clarity and consistency on what his company stands for, what it’s trying to achieve, and how it intends to get there. His belief system is based on the concept of “radical transparency,” which encourages employees to question everything, to think for themselves and to speak up.

He works ON his business, not AT his business – Dalio understands that intellectual capital, enterprise experience and operational systems & processes must be captured, documented and integrated into the day-to-day decision-making of a firm. Like Ray Kroc, Dalio has invested great thought and effort to create an organization with intrinsic value that does not rely on him, or on any individual, for its continued success. In Bridgewater, he has created the McDonald’s of investment management.

He has no patience for ego or emotion – Dalio understands how personal agendas and corporate politics can destroy any organization. He has been relentless in his efforts to remove ego barriers and emotional reactions in Bridgewater’s decision-making process. Institutional and personal transparency is the cornerstone of Bridgewater’s corporate culture. Some employees who’ve found it difficult to survive under such a high level of scrutiny either drop out or are invited to leave, providing the firm with a very effective natural selection process.

He’s focused on the importance of mistakes – Dalio understands that corporate arrogance is the most significant potential liability for successful companies. Because he believes anyone can be wrong, the Bridgewater culture views mistakes as opportunities to learn, rather than something to be avoided. FBI Director James Comey, who once served as Bridgewater’s general counsel, described the firm’s “obsession over doubt” as an asset that drives constant improvement and reduces the chances of bad decisions being made.

He’s not motivated by money – Dalio has been wealthy for a long time, but being wealthy was never his primary goal. In his own words, “I started Bridgewater from scratch, and now it’s a uniquely successful company and I am on the Forbes 400 list. But these results were never my goals—they were just residual outcomes—so my getting them can’t be indications of my success.  And, quite frankly, I never found them very rewarding. What I wanted was to have an interesting, diverse life filled with lots of learning—and especially meaningful work and meaningful relationships. I feel that I have gotten these in abundance and I am happy.”

The corporate tag line describing Bridgewater Associates is aptly titled “A Different Kind of Company.” And Dalio is a different kind of American businessman. Unlike Apple’s Steve Jobs, who managed by arrogance, fiat and intimidation, Dalio has created a meritocracy that’s based on honesty, clear thinking and humility.

Bridgewater doesn’t produce clever electronic gadgets or software apps designed to entertain us or make our lives easier. Dalio’s greatest achievement is unrelated to the wealth he’s created for himself or for his institutional investor clients. Dalio’s most valuable and enduring accomplishment is based on his role as the architect of an organizational management model that can radically improve the world of work, as well as the lives of people who seek personal meaning through their work.

Unfortunately, most companies – regardless of industry – don’t have the courage or the desire to adopt Dalio’s brutally honest management approach. That’s why Bridgewater is likely to be the most world’s successful hedge fund manager for a very long time.  True hedge fund craftsmanship.

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Ronald McDonald Makeover: Liposuction Not Required

Too Big To Fail?

Thanks to the well-intentioned corporate activist group, “Corporate Accountability International,” and its egg & ham-fisted attempt last week to coerce Ronald McDonald into retirement, McDonald’s Corporation was handed an unsolicited opportunity (and loads of free air time) to reposition the company as a protector of first amendment rights, and to re-launch its aging spokesclown as “the ambassador of good food.”

Although the grass-roots group gets props for tackling the childhood obesity issue, CAI was ill-advised to point the finger at McDonald’s as a leading obesity culprit; to attempt to dictate corporate policy; and to mess with Ronald.

Why?

Fat kids don’t drive themselves to McDonald’s; their fat parents do. If you want to influence corporate policy, get a seat on the company’s Board of Directors. And the McDonald’s clown is namesake of a charitable organization that helps kids who have cancer.

This was a historic triple-stupid play deserving of special recognition from the Public Relations Society of America. Perhaps they should have hired the PR guy who handles the Facebook account at Burson-Marsteller.

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