When does an industry practice become "table stakes"?
It’s hard to remember that the world wasn’t always the way it is today. Practices adapt. The world evolves. As the cliche goes, the only constant is change (don’t worry, I’m not going to follow that up with “live, love, laugh”). The markets are changing. Across investment banking and capital markets, the practices are changing.
We do so many things because we ‘always have’, not realizing there was a time when these were emergent behaviors that gave their practitioners a competitive edge before ‘everyone’ did it (because they too saw the logic and wanted the competitive edge for themselves). We do things today because it emerged as the best way to do something in the past. We do things today because of the evolutionary process of the markets. Emergent behaviors become expected. Change happens.
I have an interesting personal anecdote from none other than my father, who worked across equity and fixed income sales, about the morning meeting. Of course, that meeting is so ingrained into the industry today, you wouldn’t even ask whether or not it existed: you’d just ask when and where. Except here’s the point: they didn’t have a morning meeting when he started. In fact, when they started the practice, there was a concern that people wouldn’t show up to the meeting, so they decided to institute a fine that would be donated to charity at the end of the year for those absent. It sounded like a good idea, but a response from someone senior on the desk showed how many people respond to change: “who do I make the first year of fines out to?”
Change comes slow, until it comes fast (last cliche, I promise). After spending a lot of time with clients over the last few months, I have been thinking a lot about what behaviors that I’m seeing emerge now that will likely become best practices in the future, and in the interest of helping our clients see around the corner ahead, I wanted to share a few:
Weekly investment banking notes: one of the things I’ve found myself saying frequently over the last few months, and seeing frequently, is that investment banking teams are having their ‘morning note’ moment. It’s hard to remember that markets participants didn’t always send out a morning note. It was emergent until it was a best practice. Now, it’s the most common new practice we’re seeing across our investment banking users. In fact, many of our clients are requiring every industry team to send out a weekly note. It’s driving client conversations, building a brand, and generating client intelligence.
Sunday afternoon summary: on the markets side of the business, we’re seeing more individuals (and sometimes, desks) send out a Sunday summary of the week ahead. There are two benefits: 1) it usually garners higher engagement (less competition on weekends), and 2) they are using the intelligence to drive the Monday morning meeting and client conversations to start the week.
Tactical Institutional Investor (II) voting: with II season wrapping up, we saw a huge push from our Research users getting much more focused on leveraging email communication (and email intelligence) to be targeted and focused with voting conversations. The ability to reach out, see who has clicked through to the vote, and follow up with those who haven’t, is very valuable. Additionally, the ability to use historical engagement data as evidence of value add helps support the voting process.
Weekly “Top Clicked” note: this one is still very emergent, but gaining traction quickly. As I tell firms on Street Context: “your clients might be interested in what you think is important, but they are much more interested in what everyone else thinks is important”. It’s the same on Bloomberg: people use TOP much more than they just look at news. The ability to get the top read links from across the desk, compile that into a note, and send it out towards the end of the week is very valuable to clients (I could see this becoming an end of day recap a la “Just in case you missed it – top clicked links”).
While not an exhaustive list, those are a few of the emergent behaviors we’re seeing. The question I find myself asking is: when will they become table stakes? When will they become best practices that every desk has incorporated into their daily workflows, similar to the morning meeting? Fortunately for some, it will likely be a long time until everyone is doing it. Just like the morning meeting, there will be early adopters, the middle, and late adopters. Those who adopt early will benefit the most, and those who adopt last will simply be catching up.
The challenge I pose to all our clients, which I will end this note on, captures the above thematically: if the industry is changing, how is your business changing? What will look different in a year, two years, or three, from what your business looks like today? How will you cover clients? How will you trade? How will you engage corporates? How will you drive scale?
The industry is evolving – post COVID, post WFH, post industry shake up – the change never stops. As always, we’re here to help by sharing our best practices and perspectives on how the industry is evolving.
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