Leadership lessons in investment banking
After a 15-year career in investment banks, you learn a thing or two about determination, tenacity and endurance. True, the generous benefits help to cushion the associated sacrifices, but they can also shackle you to a purpose that might not be you at all. We’ve all heard plenty of stories about misaligned incentives in investment banks, but not what it means for the individuals.
The result? The generous compensation package, high-flying image and brand name calling cards attract many bright MBA graduates who may be less interested in their peers and their leaders — not exactly the best motivations with which to begin your journey.
This gives leaders in the industry natural advantages. Similar to the military or any organisations which follow a rigid hierarchy, your followers magically arrive through the associate and analyst programmes and are “forced” upon you. Your followers learn only what they want from you, then they do what they have to do to rise in the chain. Everyone seems to be chasing something, and those goals may not be aligned to your larger purpose.
After many years, I reflected on this and where I wanted to be. I founded my own hedge fund to build something from scratch. This was a difficult but rewarding experience which has given me four leadership lessons I was recently asked to share at the 10th anniversary of the Global Executive MBA programme at Insead (which Ling graduated from in 2010) in December 2014. The four lessons are:
Be passionate, drive yourself with purpose
You have to be true to what you’re good at. In the investment banking world, you have to learn the core, long-term investing philosophies. For example, you will likely have to provide 10-year cash flow forecasts for your discounted cash flow models, but in my experience the actual numbers rarely match the forecasts as unforeseen black swans always happen during the forecast period, rendering the initial return expectations meaningless.
After founding my own hedge fund, I found a niche for myself with our short-term events-driven investment style. I am baffled by critics who only focus on the long term and argue that the short term is irrelevant. In my opinion, the short term is as important as the long term, and you have to understand the intricacies of the two different time horizons to make successful investment decisions.
With a six-month investment horizon, I’m highly driven and determined to structure an exit to our investments fast. Having such a positive mood and being tied into fast-moving events, I’m driven by purpose, which clearly puts me in a good mood. Doing what you love can make you self-determined and gives you the energy to bounce back after setbacks. Winners’ exhilaration is infectious.
Fire up other people’s passion in the workplace
This makes those around you passionate as well. A leader needs to have followers. You can’t be a leader otherwise. But while you may be excited about what you’re doing, it’s difficult to inspire and ignite other people’s passion and drive. You need to build a team culture. Drop the finger-pointing and blame game. For anyone who plays on a team, winning leaders make it easier to respect and listen to one another, because after all, if you win together, then the presumption is that everyone is a good player. You want your team to love to stick around at the office. More time together brings more chances for information-sharing and mentoring.
Be flexible and learn
Many people very often don’t want to hear about their own failings or those of others, so they avoid feedback. But the truth is that winning leaders are more likely to voluntarily discuss mistakes and accept negative feedback. Success consists of examining and improving many small processes and routines.
You need to learn to work around the obstacles and try a different way if you believe that the goal is really important. The goal cannot be defined so specifically and narrowly that you feel all is lost if you didn’t get it this way. And our life goals are like that too.
Don’t be too busy, build a solid support system
Many of my corporate finance and investment banking friends often equate being busy with producing optimal performance. In fact, the perception in the industry only ever reinforces this view. Being seen to be busy is being seen to be successful. But don’t be too busy.
At Insead, I learnt to allocate “me” time for introspection, and leave some time for the family and other creative thoughts. By giving the brain “downtime” we can improve mental health and allow ideas to incubate.
Behind every winning leader is a circle of family and friends. Broaden your relationship networking groups to learn from other leaders. You need their support to keep going.
Roy Ling is a managing director at RL Capital Management and RL Academy. He also serves as an independent board director on six listed companies across Asia. He is a 2010 graduate of Insead’s Global Executive MBA.
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Published: February 15, 2015 04:00 AM