The Edge at the Core of Your Brand
6/11/24 | Eric Alexander
It can be frustrating for Asset Management CEOs when clients and prospects fail to understand their firm’s value and salespeople seem unable to break through and persuasively tell the firm’s story. This frustration often leads to a hard look at the firm's brand and a decision that it’s time for a refresh.
In many cases, the source of frustration is not actually a problem with the brand but with a squishiness around the description of the firm's edge. After all, it was probably the excitement of a distinct edge—a new, highly differentiated or exquisitely refined approach to managing money—that spurred the creation of the firm. The small group of founders and their initial team had no trouble telling the story back then, and discussions of brand were probably limited to Vodka at the martini bar.
But that was then, back at the beginning. By now, a larger and far-flung team working on a multitude of strategies and funds might be hard pressed to explain the firm's edge in a single sentence, leaving slim chances that they can communicate that edge to their colleagues, clients, prospects or consultants.
So, why aren't more CEOs and agencies focusing on edge as much as they do brand? Because it’s a lot harder.
Refreshing the brand might be as simple as hiring a slick branding agency. But taking a fresh look at a firm's edge takes a more rarefied talent and proven expertise. It requires a deep dive into the core elements of the firm's investment philosophy, strategy and architecture, as well as their tactical execution. It calls for a thoughtful look at how the firm is acquiring, analyzing and interpreting information. The firm must dissemble and interrogate its decision-making processes and sift through the emotional, environmental and temporal factors that influence or soften the discipline applied to those processes. The execution of those decisions must also be questioned to understand and isolate issues of concern. This level of real, necessary work is why, so often, firms are glad to see the problem as one of branding and hire an ad agency to make it go away. But of course it doesn’t, because that wasn’t the problem to begin with.
The results of the effort to revitalize a firm’s edge can be an enthusiastic doubling down on a system that remains intact and viable for today and the markets ahead. It might also reveal issues and shortcomings at the very core of a firm's business if the findings show a drifting or softening of the core. The effort should result in an ability to rearticulate the firm’s edge clearly and succinctly or, at the very least, it ought to lead to the recognition that not being able to do so indicates a broader problem.
When my Compitium partner, Marc Reinganum, was managing State Street's Dynamic Small Cap mutual fund during its five-year stint as number one in its small cap category, he offered up this concise explanation of their edge: "We modeled and forecasted risk, in its many manifestations, better than everyone else and believed wholeheartedly in our ability to predict the returns of small cap stock stocks better than all our competitors."
Now that's an edge. And it's just that: a clear, confident and compelling statement on what he did and why it was better than other small cap managers. It was not intended to describe the fund, it was designed to stimulate a simple question, "How?" and invite a more comprehensive answer and explanation. While the edge is clearly not the brand, an understanding of it is precisely the kind of input and direction an agency would need to develop a brand that rings to true to the CEO and her team and that engages clients and prospects in a productive dialog.
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