Over the years, we have collaborated on various projects with multiple partners. Some are long-term strategic partnerships, characterised by trust, experience and respect. Others are driven by the needs of a particular project, where it can be harder to qualify competence (e.g., a designer who has mastered the tech aspects of a specific learning management system). It has all been ad-hoc so far, as I imagine it can be for you in-house folks - identifying and picking partners for specific projects.
It’s only recently, following the guidance of a fantastic and uncompromising business adviser, that I was motivated to professionalise the setup. If I explain why, it might help you.
- Rules: A couple of the project-specific partnerships have gone wrong. Two failed to deliver as agreed. A couple of others delivered work that was very underwhelming. There are lessons here - my failings, theirs, and the root causes that can be turned into rules of engagement to avoid repetition.
- Formalise: With partners who consistently deliver, we’re moving to longer-term partnership agreements, similar to master services agreements. I know from experience with my clients that when we reach this stage, life becomes much easier. With that safety net in place, it’s easier to share more, learn more, do more, and do it better. In our case, it now means that if you ask me, “Hey, do you know someone who does world-class OSINT sleuthing, develops fraud tools for SMEs, or has fantastic speak-up frameworks for mid-caps, etc.?” I can confidently refer you.
- Publicise: If you’d had a wonderful experience with an adviser, share the love. I understand there is reticence here: what if they don’t deliver, or what if they get so busy they don’t have time for us? But it’s one of the nicest things you can do. All of the work we do with development finance institutions and impact investors stems from two lovely individuals who consistently referred us. That helped keep the business going during a challenging year (2022) and enabled us to improve our service to DFIs and impact investors. A rising tide lifts all boats.
- Call out the bullshitters: I know many of you already share notes in working groups (e.g., European DFIs, the working group for tech companies in London, and numerous healthcare equivalents). However, if you’re not in those groups or not discussing what’s wrong, you may miss out on vital information.
Why would you do that last point? Because if you’re in-house, you can. You’re not competitive with people you buy services from. On the advisory side, we can’t do that. There are four very prominent “gurus” in the ethics and compliance space who I know are frauds. They stole, trod on the backs of others, or otherwise misrepresented their experience and qualifications, all the way to a published book (in one case). Much to my wife’s dismay, if I (or any other advisor) were to criticise a competitor or in-house person, we would appear, at best, petty. However, if you do in those informalised settings, you’re providing a public service. Hooray for you!
Years ago, a fraudster mis-sold a hedge fund client a mathematical model and its associated software. The fraudster had forged a maths doctorate at Cambridge University and procured three mobile phones (one UK, one Aussie, and one with a US number). He then produced three referees: a gruff Australian self-made business mogul, a pretentious British academic, and a Greed Is Good New York-based trader. All played by the fraudster, with apparently compelling accents. The hedge fund was so embarrassed at being duped (when a brief Google search or a phone call to Cambridge might have exposed the ruse) that they contracted my former employer to ring around the London hedge fund scene to warn others. I don’t suggest you go to such lengths, but it does indicate there are ways to get the word out.
It’s in all our interests that our industry maintains professional standards and upholds integrity. Sifting the great partners from the duds is part of that process. I don’t want to partner with or hire anyone who isn’t up to the job, as I know you don’t. Let’s share and compare notes, and tidy up a progressively messy market.
Governance (trending)
With the list of risks covered by anyone with integrity, compliance, ethics, or ESG in their job description spawning like spring bunnies, is governance the answer?
That is the theory some DFIs, multilaterals, and development agencies are working on. Over the past six months, the number of projects with a significantly more prominent focus on governance has increased substantially.
The thinking goes something like this: In nearly any organisation outside of Fortune 100 (or perhaps 250) size, there is little budget, capacity, or appetite for large internal risk teams. Expecting one person (or a handful) to cover every risk from sustainable supply chains to money laundering is untenable. It’s producing burnout and overwhelm at a rate that’s creating supply-demand tension in recruitment. Therefore, should we instead elevate ownership of risk to the executive and board?
I appreciate it’s not something all of you can do. However, savvy investors are shifting the risk to the leadership of their investees (typically mid-caps, scale-ups, and SMEs), with defined contractual terms (investment conditions). To sweeten the pill, they’re working on knowledge transfer (as are we) - ways to modularise the elements of sound governance and risk management into bite-sized training, tools (assessment, tracking), and content (templates, etc.).
Perhaps not surprisingly, when governance and risk become your problem (as a leader), miraculous resources are found… who’d’ve thunk!