Grand unifying theory

• Commercial imperative: to have clients coming back. Above all else.
• What are ways of ensuring clients stay with you? You indicate commitment
• Indications of commitment:

• expense of communication: the thick card, embossed envelope - Rory Sutherland
• intellectual, social commitment to clients - Robert Cialdini
• build personalised, not cyclo-styled, interpersonal relationships with them.

• Standardisation, commoditisation:

• guarantees margins tend to zero (you have solved the risk and therefore depleted the premium)
• Of course because of non-linear effects, you hjavent solved the risk; it is just that the market prices itself as if it has, because everyone labouring under the same common delusion of modernism that “we have comprehensively syndicated risk/banished boom and bust/reached the sunlit uplands”
• Indicates absence of commitment
• Allows a lack of client commitment: products and offerings are fungible
• The risk/reward of greater effort to attract customers isn’t there. Hence the headlong rush to lean production
• Targets your offering at the mean - the commitment is to be found at the Edges - Rory Sutherland

• The besoke, thje tail events, the risk scenarios, off-piste; here be dragons:

• This is where the best opportunities are. This is where innovation will come from. This is where developments will emerge. Here the stakes are higher.
• You can’t manage it by algorithm. You need experience; you need diversity; you need expertise. You need people comfortable with doubt and without certainty. Standard tropes and management bullshit will get found out.
• Here redundancy is an advantage and an imperative, not a competitive disadvantage.

• Where the bureaucratic layer can make itself useful:

• In culling those clients who are not generating sufficient fees, despite the commitment and relationship skills thrown at them. This incentives salespeople to really double down with them, and creates a scarcity dynamic in the client’s perception which is in itself persuasive (see Cialdini) and likely to improve yield.
• Note also that the problems of scale kick in precisely when you have too many clients and the cost ratio of providing top end service to all of them is out of all proportion, and some clot goes “why don’t we just send them a Silverpop”. The answer is to not have so many-low yielding tail clients that you can’t properly look after all of them. Also bear in mind the total cost of onboarding new clients is monstrous, and you are bringing in a class of clients that QED have a much shallower relationship than the ones who are exiting. The job is not to make the onboarding more efficient to deprecate the cost of churn, but to slow down or stop the churn.

Random thoughts

The high-modernist disposition has reorganised, not banished redundancy cost and slack but rerouted it from productive units into the administration layer. The generals/troops mix has inverted, with the atomisation of functions, each with its own colossal bureaucratic machine. It has converted functional redundancy — which in a complex environment, is a competitive advantage and only a drawback in a simple environment, as it maximises reactivity, creativity, agility and adaptability, but minimises central controllability — into administrative redundancy, which is a competitive advantage in a simple environment, as it prioritises control and mechanisation over a basically unnecessary (and dangerous) creativity and diversity. In a simple system control, discipline and execution is all there is: your perfect ratio is all administration and only machines executing