Return of the BHAG is a sign of the times
Audacious growth programmes are back in fashion across the industry, but managing these ambitions may prove a considerable challenge
Is talk about a US recovery still premature? Can Asian optimism power the rest of the world? Are we finally seeing the return of the BHAG?
While financiers and economists debate the answer to the first two questions – Asian flows into US stocks coupled with Eastern wealth managers looking West for opportunities may sway their view – the answer to the third question appears to be yes.
The recent financial crisis saw many goals and visions discarded or postponed. Ambitious growth programmes in asset management at the likes of Dexia and KBS were among minor casualties as problems in European banking seeped into fund houses.
Hardest hit was UBS, spiritual home of the BHAG, where most initiatives, departments and cross-curricular working parties had their own three letter acronyms or TLAs.
The term BHAG – Big Hairy Audacious Goal – came from a 1996 article by Stanford-educated business consultant James Collins and Stanford organisational behaviour professor Jerry Porras. Titled Building your company’s vision, it referred to companies which had set up 10 to 30-year goals – the more audacious, ambitious and emotionally compelling the better – and how these goals bind staff together and spark growth.
While UBS’s secrecy-led stateside sorties, coupled with fallout from asset management and investment banking, led to widescale withdrawals in wealth management, the leadership of Ossie Grübel, decorated with the award of Private Banking Personality of the Year by PWM in 2010, is slowly getting things back on track.
And the BHAG is clearly being revived in the industry. Witness the words of cost-crunching Robeco chief Roderick Munsters, plotting his plans in the bleak surrounds of Rotterdam’s concrete financial district, vowing to add more than E100bn in new assets by 2014.
France’s Société Générale and Germany’s Deutsche Bank, on a hiring spree in Singapore, have vast plans for Asian private banking in particular, with the latter promising to double regional assets.
Even Louay Al-Doory, one of the original BHAG boys in UBS’s famous Zurich funds factory on Bärengasse, has massive ambitions to turn the Reyl family office in Geneva into a serious wealth house with branches in Europe, Latin America and Asia.
Managing these ambitions and keeping links between centre and regions watertight is the hardest challenge, as banks including UBS’s fiercest rival are finding out. Credit Suisse has enjoyed excellent growth, while tightening up accountability of private bankers to Zurich head office, which increasingly sets asset allocations and makes sure advisers don’t go too far “off-piste” with favoured clients.
Just how strong is central control over Germany, where the bank last year saw tax-linked raids at 13 branches, and London, where UK chief executive Ian Marsh recently resigned, we are yet to find out.
