Complacency

Everyone knows complacency kills, but too many people say it without really understanding what it means to have to combat complacency. Many people at the top of their game start to "play defense." Being the top dog suddenly means to them that they need to protect their methods from everyone else. Basically, they make sure others don't catch up to him. I think the modern world has shown this to be the wrong approach.

Here is the question. Let's say you sell a product that it might take the competition four years to be able to compete with. What do you do? Most companies sit on their great product for four years and make continuous upgrades to it. Sooner or later the next guy comes in with the next great thing making them obsolete. People in finance do the same thing. Some guy has a great valuation or pricing tool. They make the best prices for the street constantly. Then someone else comes up with the next great thing and they're left in the dust.

You might be reading this and saying "duh, that's how business works, through competition." I say to you, bullshit. That's not how business has to work. You can continue to innovate through your leadership. If your product is going to be the top dog for four years, make that product obsolete yourself in less than four years. One thing Steve Jobs is famous for is taking his i-pod mini and making it obsolete with his i-pod nano in 18 months. No one else would have the chops to make a product and then make it obsolete himself, but that's how you stay on top of the game.

Finance is largely the same. Do you have any clue how entrenched and complacent financial companies often are? Step in and innovate. Business leaders are innovators, and the first financial company to make a breakthrough in ways to raise capital will make a killing. Notice Goldman made their TrUE exchange? Everyone considers them to be on top of the capital raising game, but they are going to make the usual avenues of capital obsolete by producing the next new thing.

Don't sit around learning the ways of the old guard. Think about what the alternatives are. Do fixed income people really believe that spreadsheets are always going to be the way to go for pricing? Do equity guys really believe that there is no new innovation to be made in their markets? Do bankers really think that the old-school handshake and phone call will forever be the way the deal is struck? Things will change. Be the one who changes them, not the one who gets blindsided by the change.