Holistic thinking and problem solving

by Richard Class

jigsaw puzzle with one piece missing. Holistic thinking.

Challenging the status quo to reduce risk and boost your firm’s performance

With risk management and operational efficiency being ever more important, OptimX has partnered with clients to conduct independent Treasury Reviews.  Clients benefit from OptimX’s unbiased perspective and our deep buy and sell side financial markets experience, without needing to manage the process or resource the review in-house.  The result is reassurance for management and investors, improved processes, and the added benefit of saving money.

Being open-minded, thinking holistically, and meticulously managing renegotiation are just several of the ways to help improve problem solving and enhance performance.

Being open-minded

Both individuals and companies have an in-built reluctance to change.  New ideas challenge the status quo.  Accepting outside expertise can – but should not – be viewed as an admission of failure.

However, inertia is not a viable business strategy, particularly in today’s challenging macro environment with rising interest rates, cost pressures, and increasing regulatory scrutiny.  Asset managers and hedge funds face additional challenges in generating returns in this environment.  Hence, all avenues to mitigate risk, reduce costs and improve returns should be considered.

Thinking holistically

To think holistically about problem solving requires an open dialogue, an objective analysis of all the issues, and a belief that cognitive diversity is a positive factor.  It is important to establish a clear process for a review.  This should include agreeing the scope, identifying the areas of focus, detailed analysis, a thorough evaluation and report process, and finally a format to effect change.

Acceptance of change may require adopting a growth mindset.  Rather than thinking that change means we have been wrong in the past, it is more productive to believe that change can now put the firm on an even better trajectory in the future.

Renegotiating terms

As individuals, most of us are comfortable with not accepting the initial renewal quote from our car insurance company and asking for a lower rate.  However, many companies are reluctant to renegotiate terms with their suppliers, fearing being bamboozled by insider terminology, or that questioning them may damage or even destroy the relationships.

Legacy pricing a drag on performance

Too many companies have expensive legacy cost structures that may never have been renegotiated.  This is more often the case where a firm is dealing with much larger and more powerful suppliers, or the nature of the service means pricing is opaque or is charged without a monthly invoice to sign-off.

The consequence is that newer entrants on preferential terms, or more aggressive competitors who have already renegotiated, have a performance advantage.  These advantages compound over time, and in the long run the firms with lower costs deliver consistently better returns and ultimately crowd out their slower and less efficient competitors.

Renegotiation requires tact, objectivity, diplomacy, and patience.  The company may need to sequence its requirements carefully to extract the maximum savings, whilst maintaining the best possible relationship. Renegotiation can involve compromise, but we have found time and time again that we help create stronger relationships and win-win outcomes for both our clients and their counterparties.  It also helps build a cost mindset internally, which typically leads to further gains over time.

Partner with OptimX

OptimX focuses on the things that keep you awake at night. We leverage our prime brokerage and trading experience to help our clients improve their performance in the following areas; operations, financing, cash management, foreign exchange, and margin.

Our approach is to be independent, outcome focused and to align our interests with those of our clients.  We help our clients navigate the delicate balance between risk, operational efficiency, and cost.