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Sharing Best Practice in a Flat-World....

Though each one of us understands the importance of sharing best practices in this globalized environment, very few are open and ready to bring that to task. As the gap between east and west receding & the emerging market tigers resurging, business models are converging towards a single pattern. Enterprises can't just swarm around in Americas or Europe, they have to expand world-wide to retain their top & bottom-line position and competitive advantage. As the model of operation is truely getting global and the impact of east affecting west & vice versa is visible, it is necessary for organizations to collaborate on processes which have systemic significance - that means, share your best practices. My observations in a worldwide risk management conference attainded recently has propelled me to discuss this topic at a wider horizon on a flat-world stand point.

Before I give a glimpse of my experience, let me briefly jot-down the meaning of "Best Practice" -

"Best practice is defined as the most efficient (least amount of effort) and effective (best results) way of accomplishing a task, based on repeatable procedures that have proven themselves over time for large numbers of people." (vist the wiki section for detail elaboration)

Over time, Oragnizations have taken steps to share the best practices internally to ensure efficiency and effectiveness in operation, strategy execution. However, very few would have imagined the growing need to share best practices externally to a wider audience. We may have plenty of examples on internal best practice sharing excellence (Don Higginson's blog on UPS best practice sharing story can be refered here), however I have little access to literatures on sharing in external world.

One of the prominent sectors which has been forth-right in bringing each entities within to a standard forum for sharing best practices is "Financial Services Industry" though we can't under-sight the role of regulators in this movement. Be it any business process, financial services fraternity will have world-wide forums to interact, dialogue and learn. However, one area that stands out in the bunch is risk management. It's no more the individual enterprise risk management, but the onus of each entitiy within financial community to address its risk concerns in collaboration with other members. This has been widely successful with the formation and operationalization of Basel committee (http://www.bis.org/). As observed historically, collapse of an individual financial services player creates ripple in markets world-wide (recent Bear Stearns turmoil can be envisaged here). That's the power and eminence of risk management in wider external world. As the financial services players grow their foot-print by expanding across geography, markets drivers are getting clutched geographically, sectorally- that means, it's no more Asia catches cold if US sneezes, but US gripped in fever if Asia on heat-stroke. Now that shows how important for markets in west to share best practices with east and the other way, especially when one talks about risk management in a wider horizon.

Under above observations, I was completely perplexed with my experience in this global risk management conference. The congregation was to debate and understand the future of "Buy Side Risk Management" in five years down the road. Eminent panelist, mostly CROs of top asset management firms of Wall Street, participated. When they were asked to share best practices in buy side risk management, each one of them sort of duffed the question with some vague reason. Some of the firms representing in the podium were known for their elite risk processes world-wide, however they were not ready to divulge anything. That's when I felt the tweak in my brain to understand "Why this secrecy?". I believe the following ones could be the reason:-

  • Fear Of Loosing Competitive Advantage- In this credit market turmoil, some firms have stood up to market expectations due to their superior process administration, risk management. Executives from those firms were representing the forum and they had this internal concoction that if they share best practices, competitive advantage might be marred- how ridiculous this thought in a flat-world environment.
  • Scant respect to Globalization- This is a world wide forum with representations across markets. If best practices are shared, will help entities in other geographies and that's the essence behind this forum. Looks to me that firms have embraced the impact of globalization theoritically, but have not yet internalized to process. Serious change in mind-set is required.
  • Killer of Their Own-  Global players have expanded their reach to all parts to grow their business and improve their financial numbers. If I speack on behalf of the financial services Co perspective in a globalized context, the expectations and demand from clients across region have numerous commonalities and so also the commonalities observed in market drivers. That means we are heading towards a truely global open market with minimal fundamental difference. In this background, if west won't share its best practices with east and vice versa, it's basically killing it's own family- to illustrate, Goldman in US has to be aligned to the world of Glodman in Europe or Asia in terms of process excellence, similarly markets of US should be aligned to markets beyond Atlantic. All this can be possible with both internal and external best practice sharing. By clobbering within your own nest, organizations are definitely creating a 'Hornet's Nest".

 

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