LOOK, LISTEN AND LEARN
One of my memorable learning encounters, in a previous phase of my career as a telecommunications Systems (Sales) Engineer, was a demonstration by an equipment vendor of their new turret systems. I worked with account executives in two-person teams and we served financial institutions and departments that conducted brokerage activities. Turret systems are essentially giant phones with push buttons to link anyone and everyone who matters to a trader. On a trading floor, the expression ‘time is of the essence’ takes on a whole new meaning! Think of timeliness on steroids and you’ll be close.
Understanding The Customer
I exercised the reluctant wisdom to keep my mouth shut when, at one point in the demonstration, the sales person banged the receiver repeatedly on the phone and said, “This thing will take all kinds of abuse!” As an electrical engineer who had said “%$#*@!” more than a few times, while gingerly trying to coax my fourth-year wire-wrapped radio-transmitter project to work, that sales person’s behavior seemed like something out of The Twilight Zone.
I later commented to one of the AEs, “was this guy crazy or what, that banging made no sense.” He smiled kindly at me and said, “Oh wait till you meet the boys on one of those trading floors.” Yes, they were mostly boys, the female population in that profession at the time, about the early-90s, was minimal. And yes, ‘those boys’ were an overly hyperactive bunch and prone to outbursts when their big deals ‘went south.’ Individual performance had significant consequences and those phone casings needed to absorb all the abuse that stemmed from traders’ responsibilities.
Technology, Tools and Capabilities Matter, But…
Fast forward to our modern environment where the phones are all elegant, modular and relatively breakable masterpieces of voice-over-IP technology that seek to deliver all the previous connectivity’ but do so in a lower cost technology model. The new systems plug in to a myriad of data sources and provide continual data feeds on high quality screens.
Implicit in these new designs is a new expectation of behavior. The modern trader has become a master of information management. He or she has now been conditioned to rely on the technologies to a much greater extent, and to learn to keep abreast of the ever-increasing flow of information. One vendor’s product review states, “Imagine a trader hitting his voice button on his instant messenger and ringing a button on your turret. This really starts to make you think.”
With all that technology, you may well ask yourself the reasonable question: what’s happened to judgment? Do today’s traders have any real-world context for making their decisions anymore or do those technologies define the boundaries of their decision making inputs? How did all these tools help to mitigate the financial meltdown we just suffered? Did they even help, or did they exacerbate it?
Does The Change In Environment Deliver the Right Performance?
One of the foundational models of human performance engineering—the six-factor Gilbert Model—attributes high importance to environmental factors for performance outcomes. Three Environmental factors include information, instrumentation, and incentives, and the other three are Personal factors: knowledge and skills, capability, and motives.
For finance and trading, part of the environment has been regulatory change (especially in the US) that reduced separation between commercial banking and securities trading: a return to the problem situation of 1933 that led to the separation rules in the first place. Meanwhile financial crises have become progressively more daunting. Despite the experience of Black Monday (1987), we have had worsening 10-year fiascoes: Long-Term Capital Management (LTCM) in 1998, and the latest collapse (2008-9).
Technologies made day trading possible too, with highly motivated average Joe’s gaining access to an environment and its tools (environmental factors) without the requisite Knowledge (personal factors). Some have succeeded but the grand visions of easy wealth have now come down to earth. One of my colleagues left his ‘automatic’ system under the care of his fiancée but it was not automatic enough to the tune of many tens of thousands of lost dollars.
A systematic Approach to Reliable Performance
What the world of finance is teaching us on both the enterprise and personal levels is that there is no substitute for a coherent approach to performance, one that relies on all six factors of the Gilbert Model. What we may have lost sight of in the obsession with and over-reliance on technologies, is the pursuit of true growth in core knowledge: recognition that you cannot kill the golden goose; that long term success in trading does require understanding and using new tools, and it also requires integrating and adapting traditional knowledge to the new paradigm.
Just as the learning business itself learned 10 years ago, learning from technology alone was a non-starter. Now the wiser approach is learning with technology, and the role of the learning expert has changed accordingly. Information can be accessed with relative ease; helping to use that information for substantive learning and immediate results is the challenge. So too, financiers need to adopt the same mindset to work with technology and not be driven blindly by it.
There is no substitute for rational judgment (enhanced skill): that a single hedge fund alone with a liability that at the time that equaled almost 25% of the US deficit ($1T) was a fictional entity, not to be entertained under any circumstances, or that a minimum wage earner with no job or credit history cannot be entrusted with a mortgage with monthly payments that will balloon to 2.5 times her monthly wage. Regardless of how such debts are packaged they conform to one rule: garbage in, garbage out.
Individual and organizational performance is serious business and requires disciplined attention. Cut corners and soon enough, any delusional opining about expected high performance without accompanying investment of time, energy and resources to achieve it will smack you in the face. Unfortunately, that delusional approach can sometimes take others down with you.
Edmund DelSol is the Author of Workplace Essentials, Part One: Ten Vital and Transferable Skills for Success in the Knowledge Economy, available at www.workplace-essentials.com