An Organogram Ate My P2P

How Do You Grow-Up Without Growing Old?  

One of the Sun's most bizarre if memorable headlines was "Freddie Star Ate My Hamster" - which rather comes to mind thinking of the more senior P2P platforms right now.

One of the archetypal stories across time is of the rebel who becomes the very thing he opposed, the son that becomes the father.

My New Year’s London Fintech Podcast covered this but in brief…

George Lucas who started by opposing the studio system in Hollywood and then became one of the biggest grossing himself.

The US, Russia and France who virulently opposed monarchies ended up with a more monarchical political system than those who kept their monarchies.

The shiny shoed #newFS boys who end up becoming the cynical prefects.

It is not easy being a startup of any nature, let alone in the challenging world of FS.  It’s even harder being a successful one that grows to the stage where they can use the billion unit to describe volumes.

Along with luck there is clearly something special about such firms.

How do they preserve this special-ness?

How can they scaleup and become more robust whilst preserving what it was that got them to that stage in the first place?

Can you grow up without ossifying and growing old?

When Alternative Finance is no longer alternative will it still be sexy or just yet another firm trying to maximise short term profits at the expense of longer term growth and externalities?

I had the chance to discuss this topic recently with someone who has some experience and insight. Alex Langridge spearheads the Fintech recruitment practice at digital head-hunters The Up Group who have worked with many of the biggest P2Ps and Fintechs.

For those of you lacking headphones there’s plenty on this topic in the show notes but I’d like to narrow in on one factor. The Organogram.

Leading into this is a memorable phrase I hadn’t heard before – the CEO as Chief Everything Officer :-)

It’s unsustainable and perhaps it’s a right of passage when the CEO realises this himself or is nudged into it by his colleagues.

It’s at this point perhaps that the most pernicious of diagrams – the organogram – kicks in.

Pernicious as we would all recognise the Devil if he turned up with a forked tail snorting fire. We might recognise him less if he wore Prada – or perhaps in this case a cheap M&S suit.

Back to the archetype.

Why is that story repeated time and again in so many different contexts?

Simply as the growth story of the younger involves passing through the same forces that turned the former younger into the father. 

When we set sail, if we set sail in the same winds and tides that the prior generation sailed in, the chances are we will end up in the same harbour no matter what our original course.

Determination alone is not enough (we can assume the prior generation had it too).

More important is an understanding of the dynamics of the winds and the tides – especially the subtle ones.

The organogram is one of the most pernicious. And arguably the most pernicious.

A startup has lots of fluidity and less structure.  In contrast an established player has lots of structure and minimal fluidity.

In Chinese thought it’s the gradual takeover by Confucianism (~ordered) of Taoism (~natural) – form and emptiness.

For the more prosaic/left-brained the essence is this – the language of an organogram ends up (or starts?) by adopting wholesale banking organogram terms – CEO, CRO etc etc – and this language/thinking leads one inevitably in a certain direction.

But this organogram is a busted flush!

This language is a busted flush!

The organisations that adopted it failed so badly that every taxpayer had to pay for their errors.

Let’s take one example – but the concept applies across the organogram.

In my articles for AltFi News last year I made the strong case for P2Ps et al having CROs and I was very gratified to see this happen.

But I should have said “terms and conditions” apply.

The current, failed concept of a CRO on a banking organogram is:

1. a bureaucrat who like all the other CXOs can never be held personally accountable (understandably given all the efforts to make CXOs legally responsible when things go wrong (and “things” in FS are generally probabilities not certainties so they will go wrong))
2. more perniciously the CRO as implemented by every P2P or Fintech I know (the ones I don’t know may do it well) is a bottom-up guy (no lasses AFAIK) who is responsible for a vital but still tiny part of “everything that could possibly go wrong”.

Back to the CEO in Chief Everything mode.

He worries about everything – all sources of risk – not just the “production” department’s risks (ie credit quality).

Reputational Risk, Cyber Risk, Business Plan Risk, Strategy Risk, the Risk of Growing Old and Rigid etc etc etc (literally without limit).

In essence the original CRO's (when frankly banks didn’t blow up) role was to make sure that anything that the Chairman or CEO worried about when they woke up at 04:00 in the morning was sorted. Top-down – Enterprise Risk if you like; not “bottom-up” (underwriting quality).

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But this is to take one example – it applies across the board [shouldn’t that be “across the organogram?” Ed.].

If one implements an #oldFS organogram, one can expect to start to assume the nature of an #oldFS player.

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How well is your P2P growing up without growing old?