It was the mid 2000's. I was leading an exciting young business that made me want to come into work early every single day, and be the one to turn off the lights at the end of the day. The days were long, but very rewarding. I knew my team and I were building something special, a business that no one outside the immediate team (and perhaps a couple inside it) believed we could.
What this meant of course was that we were inventing a new business model as we went along, one that our market peers would soon seek to emulate. And being a pioneer, is always hard work. It falls upon you to solve the unresolvable. The challenge this particular day was particularly tricky. We needed to scale up significantly to achieve the goals we had set for ourselves, but there was a difficult issue that was hindering us from achieving scale.
I sat staring at the wall in front of me. On it was a list of credit lines for our contemporaries, and the maximum maturities to which we could do business with them. We were limited in terms of maturities by the bank's credit appetite, and yet it was the term to maturity of the trades that made them profitable for us, while allowing adequate safety nets to be built in for both the bank and our clients. It was the fourth time I had looked at the list that day. Looking at it repeatedly, I had perhaps convinced myself, would change something.
And then it did, because I changed my thinking.
The realisation struck me in an eureka moment. The bank had a certain risk appetite that was defined by how long credit was extended to the counterparty and not by the term to maturity of the trade itself. So if we could find a mechanism to limit the maximum period of the risk while maintaining the time to maturity of the deal, we could achieve our objective. I called my team's think tank in, and we put our heads together. By that evening, we had not just found a solution, but got the sign off from the relevant oversight departments to move ahead.
Over the next four years, our business expanded several fold, in no small measure because a dormant client base became one of our most significant. Within a year some of our largest peers caught on and replicated what we had done. But far from eating into our business, it expanded the market itself with more and more new counterparties entering a space they could never otherwise have participated in.
It was one of the biggest leadership insights I gained during the course of my career - if you change your perspective, you can change the paradigm, and the future.
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