Mike Lombardi, football coaching and investing

| | Observations

I am not a football fanatic, but I picked up this book on a recommendation and was amazed by Lombardi’s insights on leadership and management. Mike Lombardi is long-time football executive and media analyst. The book focuses on Bill Belichick and the New England Patriots, but his conclusions could apply to any money management firm. A good money management firm is successful because it acts like a well-disciplined organization with a common purpose. That is no different than a competitively run sports organization. Lombardi finishes his book with five key recommendations for firm success that are worth presenting in bold.

  • CULTURE COMES FIRST
  • PRESS EVERY EDGE ALL THE TIME, BECAUSE ANY EDGE MAY MATTER ANYTIME 
  • SYSTEMS OVER STARS 
  • LEADERSHIP IS A LONG-TERM PROPOSITION
  • YOUR’RE NEVER DONE GETTING BETTER

I would employ these five recommendations to any hedge fund or money management firm. The idea that culture beats strategy has been a key insight from Peter Drucker. Always use any edge you have because you will never know when it will be useful. A good money management firm that wants to generate alpha always has to think about their edge. The system should always be dominant over a star. A star system can never be sustainable and never effectively uses the entire organization. If the smartest person in the room is always the same person, the firm better switch its hiring practices. There is no such thing as short-term leadership. Leadership is hard work that takes time.  Leaders do not think about the short-run but are always playing a long game. Finally, always try to get better. This is a variation on the Japanese management principle of kaizan, incremental improvement. 

I have often focused on management and decision-making with some of my posts for the simple reason that process is more important than any single market viewpoint or recommendation.