As Awbury approaches the ninth anniversary of its founding (which, in the wake of the time distortion caused by the pandemic, seems a “lifetime” ago!), it is worth addressing how one can continue to be productive, remain relevant and generate value.
The term “Day 1” has been made famous by Jeff Bezos, founder of Amazon, who, by any definition, has built an extraordinary business since starting Amazon some 25 years ago. In essence, Day 1 is defined as the antithesis of Day 2: “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
Day 1 means moving and deciding quickly. It requires constant experimentation and adaptation, running the risk of the failure of a particular idea, and, if necessary, discarding concepts or products which are not, or no longer, fit for purpose. It involves identifying themes and trends, and following, rather than resisting them.
It does not sound that complicated, does it?
Yet, the apparent simplicity often becomes overlooked and overwhelmed as businesses scale and mature, because their managements fail to grasp that:
– Being obsessive about meeting and exceeding clients’ expectations
– Resisting the dead hand of process
– Identifying and responding to external threats; and
– Rapid, targeted decision-making
ensure not only the creation of an effective and valuable business franchise, but also sustain its long-term viability.
Unfortunately, as has long been evident in many industries (including (re)insurance), and has been made evident in the wake of the pandemic, businesses (as represented by their supposed “executives”) tend to slip into a seemingly comfortable “middle age”, when really they have become senescent, deluding themselves that they are still youthful and effective. They may just about earn their cost of capital (in a “good” year) and when the economy is expanding; but their irrelevance is revealed when their fitness and adaptability are tested. Their stasis leads to paralysis, and one begins to hear their “death rattle”, as they flail and grasp at anything that may stave off the end. Nothing lasts forever, but squandering the advantages gained by focusing on the attributes described above amounts to a reckless disregard for the Darwinian framework of any competitive environment. Adapt or die.
Of course, there is always the risk that, when something such as the concept of “Day 1” achieves what amounts to cult status (compare “The Warren Buffett Way”) and becomes “received wisdom” it can become a problem in itself, because no-one questions its premise any more.
At Awbury, we are very well aware of this and the so-called “framing” issues that limit or constrain thinking and exploration. So, we take great pains to avoid believing that one approach will always work. (Re)insurance and the world in general are far too complicated and complex for that. Nevertheless, adopting the approach that it is always Day 1 is a valuable part of our intellectual toolkit.
The Awbury Team