“It’s always been easy to find the solution,” Borges says. “That’s what I’m good at. The challenge is to convince others.” As the first-ever chief innovation officer at fund adminstrator Saltgate Management, Borges has had a stellar career in private equity with stints at Akina and Unigestion, and Reichmuth & Co, working ‘front to back’, as she puts it, so that alternative asset managers can adapt to new challenges in a changing market landscape.
This can involve everything from improving transaction efficiency to mining data--often both. One example was in 2018, when Borges, together with technology provider Asset Metrix, launched a portal that gave clients access to every portfolio company to whom they had exposure. Common in public markets, but almost unheard of in the alternative asset management space. “People previously had to sift through sheets of PDF to see their exposure to underlying companies,” explained Borges.
The portal, created while at Unigestion, won recognition from industry news provider Private Equity International and secured Nadja’s place in their inaugural ‘Future40’ leaders set to shape private equity over the next decade.
It was also an immense challenge from a communication perspective, with the prototype for the portal developed as two companies were merging into one. “It involved a lot of negotiation,” said Borges. “Two companies with very different objectives had to be persuaded.”
While Borges is now an old hand at building consensus, “I even went back through the process with trusted people to understand the message it would send,” it has not always come naturally to her.
“Early in my career I had to learn a difficult lesson,” said Borges. It took place when Borges was chief operating officer at the former securities broker Plenum Securities, in Switzerland. She had the idea of “a relatively small change” of connecting a market data provider with the companies’ own data, to align their data sources and make sure the data they used was comparable.
“I thought the portfolio managers would love it,” said Borges. She was wrong. The portfolio managers in question felt that Borges was telling them that the way they were operating was wrong, teaching her a valuable lesson. “It’s not the message that I send that counts, it’s how it’s going to be received.”
Stricken by her lack of success, Borges turned to a coach to help her understand how she could do better. Together, they examined the process, Borges’ message. “I had to reach out to my network. It’s a real lesson, just as data must be connected to other data sets as a multiplier, we must be connected to others to find solutions.” Through conversations with her coach and a lot of soul searching on how to convince people, Borges realised that her error had been to lead with the solution. “People argue with statements. I should have listened and led with questions.”
If she were to do it again, Borges would have listened to the portfolio managers’ arguments first. “What were the reasons [the current process] was implemented? Do you think it can still be applied in today’s environment? In a perfect world, how would it be?” This approach would have enabled Borges to go away and think about her own answer, given her time to get her tactics and strategy right, and ultimately to engage. “I needed to know who I was talking to.”
She would also have used proposed changes in other departments as leverage. “Imagine if we could get the change you desire in the other department? Would you change too?” She feels this approach would really have made a difference. “Despite having the support of leadership, you still need to get everyone in the organisation engaged. I learned that.”
As a result of this experience, Borges has become fascinated with negotiation. “I read books on it, watch things, seek coaching.” She is a font of information on the subject.
“The most important person you need to know in any negotiation is yourself. There are five different styles and most people are a mix of two--a principal and a fallback--duelling, engaging, compromising, avoiding or accommodating. If I am accommodating as a fallback, then everyone knows if they talk long enough, I’ll back down.”
Yet despite her breadth of experience, Borges still encounters two main sticking points when it comes to change.
“One is a lack of executive support, or a resistance and lack of support for a particular change.” In these circumstances, she has found it is useful to offer both pleasure and pain incentives. “What’s the alternative if we don’t change? Set it out to them. This opens up 85% of negotiation sticking points.”
The second common sticking point is bad past experiences. “Some companies have had enough of change. To break that pattern, I give them a success story early in the process. People need good experiences in order to change their values, beliefs and behaviours.”
She believes cracking these is the secret to success. “Once these obstacles are overcome, the change process is just a race to the finish line. People want to change, but the stories they tell when they go home at night matter. Their contribution matters.”
Data in the alternative asset management sphere
The role of a chief innovation officer is a relatively new but necessary one as changes sweep the alternative asset management universe. Due in part to its illiquid nature, fund managers of alternative assets have not been able to access the same data that public assets have provided.
“In times past, the only way to get data from alternative funds has been to look at US pension funds which are obliged to publish their data under the Freedom of Information Act, and from this information see how our assets are valued in comparison,” says Borges.
However, this is changing. In the past two years, fresh inflows from secondary funds have created new liquidity, changing the strategy for private asset portfolios from commit and hold to an active-managed strategy. At the same time, commercial databases such as Prequin and Pitchbook have in the past five years encouraged fund managers to proactively provide details of their funds, making information that were previously private, public.
The result is a treasure trove of large volumes of data.
“There are so many opportunities,” explains Borges. “Fee models, for example. The data is already present. Based on historic data and an econometric approach, we can now use this data to pop out automised tailored fees for their specific needs. If we know what different services should cost, we can automise our contracts. I don’t stop there. If you can combine static data and transactional data, you can create a data hub.”
Changes to the way data is made available in the alternative asset world is bringing the existing fee structure of fund of funds under pressure, as the advisers who would formerly make the introductions are squeezed out by the new information availability.
The asset managers’ endeavours to stay ahead of the changes is evident in the new demand for data specialists and innovation officers in this field.
“It’s been wonderful to see the support when people feel engaged. Once I convince key people, my former opponents become the biggest promoters of my work,” says Borge. “The competitive advantage is definitely switching to players that analyse and utilise information in large volumes.”