I was invited to the Norges Bank Investment Conference by CEO Nicolai Tangen, arguably the world’s most important investor. He runs Norway’s $2.2tn sovereign wealth fund which owns around 1.5% of global listed equities.
The theme this year was “Winning Cultures”. There were 4 sections: Fundamentals, Transformation, High Performance Cultures in an Age of AI and then a live edition of the In Good Company Podcast.
The speaker list was extraordinary: Ken Griffin, Jamie Dimon, Michael O’Leary, Ajay Banga and others.
I went hoping to learn a lot about culture. I’m not sure I did. But I did learn a lot about how high-performing organisations actually operate, and in some cases, what people say about culture versus what they actually do.
Three themes came up again and again:
1) Speed matters more than structure.
The best organisations make decisions quickly- and push authority downwards.
2) Incentives and behaviour matter more than slogans.
Very few of these CEOs talked about mission statements. They talked about hiring, firing and execution.
3) “Culture” can simply be a by-product of success.
As one speaker put it: nothing drives a positive culture like winning.
There wasn’t much consensus on “culture”. In fact, one of the most successful CEOs on stage was openly sceptical of the concept. But their behaviour - and how they run their disparate organisations across a wide spectrum of sectors - had more in common than you might expect.
Some of my favourite takeaways came from 3 industry titans, one of them European.
Ken Griffin has built two leading financial businesses at Citadel.
He promises to make decisions within 24, 48, or 96 hours and if he fails to do so, the default is that the junior person decides. A commitment to speed was a recurring theme.
One third of Citadel staff are software engineers – I found that surprising.
In the early stages of AI, the organisation came up with 200 AI projects. Griffin instructed them to cut that to 5, and to push those hard. Of those, 3 were successful.
My takeaway - that’s what Citadel’s “culture” looks like: speed + focus.
Michael O’Leary, CEO of Ryanair was one of the most impressive speakers but was the least interested in culture.
O’Leary was dismissive of culture as a concept – “culture, smulture”, he responded.
Instead he is obsessed with cost. This singular focus means that every employee is aligned around a common objective. It’s incredibly simple but highly effective. Simplicity was another common theme but there was agreement that it’s difficult to achieve.
Charging for bags wasn’t about increasing revenue. Instead it was the most effective cost-saving initiative they introduced. It reduced turnaround time, fuel burn, check in times and cost. 20 years later, other airlines are copying the move, but to increase revenue.
My takeaway: simplicity and clarity beat cultural slogans.
Jamie Dimon of JP Morgan was interviewed by Nicolai Tangen in a live edition of his podcast. My favourite comments included:
Bureaucracy is a “Petri dish”. You fight it by sharing information and by going to see clients – they will tell you if a competitor is doing something better.
Dimon personally reviews customer complaints – he didn’t go into the details and I would have loved to hear more, but it illustrates his priorities.
He focuses on efficiency and having the right people at his meetings. And when someone brings a problem, he asks, “what are you going to do about it?”
There was a lot of talk about culture, but in practice:
Griffin talked about decision-making systems
O’Leary talked about cost discipline
Dimon talked about execution and market competitiveness
Little of this was what academics and commentators discuss or indeed what many companies mean when they talk about “culture.”
My takeaway, which is hardly revolutionary, was that when analysing a business, it’s pointless to ask a question like “Does this company have a strong culture?” I don’t even know what that means. Instead, its more important to ask questions like:
How fast do they make decisions?
What behaviours are rewarded?
Is there simplicity and clarity around the goal?
That will likely be more informative of future performance than any set of corporate values or mission statements.
Below are my structured notes from each session, with some additional observations on what actually matters for investors, including:
Griffin on hiring and decision-making
Dimon on credit markets and systemic risks
The one factor several CEOs think is making Europe structurally uncompetitive
How CEOs are embracing AI to effect change inside their large organisations
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