Once upon a long time ago, I was a bright-eyed young professional working in capital markets, tasked with improving communication and information capture among traders, bankers and salespeople across geographies by implementing a customer relationship management (CRM) tool.

No problem, right? Except that I had, quite literally, no idea what I was getting myself into. Or that it was the beginning of my bizarre, long-term love affair with the capability I call relationship and knowledge management (R&KM) – mostly so people don’t think I’m just talking about Salesforce.

Relationship and knowledge management is how an organization gathers or generates, organizes, stores and shares information from external parties and internal activities. And it’s an important thing for pensions and investors to be good at.

On my original R&KM project, we did many things right, navigating the fast pace and big personalities of capital markets to understand processes, migrate data and design a painless user experience to deliver on a very clear scope. I happily pulled all-nighters with developers testing code. We invested heavily in training and support. And yet, the CRM platform chosen to enable R&KM suffered from the negative cycle of unmet expectations, poor adoption and bad data that can make these complex, expensive investments seem fruitless. R&KM was firmly established in my mind as one of those irresistible problems: A Thing That Should Be Easy But Is Very, Very Hard.

And in the 20 years since, I’ve worked on many diverse R&KM strategy and delivery efforts – unpacking with clients and colleagues why and how it is so difficult and designing the choices and capabilities that need to combine to deliver the full impact of good R&KM.

Recently, I’ve had the opportunity to revisit this conversation in the global investment management ecosystem, interviewing risk-takers and their technology partners on their R&KM experiences and aspirations (note, quotes have been paraphrased for confidentiality). These conversations have reinforced my long-held belief that relationship and knowledge management is one of the most powerful capabilities available to pensions and investors – enabling superior decision-making, partnerships and investment returns. Here are the top five insights from this discussion, and the reasons why I am long R&KM.

1. R&KM is an intractable challenge with seemingly infinite potential

The fascinating reality of R&KM is: everyone is wrestling with it, no one is doing it to an objectively excellent standard and/or their own satisfaction – yet there is an unshakeable belief in the value of getting it right. No one I spoke with really had a business case, despite the many years and millions invested in the effort. User adoption is broadly miserable, across both generic and industry-specific tooling. But people can get almost misty-eyed talking about the potential in R&KM.

Improving investment returns, partnerships, institutional memory, operational reporting and risk management are the most valued outcomes of good R&KM. “If you have any experience in this industry,” according to a global PE investor, “you have hundreds of relationships to manage. How else can you do this effectively at scale? Because you’re only ever one relationship away from winning a deal.”

As one leader of an asset team at a sizable pension board shared, “We had signals from relationships in one portfolio that could have helped us predict Covid impacts in another asset class, but no good mechanism to share them. We can see it after the fact, but we have to get in front of it.” This kind of challenge is exactly where the big brains of investment management should want to play.

2. There are many ways to approach R&KM

There isn’t one right answer to R&KM; organizations must make the right choices for their context and objectives. In our research, we learned about R&KM programs with a range of diverse priorities, including:

Improved communication across asset silos to increase alpha (requiring a focus on insights over contact data and activity, and significant ongoing support from a center of excellence (COE));
Preserving institutional memory amid talent changes (using “customer-led delivery” of the project to achieve high user adoption); and,
Relationship management at scale (emphasizing contact and activity capture and management, leveraging automated processes to make investors more efficient).

Despite the many possible paths to positive R&KM outcomes, the most successful journeys shared a few key features: clear, focused scope, highly engaged business users and an organizational commitment to the long haul.

3. R&KM is not (only) about technology…

A shocking number of R&KM initiatives are born and, sadly, die as technology projects and there are no shortage of software vendors with ready solutions to build up this core capability for pensions and investors. But R&KM is not about technology or, at least, not only about technology. “People tend to think about the tool before the process,” explained one global debt investor. “The tool is almost irrelevant. You have to think about your processes first.” A leader from another organization noted, “You have to understand your cultural maturity [in this capability] – you have to crawl before you can run.”

The most successful R&KM programs we observed started analog or sought out existing collaboration and communication processes to automate. One technology leader at a major provincial pension board described a significant investment in a platform that languished, until they migrated “an existing process to manage deal flow into [our product]. Adoption went through the roof. But users weren’t using [our product], they were doing that process.”

Technology leaders can catalyse investments in R&KM in their organization – but they should resist the temptation to lead the charge or to set unrealistic expectations of what various R&KM technologies can deliver. Focus on the current behaviours and future goals of the business, not what R&KM tech can do. It’s tempting, because good R&KM tech can do a lot if it’s easy to use, flexible and secure and gets the balance between configuration and customization right.

But line of business leadership is critical to the design and implementation of R&KM processes that can be effectively enabled by technology – and to their ongoing care and feeding. For example, front-office COEs or support teams helping to realize R&KM outcomes can be a significant investment, ranging in size from 1 to 15 FTE.

4. …but technology can change the R&KM game

It’s not only about technology, but the next generation impact of technology is on the horizon for R&KM.

In contexts where traditional tooling is being used – whether that’s enterprise platforms like Salesforce or Dynamics or industry-specific plays like DealCloud or Affinity – the focus is on layering on better reporting, process automation and natural language processing analysis. Firms are working to get proactive through behavioural nudges (such as monitoring time elapsed on contact with key relationships) and ecosystem monitoring (by integrating external sources like LinkedIn to monitor target company growth).

In an imagined future context, the most creative thinkers paint a picture of the world where there is no spoon – where the lines between R&KM-specific tooling and enterprise resource planning (ERP) platforms blur even further to deliver R&KM outcomes by sourcing information and insights in the flow of everyday activities, like email traffic, transcribed video calls and a ‘Hey Siri’-like search capability.

If you are early in your journey of building R&KM processes and their enabling technology, I would urge you to think beyond the construct of traditional CRM tools to potentially new, more integrated and frictionless ways to enable your desired outcomes.

5. You can learn from failure

And if you are not just starting out, don’t despair. We all know this truth but it’s worth repeating in the context of R&KM: failure can be a great teacher. Most of the pension and investing teams we spoke with who are getting it right, got it very wrong first (sometimes more than once!). “We did some serious self-reflection between our first and second attempt,” one investment leader disclosed, “and got very serious about not making the same mistakes. The result has been a totally different level of ownership and accountability.”

If you’re a technologist tasked with R&KM enablement, get wildly curious about your business culture and processes. If you’re on the front-line looking for tools to help you, challenge yourself to build analog R&KM muscle that will make your technology investments more successful. If you’re in leadership looking for transparency and control, design R&KM so that it also delivers real value to your front lines. And if you’re on a Board being asked to approve funding yet again, press for clear objectives, engaged leadership and how we’re applying what we’ve learned from past attempts – ours or comparable organizations’. Because R&KM is worth doing well.

We’d love to hear your success or horror stories in R&KM or talk about how we can help you on your journey to get great at critical capabilities – you can drop us a line at hi@fusestrategy.co.

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A Thing That Should Be Easy But Is Very, Very…