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4.3. The Role of Top Management
Top management is the driving force. Leadership, commitment, and active involvement
of top management are essential for developing and maintaining a commitment to qual-
ity. According to ISO 9004:2000 clause 8.5.1: “ Management should continually seek to
improve the effectiveness and efficiency of the processes of the organization, rather than
wait for a problem to reveal opportunities for improvement. Improvements can range
from small-step ongoing continual improvement to strategic breakthrough improvement
projects. ” At many firms, this management philosophy is the rule, but at others managers
obsess about working harder, not smarter, viewing quality as luxury. But, financial firms
have to work smarter if they expect to uncover new and competitive business opportunities
with fewer resources. Quality and continual improvement are now becoming the normal
approach to doing business.
For the two processes we consider over the course of this book—the product realiza-
tion process (K|V Stages 1, 2, 3) and the process of a working trading/investment system
generating performance metrics (K|V Stage 4)—top management is ultimately responsible
for strategic planning and execution, including:● Building new revenue streams, starting and seeding many new strategies, and
rolling out to investors the strategies that offer the best risk/reward ratios.
● Raising capital by selling shares in the firm. The firm is essentially a portfolio of
uncorrelated trading/investment systems. (Portraying the firm as a high technology
firm, with proprietary intellectual property that drives cash flow, will buy a much
higher valuation ratio.)
● Maximizing, or optimizing, the value of the portfolio of new and existing trading/
investment systems.
● Establishing quality as a firmwide initiative and setting the example.
● Overseeing trading/investment system value streams.
● Organizing product teams, defining responsibilities and assigning authority, and
promoting and rewarding successful teams.
● Managing vendor relationships and partnerships.
● Assessing the need for new product-specific processes, documentation, and
resources.
● Sharing best-of-breed ideas between product teams, colinking value streams, and
removing the blame culture.
● Resolving disagreements between product team members and other employees.
● Creating a learning environment and encouraging all employees to become
innovators.
● Tolerating setbacks to maximize individual and organizational learning.With respect to gate meetings, management is responsible for:● Reviewing gate meeting deliverables prior to the meeting itself.
● Attending gate meetings to review and verify the progress of trading system devel-
opment projects. (Verification at gate meetings will ensure that design and develop-
ment outputs of one stage have met the design and development input requirements
of the coming stage.)4.3. THE ROLE OF TOP MANAGEMENT