INTERVIEW - Meet the editorial board: Daniëlle Melis
I strongly believe that practitioners in the investment chain (including policymakers and regulators) must make an attempt to better understand what truly drives and motivates institutional investors and other actors in the chain. Not just the obvious drivers for performance, but a deep insight in their motives for future performance
Gerard Roest has invited Daniëlle Melis as the next participant in this ‘relay interview’: ‘As Chair of the Nyenrode Corporate Governance Institute and through her research, Daniëlle approaches this subject from an academic point of view - and I am very curious as to what science has to say about this topic.’
What is your personal motivation to SHIFT TO?
‘For me, SHIFT TO is an inspirational journey. From my experience as a practitioner in capital markets and institutional investing, as well as in academia, I am curious to see what will come from being part of this journey, and part of the SHIFT TO ‘expedition team’: expert practitioners, thought leaders and academics who aim to transform the current paradigm of institutional investing into investing for a solid and healthy financial future.
On this journey I feel it is important that contributors to the FCLT initiative continue to learn from ‘new’, and to challenge ‘existing’ practices, and cross the borders of their comfort zones and current knowledge. SHIFT TO can build bridges between the academic world and practice, between the financial sector and the sectors in which they invest, between ‘what is now’ and ‘what is coming next’. SHIFT TO can bring together the PEOPLE and KNOWLEDGE that will facilitate and accelerate the SHIFT TO long term investing.’
How does this fit into your professional ambitions?
‘My professional ambition is to contribute to business and society in a sensible, value creating way. I hope to be able to cooperate and co-create with others by sharing the personal knowledge I have gained, my experience in the field, and the ideas I challenge through my research, to focus on a common theme: long term investing.
In my work at Nyenrode I am motivated by the mission “Serving Society by Shaping Responsible Leaders”. As Chair of the Nyenrode Corporate Governance Institute I contribute to this mission through my work with executives, non-executives, investors and a wide variety of stakeholders who are and will be making an active contribution to the public FCLT debate. Next to my work as an academic, my ongoing work in the financial sector provides for my personal motivation to stimulate awareness of long term investing in the financial sector, which also contributes to the mission of SHIFT TO.’
In your opinion, where should the financial industry be in seven years’ time?
‘I hope the financial industry will have regained society’s trust – from consumers, the beneficiaries of our savings and pension schemes, and the businesses that invest and innovate for the future. I hope the sector has shifted towards more focused, agile business models for financial institutions, and that those institutions have found renewed purpose and vigour. The game will have changed. Driven by Fintech, other players will have entered the field and existing players will substantially have changed their license to operate. There will hopefully be less regulatory pressure, balanced by more psychological and behavioral contracting (a stronger focus of the financial sector on their core purpose, and less focus on short term financial gains) - we’ll be focused on doing the right things instead of only doing things right.
Next to people, money will remain an important - if not the most important - resource for businesses, enabling them to contribute to a financially healthy, secure and sustainable future. The institutional investor community, together – and only together – with the other actors in the money-chain will have integrated their responsibility to contribute to achieving this higher goal whenever and wherever possible. To be honest, I think seven years is too short, but the sector will have to start now – and yesterday would have been better.’
Who should we definitely hear from in this newsroom?
The captains of industry, the CEO’s and their teams who are shaping the investment agenda for the future. The trend watchers, who can identify megatrends that most of us can’t see yet.
The ultimate providers of money, i.e. the pension funds and their beneficiaries.
The institutional investors who can lead with ‘practice by example’.
And, perhaps surprisingly, the promotors of short-termism, because unless one clearly understands their motives and underlying incentives, a true shift in paradigm to long termism will be hard. In Aikido terms “use the energy of the attack to throw the opponent.
Which issue is most urgent in your view/field of work?
‘I strongly believe that practitioners in the investment chain (including policymakers and regulators) must make an attempt to better understand what truly drives and motivates institutional investors and other actors in the chain. Not just the obvious drivers for performance, but a deep insight in their motives for future performance.
Academic research can contribute to such an improved understanding but requires a multidisciplinary approach. The philosophical concept of teleopathy (Goodpaster, 2004) helps us to broaden our perspectives and shift from a one-dimensional focus on existing paradigms to new (integrated) paradigms. Key areas of future research that should be further explored are in my view:
what are the psychological and cognitive competencies and limitations of individuals?;
what is the influence of organisational context on the behaviour of individuals?;
how do group dynamics influence behaviour (social interaction)?;
how are actors and factors (inter)connected and what is their interdependency?’
Extra question from Gerard Roest: ‘Is there an academic line of reasoning to support the shift to long term investing?’
‘The research agenda outlined above requires improved cooperation between academia and practice. I see an academic trend in the debate around long term investing: there is a SHIFT from a regulatory approach (and accompanying research of legal scholars in this area) and a purely investment/capital markets approach (and accompanying research of financial scholars) TO a behavioural approach. The challenge for academia will be developing an integrative research approach - one in which improved understanding of behaviour provides practitioners with the insights to truly rethink and challenge existing paradigms.’
 Goodpaster, K.E. (2004), Ethics or Excellence? Conscience as a check on the unbalanced pursuit of organizational goals. Ivey Business Journal, March/April 2004, p.26-33
The members of the editorial board of SHIFT TO all have professional but also very personal reasons to join this initiative. In a ‘relay interview’ we learn more about their motivations as they ask each other: ‘Why do you want to SHIFT TO?'
Danielle Melis invites: Constant Korthout as the next participant to this ‘relay interview’.
’I am curious to hear from Constant as a board member who depends on long term availability of funds for the future success of companies; while concurrently serving on the board of a financial institution that serves businesses and asset owners in their long term ambitions.’
And adds two questions:
‘What kind of behaviour (that isn’t currently in play) needs to be integrated into the boards of companies, investment institutions and asset owners/pension funds as well as regulators to make the paradigm SHIFT TO long term investing?’
‘What dilemmas will come up in promoting the SHIFT TO long term investing?’