Vish Hindocha: Hello and welcome to another episode of the All Angles podcast. I'm delighted to bring my guest today, Roger Urwin. Roger, welcome to the podcast. Thank you for being here.

Roger Urwin: Vish, it's a real pleasure. Looking forward to it.

Vish Hindocha: Roger, you are currently the global head of investment content for Willis Towers Watson. It's the role you've been in for a while, having founded the investment practice, starting in the mid-90s. You have a few areas that you've worked on a lot, DC life cycles, governance, working through value at risk, risk modeling, beliefs, sustainability. I've done a poor job of giving some personal background to you, Roger, maybe I'll ask you, could you take us back and take some of the listeners back? Give us a little bit of a potted history of you. How did you get to be here? What are some of the pit stops along the way that you would call out as some of your highlights?

Roger Urwin: Yeah, fabulous. So, Vish, I think things started by doing a maths degree a long time ago. I did at Oxford, and I did applied statistics as an addendum to that. I added it on at the end. That took me into the actuarial world and the investment world back in those far away days of 1977. So that's when I started my career. And I've been in investment ever since. It's a fascinating area. I think it's got a lot of meaning. It's particularly become more interesting, with sustainability in the wings here as well.

I've done several jobs in asset management as well as the consulting work that has been part of me for a long time. I actually started what was the Willis Towers Watson Investment Practice back in 1989. I was employee number one, so there you go. It was really interesting greenfield situation and really enjoyed growing it as a global business, and then worked out late in the first decade of the 2000s that, in order to stay fresh, I needed to get out of managing things, being the sharp end of delivery of bottom lines and working pretty intensively on things that weren't quite my taste. My taste is working with clients. I just love working with asset owner clients across the world.

So, that led me back to clients and also to content and this thing that we refer to as thought leadership. I hate the term, but if you think about thought leadership, it's basically thinking that is both innovative and influential. It's trying to arrest people, it's trying to make sure that people get the sense of alignment around a subject. So, you're trying to win over people to a certain way of thinking, I think, and it's action oriented, all of those things. And that's what Think Ahead Institute has done. It's been around for 20 years. It's been in its current form, which is a sort of skunk works with members. It's been in that form for the last six, seven years essentially. And it's been a really interesting journey because the investment industry has just got progressively more interesting and more difficult at the same time.

Vish Hindocha: One of the questions I love to ask guests is what is your why? Why do you choose to do what you do? And you've touched on a few things already, focused on clients, developing trust and alignment and sharing thinking. Is there anything that you would add in terms of, how are you still passionate about all of the things that you get involved in?

Roger Urwin: So, it is really about thinking of life through substantially two lenses. So, I've got a family lens and I've got a work lens and I haven't really got a lot of time for other things. My work lens has been a real privilege to work in an industry which is full of very, very good people, very well-meaning people that work to benefit the collective of the industry. That's why I'm involved with professional dimensions, CFA, faculty of actuaries. I've found it very helpful to take up different vantage points and looking on the industry from different places. That's why I've had this long term involvement with doing different jobs at the same time.

I've currently really got two jobs at WTW. I've got the job of managing a lot of fairly significant big asset owners projects in terms of change, that's roughly what it is. It's all about organizational effectiveness. Early on, I was really into the investment content, but gradually I got more interested in how to deliver exceptional results, what is the secret sauce? And that's the feature of what I do with the big asset owners. I've got a project or two we could talk about later on.

Alongside that, the research work and really, it's been an industry that is reshaping itself. So, I am proud of doing certain things very early or indeed being the initiator of thinking. It's really an industry that needs to have innovation. You'd expect that. And so, the work I did in the 80s was oriented around the first target date funds and lifecycle design in defined contribution. That hadn't happened. People had balanced funds in their DC at the time. I've been very involved with the smart beta area, and most people attribute that smart beta term to Think Ahead work in the early 2000s.

And there's also all this dimension about governance and culture, and what I call the soft stuff is the hard stuff. Those are the areas that I'm passionate about. So back to your why. I find all of those fascinating and really stretching and, on top of it now, we have this sustainability challenge, which is enormously important, (A) for the investment results of asset owners across the world, but (B) for the wider impact on society that all these funds have. And that gives me a much stronger urge to stay around, to stay current, to be relevant and to help people. That's what client work involves. All that's worth doing is what you do for others is a line, I think it's Lewis Carroll or something like that, actually think that that is a very positive reason to be working hard at my tender years, which I won't disclose, but it does start with a seven.

Vish Hindocha: You've mentioned the Think Ahead Institute a little bit. It'll be very familiar to some of our listeners. MFS® is a member of the institute, has been for some time. So you described it as a skunk works that began, that tries to tackle big thematic topics and acts as a coalition-building device amongst asset owners and asset managers, and how do we develop good thinking on some of these themes? I would love for you to just describe some of the recent projects that yourself, Marisa, Tim, and the team have been working on and some of the areas of thematic research. There's one or two that I really wanted us to double click on today, if that's okay, which is around systems thinking. But I know you do so much more thinking around things like culture, super teams, diversity and the work that the team does.

Roger Urwin: So, Think Ahead Institute, I think you have to see it as a journey. Most things in life are of course journeys and, really, we establish the principle that consulting should be the source of innovative thinking. Day-to-day, business as usual lives weren't really giving us thinking time and so we established it as a specialist piece. Tim Hodgson came in at the origins, and you've mentioned the important contribution Marisa Hall makes to it now. Over time, therefore, we've kept it together in that specialist structure. When you design an organization, you have to be pretty careful to avoid it falling down certain traps or bolt holes that make this type of organization a bit of a luxury.

What is your job? You think? That sounds rather cozy, doesn't it? But actually if you've got members, you've got client pressures on you and that structure of thinking ahead has served us well. And MFS is a very, very strong engagement partner. We call them innovation partners really. So, your ideas rub off on us and vice versa. It's really important that we think of it that way. And my conversations with Carol and others over the years have been tremendously stimulating and they have usually been all about new thinking in the investment industry, innovation again. So as you say, you need a bit of evidence that you've had some traction with your thinking.

So, you go back, I sort of mentioned, 20 years ago, we were all into the smart beta thing. I think that became fully established. It was clear that investment thinking at the time hadn't really managed to crystallize some of the benefits of the investment theories that were working their way through about factors and about different exposures to different anomalies in the investment market. That's what was going on with that type of stuff. But anyway, that became a broad subject, great.

Sustainability. I was involved with PRI from its origins just as a contributor to their thinking, but sustainability has been a big piece of our more recent past and we launched the term 3D investing to represent the obvious coming together of risk/return. That's the two dimensions we've always worked on. Real-world impact is the third as well. And we launched it on the back of some of my early thinking on universal ownership theory, a term that many people will not have come across. But it's really quite powerful that when you look at the big asset owners, they own a slice of everything and how they work with that premise is not tremendously collaborative at the moment. So, they work usually in isolation on that challenge of getting their returns, even though they're huge and even though they will always own a slice of everything to some extent.

And so, universal ownership is really about organizing strategy in a more collaborative way in search of better returns. There's no question that this is a solid granite finance and it is working. So, 3D investing employs that type of thinking. So 3D investing, I think it's got a big future. Everyone likes the term. It's quite intuitive. Our investment thinking has to broaden out. That's the point. So, I mentioned that 3D investing.

More recently, we've done a lot of work on soft stuff in investing, work on culture. MFS has been really thoughtful about that subject. It knows its stuff from inside out, as it were. It values culture. Organizations that value culture need to be able to speak about it intelligently, understand it and manage it. As organizations grow, it becomes increasingly difficult to maintain good culture. So those aspects are really interesting as well. So, we've actually engaged with a very large number of asset managers and asset owners on the subject of culture. So, those are probably the highlights. I did want to talk about systems thinking. You've already alerted me to that, but again, we might be putting that in the parking lot. Up to you.

Vish Hindocha: No, let's do it. So as we record this in early June '24, just to timestamp it for listeners that may be listening at a different point in time, the Think Ahead Institute is in the middle of a member-led curriculum around systems thinking and systems leadership. So, I think it's a really good time, big open question at the beginning. Why? Why do you think systems thinking is really important for investors to consider right now? Why is it solid granite finance to think about systems thinking in that way?

Roger Urwin: Well, that's a good way of posing it. It's got to actually have value to our industry. And so, I'm going to just make the case pretty quickly. So first and foremost, I've asked the question of a lot of CEOs and CIOs, is your organization a system? And they say, yeah, it's got the elements of the system, it's got the connectedness of a system, it's got the purpose of a system. Yeah, I get it. It is a system. And then the extra question usually is something like, well actually, have you read up about systems theory? And people generally say no to that. So that's the premise on which TAI is working, that we need to promulgate more understanding of the benefits of thinking about an organization in a particular type of way, which kind of sounds rather abstract and not very easy.

Most people think of the word systems as it's about technology. This is different. This is a different application of the word systems. So systems is basically always this point about that there are elements that we're looking at, there are interconnections between those elements. There's a purpose in the system you're thinking about and you can think about that at the global level, at the meta level, and you can think about that at the organizational level and you can actually think about it in terms of, particularly, teams. The application to teams is very profound.

That discloses that we're just overrun with systems when you think about it, that there are multiple systems, and these systems not only interconnect, they collide. And the state of anthropogenic change in the world, where basically we now have systems that are under pressure, we have planetary boundary issues. This is really about systems crowding in on each other on a crowded planet. By the way, I joined the planet when there were 2.8 billion people, there are now roughly three times that on the planet. I've lived through the tripling of the population on the planet and that has got major, major implications for where we go next. By the way, I didn't sign up for that growth in population when I started out here.

Vish Hindocha: Well, maybe with your two, eight, 13, Roger, you are contributing somewhat to some of that.

Roger Urwin: Yeah, guilty as charged. Yeah, totally agree. So, we are therefore now trying to take this systems thinking into a practical place where people get the benefit of understanding how thinking deeply about all the moving parts in your world by the way that's applied common sense on top of that understanding, you can help with the design of systems to get them to do what you want them to do better. So, you can't fix problems exactly this way, but you can certainly contribute to a better outcome if you are very conscious of how systems work.

Basically, there are a lot of patterns in life that are very, very predictable. I'll give you an example. It's very resonant in investment. It is basically, what gets measured gets managed. And there's no question that that drives so many behaviors in our world, and you have to design around that in order that it doesn't sink the ship, as it were, because trust me, it's not a very healthy state of affairs that you only manage what gets measured because most of the meaningful things in life can't be measured. Go figure. So from that point of view, that type of maxim and general rule about how things work, understanding those is part of what we're talking about.

Vish Hindocha: So, measurement is one way in which, I know that we've discussed before, that the investment industry in particular, but the world at large and accountability of that measurement might fall short. What are some of the other ways in which you think we currently fall short? If it is just applied common sense taken forward, why is this not more intuitive to us? Why are we not always thinking in terms of the outcome of a system? How do we end up short-changing ourselves on that thinking?

Roger Urwin: What we've touched on here is systems thinking, is what I call half-applied common sense, but the other half is sort of like structured human intelligence. And so, you've actually got to, that's where the study comes from, really to be honest. So systems thinking, I've just read about it, I've never done a course on it, but in reading about it, you start to get more deeply into an understanding of structured human intelligence and structured design of different systems here. So, that's what's happening.

So in our system, our investment system, I think we are the casualties of an obsession with the measured over the meaningful, unfortunately. And as a result we don't give enough significance to the soft stuff that really does matter here. And so, from that point of view, how does that work? Well, just think about the 3D investing challenge that we've got. We've got return that's measured to two decimal places. We've got risk, which actually, by the way, we also measure that to two decimal places, but we measure it multiple ways. So, that's kind of a bit confusing.

And then we've got all the real world impact thing. And across the world, there are a gazillion people toiling through their returns on climate and net zero trying to measure and communicate and report on some very soft concepts where the accuracy is nothing like what we're used to in the investment side. And when you add the soft to the hard, you get a confusion. People are not dealing with it tremendously well. Understanding the system that way enables you to work to get through those problems because those problems are actually, potentially, going to distract us and distort our responses over time.

So, I think therefore, this is a very resonant area about how people do respond to measures, how much we require people to respond to KPIs, and more and more KPIs are growing, we have to recognize that the KPIs are actually very good disciplines on accountability and are incentives for people to do better work. Great. Often though, we over precisely put targets into these KPIs. You've got to respect the idea that a lot of these things are somewhat approximate. Indeed, many of them are qualitative in nature. And as soon as you get qualitative stuff, of course you get problems in terms of whether or not it's a legitimate measure. If you use what's called a RAG analysis, red, amber, green, for whether or not people have done things properly, it becomes difficult. And as human beings, we like to avoid arguing about the figures as it were. So, figures are figures, that's facts, you can fact check it, et cetera.

So we're drawn falsely to a distorted playing field in which figures play a big part. By the way, the interpretation of fiduciary duty is very interesting in this area. And the recent paper that I was contributing to, the Financial Markets Law Committee made a very big statement about, "Look, sometimes narrative counts as much as numbers." And I think understanding that is a really important premise. And again, I'm drawing from the sort of systems thinking principles when we build a more robust way of measuring things and how we measure things, you might think we're very sophisticated at it, but we make elementary errors with it all the time. And the human brain can do better with that. By the way, if the human brain doesn't, I think AI is going to overtake us more quickly.

Vish Hindocha: Yeah. So we have an existential reason to at least improve in this space.

Roger Urwin: I think so. Straighten the thinking out. That's what I'm really referring to.

Vish Hindocha: One of the things that I read recently about, this was more in the digital systems space, was that actually many organizations fail to recognize that it's an intersection of three things. This is from two professors, I think one at Stanford, one at Harvard, that talk about mindset, skillset, and tool set. And that in the digital space, we obsess about the tools, AI or having the right systems, and we neglect the skillsets until probably too late. But we definitely don't pay as much attention to the mindset shift that's required in order to do it. And often with systems thinking, you've drawn a parallel for me on mindset, heart, will, which is sort of where we tend to fall short.

I'm just curious, for people that are interested in leaning into this as a potential opportunity, if there is dysfunction here or a dislocation happening here, what are some of the capabilities that you think we need to develop in the next generation of leadership in the financial service industry in order to really embed this way of thinking into the way in which we work?

Roger Urwin: And naturally enough, I'm going to talk about systems leadership, but let's just lead off with a more folksy way of seeing the challenge. So, we have a hugely complex world, a world that becomes more complex at an increasing pace as well. And so, in order to understand the world, two things about it is really important. It is that you have to build models of how the world works. You have to respect the idea that these models are not the reality of how the world is truly working because it's more complicated behind the scenes. But it introduces a premise which I think is really important for leaders to apply, which is the principle of complicate to understand, simplify to act.

So essentially, leaders can get away with having a go at understanding something but not seeing it in all its complexity. But that is going to lead you to make errors when you come to apply that thinking.

So, I think it's really important for leaders to invest in their understanding of different parts of the system, whatever system we're talking about here, but then to be very, very clear that their job is not to make it complicated to people, it is to simplify it to the point where action can be understood and it can be empowered. And so really, this is the principle that no one achieves anything significant on their own. Leadership is so much about empowering people who get the vision and can apply themselves to something that is a little bit more simplified because that works better across a bunch of people, essentially. So, that is a very important sort of leadership principle, which I think we have to work quite hard at to execute because the world is getting more complicated for sure.

I mean there are strategies for making organizations a bit less complicated. We could talk about that. But the other point about systems leadership is that it's so much more about the collective. I've already referred to that. Essentially, the hardest problems just, as I say, cannot be managed or solved by an individual on their own because everyone's part of the problem. That's kind of the usual situation here. And so, you've got to get to a way of leading, which implies a certain amount of engagement of key stakeholders in whatever we're talking about, whatever situation. Engagement starts off systems leadership and then you dig deep. That's my point about complicate to understand. Systems thinking helps you to understand what's going on, what's really going on. And then you co-create answers where people feel part of the decision making.

And this is really applied common sense but having quite a sensitive view about humans and their needs and their attitudes and their values, how all of those are engaged when you do it that way round, as opposed to imposing solutions on people in the dominant style of leadership that was around 10 and 20 years ago. We thought of that leadership kind of working, but the alternative type of leadership has been, I think, road tested through more recent times more successfully. And I think we're now evolving towards a more progressive type of leadership, which is really much more interested in making sure that everyone is, if they are following, they're following for a good reason because they've been engaged in the journey, they've been a contributor to the journey as well.

Vish Hindocha: We talk a lot on this podcast about embracing complexity as a professional in this space, but then I like the idea that we have to then simplify to act by the end of it, you sort of introduced a middle step which was around, we need to co-create in order to get people invested in those solutions. As an investment industry though, and again just given your vantage point in the value chain in our world, we're often not necessarily set up to collaborate as effectively as we could. So, I'm just curious, are there examples of where you've seen that co-creation be effective?

Roger Urwin: It is stronger amongst the asset owners than the asset managers so far. So, the asset owners really do have a strong sense. I use the term all the time, “co-op-etition.” It's cooperation alongside competition. All asset owners are in competitions for deals for the best type of portfolio. There's competition there, but you can step away from that and see a number of areas where, in a rising tide, all boats can go up together, as it were. And universal ownership is at the center of several of these examples here. So, the best example is really the systemic stewardship that can accelerate the pathway to net zero. And as a result, leave portfolios in a better place with regard to the future system.

If we don't have net zero and we have runaway climate change, we have an unstable system for financial returns. The returns we need can only come from a system that works. We should be working on that system. And the way to work on that system is a collective effort of some sort. Systemic stewardship does it, that could be individual organizations, but on their own, individual organizations don't add up to enough. And so, it's the partnership effect which gives rise to a scale advantage. You've got to have a scale to influence the way that things work, the regulators, whatever you're trying to do, to accelerate the pathway of net zero. Around the nation states, that's kind of what I'm talking about here, but also how it works across non-state actors as well. But essentially, from that point of view, it's a really good example that stewardship is so much more about forms of collaboration, which we're just starting to . . .

Vish Hindocha: Scratch the surface on, yeah.

Roger Urwin: Scratch the surface. Yeah.

Vish Hindocha: I'm just curious, for you personally, is there anything that you think of as a lesson learned in systems leadership that you are willing to share with the listeners so we can move up the learning curve alongside you?

Roger Urwin: I think it's partly a style of leadership and so, the examples are a little bit indistinct maybe, it just contributes something better. So when you are involved in change management, as I am, I mean basically all consulting is a form of change management. It's usually a bit small scale, but I have been involved in trying to influence organizations at the top level more significantly. And these projects come about really because organizations are facing tough challenges. It's difficult to . . . I mean clients, of course, have their reasons to want these conversations to be relatively private, but the one example of an organization which has great systems designed that I can refer to, because it's so public about everything it does, is New Zealand Super. And by the way, that was the client I was working on earlier this morning.

So, every five years New Zealand Super ask for an independent review of how it's doing and how it's set for the next five years. That's an independent review and that sounds good and that sounds rather private. No, it's not private, it's actually on their website. They publish it. It's completely a public report. That's why I can talk about it.

And what they're doing, of course, is sharing in their secret sauce, their special way of doing things, very well designed, very good governance place, and you're able to point that out and help other organizations. So at one level, I think of that as being their systems leadership. They have a very interesting set of leaders who've always thought about the bigger picture, as I see it. It's been around for 20 years, New Zealand Super, but throughout its journey, it's had very thoughtful leaders who've been into that style of leadership. So, I think the best example I have is of other people doing it well, but what I bring to that type of organization is a perspective about how to apply systems thinking to the future of the investment challenge that asset owners have.

And I'll give you two examples where systems thinking, I think, is going to play a big part in asset owners' futures. One is really how the challenge of complexity is weighing these organizations down. The balance between business as usual and business beyond usual has got out of kilter at most places because we're just spending so much complicated time executing on the business as usual and there's not that much time given over to the investment in the future. And that is a design feature that you can do something about. I mentioned, by the way, the organizational design of having Think Ahead Institute as a separate skunk works. That is design, because it's my job to think for part of the day and I haven't, at any point, given way to pressures to avoid that. So, that's a very interesting aspect, how organizations deal with that complexity challenge.

And by the way, technology could be one of those areas that might be a bit iffy with respect to complexity, but the opportunity is for technology to really play its part in simplifying these organizations to some extent. And the best example of that is what I call the data stack, the intelligence stack where we're overrun with data which AI could help to parse, P-A-R-S-E, and synthesize and summarize to the point where humans, who have these great judgment skills and have context and have great ethical skills as well, can take over, you see?

And so, they don't have to worry about what's taking place because the technology may be able to take care of a number of things themselves. So, I think again, that's an application. And when you work in my field, I think you're just struck by the opportunities to make those sorts of suggestions, but actually get the client involved in the co-creation, get them enthusiastic about what that might happen. So, it's that type of area that I think is really interesting when it comes to applying that type of systems thinking and systems leadership to our complicated challenges. Because one thing's for sure, these challenges are getting more difficult and we can't really solve them with the sort of thinking that we use to grade those problems. We need a fresh approach to find our way through.

Vish Hindocha: Love that. Thank you so much. So just there's a few things that I'm personally going to take away. So with some intentionality of looking at good examples, we can include the NZ Super disclosures that are public in the show notes for people to refer to. I think it's being and also designing in, to your point, and being intentional about carving out time to acknowledge the complexity that we face and giving yourself time to think through that and not necessarily crowding out your thinking time with all of the other demands and pressures that we have on us. But prioritizing the need to do that and think about that holistically even within the organization as well is a really, really interesting idea and one that, again, people have talked about or desired or wished for, but not really factored into the actual system itself.

So, Roger, thanks so much on that. Again, I know you are continuing to do this and publishing more work on systems thinking and we'll keep promoting that as best we can at MFS as well because, again, we've gained tremendously from our membership of the Think Ahead Institute. Roger, just before we finish, what is one message that you would want to leave with our listeners today?

Roger Urwin: The challenge that we face in the world is getting more difficult and I'm concerned. I have climate grief, I have a lot of worries about geopolitics. I have just worries about the shape of expectation that we've built up as a society. And we haven't really had enough regard to the boundaries of the planet and aspects about looking after the future, looking after future generations. Obviously, when you've got a lot of grandkids, that comes back to you all the time.

I think really the message is that we have to be looking out for people more and collaborating more as opposed to seeing success at a personal level, at an individual level. So, I think it's simply that major point that I'd love to think that the world will be able to collaborate more. And in my small contribution I can make in finance, a lot of the energy is going into how different parts of finance can collaborate to create better circumstances for the entire system essentially.

The world of alpha was around for a long time. We're now into a world where there's a degree to which it's really about building better beta as well. So alpha is fine and dandy, but building better beta has become more the way to do that. And I think the message in that area is, can we come together and collaborate more? And that's one of the reasons why this systems leadership thing is really important to me.

Vish Hindocha: That's great. What a perfect place to end it. Thank you, Roger, so much for your time. We really appreciate it.

Roger Urwin: Well, Vish, I really enjoyed the conversation with you, as ever, and you are a natural at this podcast thing, so well done.

Vish Hindocha: Thanks. Thank you.

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