Revenue Velocity and Its Impact on Corporate Strategy

Revenue Velocity and Its Impact on Corposatz StrategyRevenue Velocity and Its Impact on Corporate StrategySome securities brokerage firms, most notablyMerrill Lynch, have used revenue velocity for many decades asa key measure of profitability. In this formulation, velocity represents the return onclient assets. Originally, it wasproduction creditvelocity, or production credits divided by the client assets in custody (that is, on deposit) at the firm. Stated in another way, this version of velocity is the return on client assets enjoyed by the firm. As Applied at Merrill Lynch Velocitycalculations were made at the aggregate firm-wide level, for the entirebook of businessheld by a givenfinancial advisor, and for individual clients. Fluctuations in aggregate velocity were monitored very closely by the controllers organization and the management reporting systems, and forecasts of trends in velocity were critical inputs to predictive financial models and profit projections. As the fi rmsmanagement reportingand profitability analysis systems and methodologies evolved and became more sophisticated, more focus began to be placed on revenue velocity rather than production credit velocity. This became advisable as the firm imposed an increasing number of fees that did not generate production credits, and as executive management began to recognize that, in transactions where production credits were indeed awarded to the financial advisor, the actual ratio of production credits to underlying revenue could vary significantly by product. Velocity in Economics Velocity, as applied in securities brokerage firms, is an application of a concept in monetary economics called the velocity of money. This fundamental theorem posits that the total value of transactions in an economy equals the stock of money times its velocity or the rate at which it changes hands. The theorem is written in this form M x V P x Q Where M is the stock of money, V is the velocity of money, P is the average price per transaction and Q is the total quantity of transactions. The brokerage application can be written A x V R Where A is the value of client assets, V is the revenue velocity on those assets, and R is the total revenue earned. Impact on Corporate Strategy The upshot of the focus on the velocity at Merrill Lynch was the development of an asset gathering strategy, working on the theory that more client assets in custody would yield more revenue. Accordingly, the financial advisor compensation plan was adjusted, rewarding financial advisors for the collection of net new assets in their clients accounts. Additionally, studies by management science of revenue and profit velocity by client segment and by individual client led to yet more insights that challenged traditional marketing strategy. That is, it was found that velocity, however, measured, declined significantly as the assets of a client or client household rose. parte of this was the result of the discount s either negotiated by or automatically granted to high net worth clients. Partly this was the result of trading activity generally declining as a proportion of assets, as assets grew. In either case, significantly lower revenue and profit velocities among high net worth clients challenged the notion that gathering assets by courting them was a preferable strategy to accumulating the same amount of assets by seeking out larger numbers of smaller clients. Going the latter route would produce significantly higher velocities on the same aggregate amount of assets.

5 Ways to Keep the Job Search Blues at Bay

5 Ways to Keep the Job Search Blues at Bay5 Ways to Keep the Job Search Blues at BayDont let the long days slow your job search. Use these tips to stay focused.Are the job search blues getting you down? Youre not alone.According to Dr. Norman E. Rosenthal, MD, a clinical professor of psychiatry for Georgetown University Medical School and a medical director at the Capital Clinical Research Associates, six percent of U.S. adults suffer from seasonal affective disorder (SAD), a type of seasonal depression that saps your energy during the chose and winter months. An additional 14 percent are affected by a lesser form of these seasonal mood changes.Even if you arent diagnosed with these conditions, its easy to feel a little unmotivated on cold, dark, wintery days. Dont let these winter blues sabotage your career or job search. Here are five ways to stay motivated this season.Lighten upConsider investing in a light therapy box to combat the effects of SAD. These boxes simulate outdoor lig ht, which has been known to cause a chemical change in the brain and offset some of the SAD symptoms. Additionally, keep your workspace and home bright open the blinds on your windows. If possible, move your desk close to a window or skylight to give you maximum exposure to the natural light.Stay activeAs Tony Robbins would say, change your state, change your mind. Exercise is a great way to feel good and relieve stress. Discover which workouts you enjoy and will do regularly, and invest in a club membership, group classes, or an instructional DVD related to the activity. The extra endorphin release will naturally boost your mood. If that isnt enough motivation, enlist an exercise buddy to help you stay committed.Find your motivating toolEveryone is motived by something different, so its important to understand what motivates you, and use that to your advantage during the winter months. Do you appreciate recognition? Feel best when youve won something? Is innerhalb peace and stress release what you need? Think about what you personally strive for, and the situations that have made you feel good in the past. Incorporate activities into your routine that will help you attain these positive feelings.Set goals and milestonesIdentify one major goal to work towards during the winter season, such as advancing your career or switching jobs altogether. Create smaller, more digestible milestones and activities that you can track on a weekly basis. When you break your goal into more digestible tasks, youre less likely to become overwhelmed and give up.Reward yourselfTreat yourself as you meet each milestone. Your rewards can vary based on your progress. For example, you might start with something small like treating yourself to your favorite dessert or a celebratory drink with a close friend holding you to your goal, and then commit to rewarding yourself to a weekend getaway in a sunny, warm place once you meet your big goal. Not only will this keep you motivated, but t he nicer climate is sure to lift your spirits.

How to see the us in them

How to binnensee the us in themHow to see the us in themHospitals are supposed to nurse patients back to life.But most hospital rooms do the opposite. They are featureless, soulless white rooms lit by headache-inducing fluorescent lights.One healthcare organization set out to do something about this problem. They brought in the prestigious global plan firm IDEO to redesign the patient experience. The hospital executives were probably expecting IDEO to deliver a stylish PowerPoint presentation with creative new designs for the hospital rooms.Follow Ladders on FlipboardFollow Ladders magazines on Flipboard covering Happiness, Productivity, Job Satisfaction, Neuroscience, and moreInstead, what they got was a mind-numbing six-minute video clip. The video showed nothing but the ceiling of a hospital room. When you lie in a hospital bed all day, IDEOs Chief Creative Officer Paul Bennettexplained, all you do is look at the roof, and its a really shitty experience.What Bennett describes as a blinding glimpse of the bleeding obvious came after IDEO employees put themselves in a patients shoes. An IDEO designer checked into the hospital as a patient and lay in an actual patient bed for hours, getting wheeled around, staring at the ceiling tiles, and capturing the abysmal experience on a video camera. The six-minute clip of the dull tiles was a small glimpse of the overall patient journey- a mix of boredom and anxiety from feeling lost, uninformed, and out of control, as IDEOs CEO Tim Brownsaid.Six minutes of footage was sufficient for the hospital employees to spring into action. They decorated the ceilings, put up whiteboards for visitors to leave messages to the patients, and transformed the style and color of the patient rooms to make them more personal. They also put rear-view mirrors on hospital stretchers to allow patients to see and connect with the doctors and nurses wheeling them around. IDEOs presentation ultimately kickstarted a broader discussion to improve t he overall patient experience so that patients were treated less like objects to be positioned and allocated, and more like people in stress and pain, Brown explained.IDEOs approach to redesigning the patient journey carries important lessons for us all. Everything we observe in the world is through our own eyes. In our professional lives, we look at our products and services from our perspective- not the perspective of our customers. In our personal lives, we refuse to make eye contact with people of different persuasions- let alone see the world through their eyes. As a result, it becomes exceedingly difficult to see someone elses truth.The solution doesnt require a huge budget or enormous resources. You can follow IDEOs lead and proverbially become a patient for the day. If you work at a sportswear company, walk a mile in your competitors shoes and ask yourself why some might rightfully choose to wear them over your brand. If youre an airline executive, call the customer service line and endure the excruciating experience of pressing numerous buttons to escape the automated prompts, only to be rewarded by waiting on hold for 45 minutes. If you want to improve a piece of software, as IDEOs founder David Kelleyputs it, watch people using it and see when they grimace.I could go on. If youre a politician devising immigration policy, stay in a refugee camp overnight. If youre a policymaker working on disability rights, put yourself in a wheelchair for an entire day. If youre a Democrat, spend a weekend in Trump country (and vice versa), engage with the voters, and listen- reallylisten- with no agenda to persuade.When were busy creating PowerPoint decks and organizational charts, when were lost in focus groups and survey results, its easy to forget theres a human dimension to everything we do.Empathy doesnt require any grand gestures. All it takes is a desire to see the truth instead of the convenient and to feel what the other person feels for the briefest of mo ments.Inspiration My podcast interview withRob Walker, the author ofThe Art of Noticing 131 Ways to Spark Creativity, Find Inspiration, and Discover Joy in the Everyday.Ozan Varol is a rocket scientist turned law professor and bestselling author.Click hereto download a free copy of his e-book, The Contrarian Handbook 8 Principles for Innovating Your Thinking. Along with your free e-book, youll get the Weekly Contrarian - a newsletter that challenges conventional wisdom and changes the way we look at the world (plus access to exclusive content for subscribers only).This article originally appeared on Ozan Varol.You might also enjoyNew neuroscience reveals 4 rituals that will make you happyStrangers know your social class in the first seven words you say, study finds10 lessons from Benjamin Franklins daily schedule that will double your productivityThe worst mistakes you can make in an interview, according to 12 CEOs10 habits of mentally strong people