To earn committee trust for a multi-year transformation, NYU's CIO began with a "plan of action on how to create a plan of action." This, followed by rapid wins like a new governance structure in three months, built the necessary confidence for larger strategic changes.
NYU's endowment secures access to competitive funds by being more than just capital. They act as a trusted advisor, becoming the manager's "first call" to pressure-test ideas or prepare for difficult client conversations, thereby adding tangible strategic value.
Instead of seeking board approval at the end, NYU's investment team presents a long list of potential managers at the start of their process. This allows the committee to contribute connections, references, and concerns early on, making their input more strategic and helpful.
NYU’s CIO restructured governance by having the investment committee focus on strategic oversight and risk, while delegating manager selection to the internal team. A 3% portfolio allocation threshold determines when a manager decision requires committee buy-in, ensuring efficiency and proper focus.
When rapidly building her team at NYU with hires from diverse backgrounds, the CIO prioritized a shared value of continuous improvement. This fostered an open, learning-oriented mindset, allowing the new team to build its own process rather than clashing over their previous firms' methods.
NYU's CIO uses historical data not to make decisions, but to interrogate a manager's future plans. This process reveals how the track record supports or contradicts their stated vision, leading to a deeper understanding of their investment philosophy and forward-looking strategy.
NYU's CIO credits her start at Goldman Sachs during the 2008 crisis for her rigorous approach to risk management. The key lesson: you don't have to like the worst-case scenario, but you must have a plan for it and communicate it clearly to stakeholders.
As Partners Capital grew from $6B to $30B, they found their best existing managers were closed to new capital. To maintain returns, they had to develop a new capability: underwriting emerging managers, which required a dedicated physical presence to build relationships with this new talent pool.
A good decision can still have a bad outcome. The key is to focus on a strong process for the decision itself. Afterward, all energy should shift from relitigating the choice to proactively managing the new circumstances to create the best possible outcome.