The following post is courtesy of Diane Harrison who is principal and owner of Panegyric Marketing, a strategic marketing communications firm founded in 2002 specializing in alternative assets.
If you’re in the restaurant business, you know that nothing brings a boost of recognition and approval to your establishment more than the earning of a Michelin star, or two, or three. The criteria for earning such an award has remained unchanged since it was first established in 1936, and the desire to own such a distinction only grows as the restaurant world expands.
But receiving such an honor takes a lot of work and a standard of excellence that cannot decline. Once received, a business must continue to maintain this standard of excellence or risk losing its status. A simple look through AI at what it takes to earn a Michelin rating might pose similarities for an investment manager to consider to raise its stature within the investment community as well.
THE 5 EVALUATION FACTORS FOR EARNING A MICHELIN STAR
1. Quality of ingredients: Fresh, premium, and properly sourced produce and proteins.
Investment managers similarly need to identify, source, and select a portfolio of investments that suit their style and strategy to deliver premium product.
2. Mastery of flavor and cooking techniques: Precise execution and delicious flavor profiles.
Execution, including risk management and portfolio management, showcase the results of a manager’s abilities.
3. Personality of the chef: The cuisine must reflect a unique culinary vision or signature style.
Every investment manager who strives to grow the business ultimately needs to publicize their skills and personality to build their brand. Being a singular identity helps drive investors to the company and provides the top-down guidance for the rest of the company to follow.
4. Harmony of flavors: Well-balanced and cohesive dishes.
Having a well-constructed strategy and approach means investors have some expectation of how a manager will navigate the market dynamics going forward.
5. Consistency: The food must taste exactly as spectacular every single time an inspector dines, whether it is lunch, dinner, a Tuesday, or a Saturday.
While no manager can promise identical results, possessing a track record of consistency is one of the most valuable assets a manager can refer to when prospecting new investors.
Receiving a Michelin star is just that; no one can buy one or ask for one. A star is awarded through multiple anonymous insector visits over time, to assure that the above qualifying factors are met consistently. Much like investment management due diligence procedures, these inspectors file detailed reports to a committee, which meets to decide which establishments merit awards.
The process seems analogous to what it takes to be an excellent investment fund. If managers establish high standards, work religiously to achieve them, and grow intelligently with an eye always towards keeping the bar high, investors will be served a Michelin-quality experience.
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