The grittier the banker, the better

You may have come across Angela Duckworth’s best-selling book Grit. In it, Duckworth discusses “grit” and how it impacts a child’s success in later life. Her TED Talk is worth watching if you want a CliffsNotes version.

After quitting McKinsey at age 27, Duckworth took to the classroom to teach 7th-grade math in New York City schools. During this time, she questioned why some students outperformed others, despite IQ scores that would suggest otherwise, and landed on the concept of grit; that perseverance, effort, and determination are a stronger indicator of career and academic success than any other factor.

I find this fascinating. And highly relevant to my personal background.

When I was at school, the prevailing mindset was that intelligence and skills were innate. What you were born with determined your trajectory in life. Fortunately, my teachers and mentors decided that I was strong in both academics and sports and so I benefited from being in an exalted position compared to my peers.

But, outperforming in high school is one thing, outperforming at university and then at work is quite another. As my environment become progressively more competitive, I became more “regular.” No longer a star student or athlete, but somewhere in the middle of the pack. I had moved down the bell curve.

This realization formed a decision point. I could either accept that this was my place and where I belonged (fixed mindset) or that this was just the beginning and I had to work hard to advance once again (growth mindset).

I went with the second option.

Not to put too fine a point on it, I worked my arse off to get back to the top of the bell curve. And part of this was relearning how to succeed. As advancement and all of its benefits had come so easily to me early in life, I had to figure out how to strive for success in new ways.

Duckworth uses Nietzsche to describe this:

“With everything perfect, we do not ask how it came to be. 
Instead, we rejoice in the present fact as though it came out of the ground by magic.

Our vanity, our self-love, promotes the cult of the genius. 
For if we think of a genius as something magical, we are not obliged to compare ourselves and find ourselves lacking.

No one can see in the work of the artist how it has become. 
That is its advantage, for wherever one can see the act of becoming one grows somewhat cool.”

Why does this matter in investment banking?

The model of achievement Duckworth put forth in Grit is highly relevant to the journey of an investment banker.

Or:

Imagine two different bankers: Levy and Audrey. Both join the bank at the same time and are equally talented, but Audrey applies twice as much effort as Levy.

Even though Levy and Audrey started out at the same point, Audrey is now outpacing Levy by 4×.

This happens in every investment banking analyst or associate class and as a result, bankers like Audrey who put in the additional effort get promoted first and achieve the most.

This breakeven relationship between Talent and Effort for a given level of achievement can be broken down as:

So as grit impacts outcome and plays a substantial role in the development of talent. What can be understood from this?

Recently, I wrote about the ratio of pitches to wins in investment banking (on average, less than 20%). The low win rate means that bankers must be able to bounce back quickly after a client rejection. And this requires grit.

Bankers have to apply a growth mindset—that is grit—to how they approach clients. The greater the client exposure, the greater the chance of proving trusted advisor status, and the greater the chance of success. And, as shown above, effort and success can snowball quickly.

When I was a product banker, there was a two-year period where every couple of months, a coverage banker I worked with would ask me to accompany him to visit a particular client. I was just one of many product bankers this coverage banker took with him to client meetings. By my estimates, at least once a week this banker was in his client’s office, all with nothing to show for it.

But the coverage banker knew that there was a huge deal in the works, and he was determined to be in front of the client providing valuable insights—reinforcing his “trusted advisor” status—as frequently as possible. For two years, he was told “not now” by the client. And, as you’ve probably guessed, one day this turned into “yes”, and the coverage banker got his long-awaited payday.

So, a little grit can go a long way and have tremendous career impact. A tool such as Pellucid magnifies what you can do with grit as by making pitchbook creation effortless, effort can be better applied elsewhere.

As with most concepts that can improve the learning experience, I’m always keen to see new research be applied to banker training and think the value to be gained from developing a growth mindset could be significant. I consciously made a decision to pursue the path that required more grit and can point to this as a contributing factor to my career achievements. And, if I had a little more training—or acknowledgment of the role of grit in my career—it would have been a smoother journey.

What are your thoughts on grit? How else could it impact investment banking and careers? Email me at adrian.s.crockett@gmail.com.