Synopses & Reviews
The world of modern finance presents a landscape of significant uncertainty, but also of rapid innovation and opportunity. Once-comfortable financial business face increased competition and lower profit margins. Time-tested investment and business strategies are being threatened by disruptive technologies and globalization. “Once-in-a-lifetime” financial crises seem to be occurring with an alarming regularity. More than ever before, success rests on the ability to make sense of the profound changes, link up seemingly unrelated phenomena, and understand the global forces at play. In
Financial Darwinism, author Leo Tilman analyzes the tectonic financial shift that has taken place over the past quarter century and then comprehensively explores the challenges facing financial institutions—as well as the entire universe of their potential responses.
Financial Darwinism explores why and how financial firms must continuously evolve amidst genuine complexity and uncertainty in order to survive and remain competitive. It analyzes the strategic, investment, regulatory, and public policy implications of a “future that has already happened” and identifies actionable ways of putting new ideas into practice in risk-focused manner.
This book starts by introducing Dynamic Finance—and evolutionary thesis about the origins, the drivers, and the implications of the ongoing financial revolution. After examining how financial institutions used to create economic value in the past, Tilman offers a concise new risk-based approach to thinking about economic performance. He then develops a practical decision-making framework he calls Financial Darwinism that is designed to help financial institutions navigate the dynamic new world. Financial Darwinism—a blend of business strategy, corporate finance, investment analysis, and risk management—gives financial executives and investors a menu of broad choices on how to create economic value. In the process, a new kind of strategic vision, the breadth of global perspective, and command of advanced financial tools are shown to be essential ingredients of success.
This book is about change, and change is always difficult, indeed wrenching—institutions must be redesigned, outdated paradigms discarded, and corporate cultures redefined. However, the alternative—the Darwinian failure to evolve—is far more painful, particularly when capital markets, clients, and competitors beat you to the punch and make difficult choices for you. Financial Darwinism is an invaluable road map to the new financial order and an essential guide to adapting and succeeding in it.
For more information, visit www.FinancialDarwinism.com
Synopsis
In Financial Darwinism, author Leo Tilman lays the groundwork for understanding the new financial order by introducing his evolutionary thesis and then outlines an actionable decision-making framework that enables financial institutions and investors to fully leverage the power of business strategy, corporate finance, investment analysis, and risk management. Financial Darwinism is an invaluable road map to today's financial world and an essential guide to surviving and thriving during these challenging times.
Synopsis
Praise for Financial Darwinism"The best business management tool is common sense. While such a timeless truth remains indispensable, it takes new thinking to navigate the astonishingly complex and rapidly changing world of finance. Over the years, I have personally witnessed leading organizations' reliance on Leo Tilman's advice and insights to deliver consistent profits and manage risk. I hope the readers of this smart, original, and practical book will benefit in kind."
–Alan C. "Ace" Greenberg, Vice Chairman Emeritus, J.P. Morgan
"Responding to earnings pressures with outdated concepts and tools or, worse yet, blind risk-taking has an unhappy ending in every case. Get your organization's costs under control and staff it with highly competent professionals. Then use Financial Darwinism to prosper in the world of globalization and deregulation."
–Jamie B. Stewart Jr., President and CEO, The Federal Farm Credit Banks Funding Corporation Past Acting President and COO, The Federal Reserve Bank of New York
"A masterful treatise on piloting complex financial institutions through the newer and tougher challenges imposed on them by the evolving marketplace. Tilman presents a unified conceptual framework that not only resonates with one's intuition, but also offers specific structural approaches to the decisions made by financial executives. This book is a must for anyone interested in improved strategies for risk management and economic performance."
–Dr. Darrell Duffie, Dean Witter Distinguished Professor of Finance, The Graduate School of Business, Stanford University
"Tilman has distilled the larger pattern from the seemingly endless reorganizations of financial institutions, some strategic and others quite foolish. Financial Darwinism articulates a framework for understanding and, for financial executives and practitioners, initiating strategic choices."
–Dr. Bennett W. Golub, Vice Chairman, BlackRock, Inc.
"Financial Darwinism explains the tectonic shifts now underway in the investment world far better than any book I have seen to date. Those who are interested in really understanding how financial markets have dramatically changed in the past few years—and how they are likely to change again in the next few years—would do well to read and absorb this important work by Leo Tilman."
–David M. Rubenstein, Cofounder and Managing Director, The Carlyle Group
About the Author
"As the world places increasing emphasis on fair valuation, risk-based financial disclosure and risk-focused regulation, Tilman's guide becomes more important for CEOs, directors and fiduciaries who must build risk evaluation into all fundamental decisions." (
Corporate Governance)
“While Tilman's thesis is directed to financial firms, the concept applies to all businesses. Failure to adopt a risk management strategic planning model will lead to extinction, hence the "Darwinism" in the title. Summing Up: Recommended.” (Choice, April 2009)
"...Tilman couldn't have chosen a better time...clearly written and with plenty of rational advice for financial institutions" (City A.M., December 11th 2008)
"One of the book's merits is that he offers tables that provide taxonomies of business model transformation." (Financial World, February 2009)
"This book is highly recommended for finance professional sat all levels of an organization as well as investors desiring insights into how firms can weather the "tectonic shift" in the financial landscape. The terminology and models used should be within the grasp of anyone who has taken an undergraduate course in finance." (Journal of Corporate Finance and Accounting)
“[Tilman] sees much to be learned from the collective blindness that led to the economic meltdown. … says the first steps to recovery are humility and innovation” (Alpha magazine)
"This book offers a deeply thoughtful and well-reasoned analysis of what has gone wrong and the outlines of an eventual road to recovery." (Financial Executive International)
Table of Contents
Foreword.
Preface.
Acknowledgments.
Chapter 1: Understanding and Navigating the Financial Revolution.
Introduction: The Need for Transformational Thinking.
From George Bailey to the Golden Age.
Accounting for Profits the Old Fashioned Way.
The “Great Moderation” As An Evolutionary Catalyst.
Economic Performance in the Dynamic New World.
Pressures on Static Business Models.
Dynamic Finance Perspective on Financial Crises.
Pillars of Strategic Decision Making.
Value Creation Through Dynamism and Business Model Transformations.
Beyond the Façade: The Importance of Risk-Based Transparency.
Chapter 2: The Old Regime and its Demise.
Economic Performance and Viability of Financial Institutions.
Static Business Models.
Dominant Forces: The Future That Has Already Happened.
Pressures on Static Business Models.
Chapter 3: The Dynamic New World.
Risk-Based Economic Performance.
Balance Sheet Arbitrage
Principal Investments.
Systematic Risk Exposures.
Fees and Expenses.
Capital Structure Optimization.
Economic Performance Attribution.
Chapter 4: Business Model Transformations.
Pillars of Strategic Decisions in a Dynamic World.
Responsive Recalibrations of Business Models.
Full-Scale Business Model Transformations.
Making the Strategic Vision a Reality.
Chapter 5: The Road to Financial Darwinism.
Real-World Business Model Transformations.
Stakeholder Communication & Equity Valuation in a Dynamic World.
Economic Value Creation (and Destruction) by Non-Financial Corporations.
The Infamous “Carry Trade” and the Old Ways of Thinking.
A Dynamic Finance Perspective on Modern Financial Crises.
Beyond the Façade: The Need for Risk-Based Transparency.
Conclusion.
Epilogue: Financial Darwinism and the Crisis of 2007-2008.
Appendix A: The Risk-Based Economic Performance Equation.
Appendix B: A Case Study in Dynamic Finance.
Notes.
References.
About the Author.
Index.