"Asset management is a craft industry and may always remain so. Its food chain is changing but predictions about consolidation are too simplistic. In manufacturing, consolidation is occurring in ownership, not activities: as size has proved an enemy of alpha, the craft end is being fragmented to create independent and multiple boutiques.

"Independent boutiques are owned by either their managers and staff or external shareholders. Each tends to have two clear entities: the mother ship and individual autonomous product groups with their own P&L; their own compensation structures - typically with low base pay and profit sharing. They buy overhead services from the mother ship when needed, while sharing profit with it. They target internal alignment by profit sharing; and external alignment by strong craft focus on client needs.

"In contrast, we are a multi-boutique firm with a similar model that targets economies of scope as well as scale. The former comes from six separate businesses that cover the whole waterfront of the main asset classes, with operational independence. Like shops within a shop, they increasingly share common platforms in research, distribution and administration, which are run from the centre to achieve scale. Those boutiques with a large institutional client base do their own distribution. Initially, the mother ship had a dual focus: asset gathering and global oversight. More recently, it has ventured into specialist services around asset allocation, risk management and multi-asset class products. It is also developing a multi-manager platform, involving alliances with best of breed external managers. There have been numerous teething problems in the transition to the multi-boutique model.

"Tensions have been inevitable in revenue sharing, capacity sharing and product development when products of one unit are sold by its peers elsewhere. Opportunistic rules of engagement have produced ambiguities to the extent that collegiality has only been there in name. Each boutique's relations with the centre have not been easy either: the entrepreneurial spirit of the one sits uncomfortably alongside the oversight responsibility of the other. Different regulatory regimes have created extra bureaucracy.

"Few senior executives at the centre or in the regions are experienced in running a global business. So, we have increased our spending on training on issues such as how to balance the inevitable contradictions in our matrix, how to rethink the mental boundaries of our businesses, and how to work as equals with people from other cultures.

"Our single biggest challenge is to manage the inevitable ambiguities in an operating model that is at once centralised and decentralised. Global success requires a high tolerance for ambiguity. It's a mindset issue."