Memoirs of a turnaround artist

The author of the book under review was the chief executive officer (CEO) of Nasdaq from 2003 to 2016. When he took over the reins, the business was caught in a deathly tailspin. Robert Greifeld chronicles how he first stabilised Nasdaq and then over time built it into one of the world’s preeminent stock exchanges, leaving its more storied rival, the New York Stock Exchange, in its slipstream.
 
In 2003, Nasdaq was in deep trouble and Mr Greifeld often wondered if he had taken on a hopeless assignment. Very few new tech companies were listing on exchanges in the aftermath of the dotcom bust. Transaction volumes had also plummeted. But the most serious threat arose from the fact that Nasdaq faced technological obsolescence.

 
In those days, customers could watch the buy and sell quotes of stocks on a computer screen. But to place orders they had to pick up a phone and call a Nasdaq dealer. The process was tedious and time-consuming. Prices would often have moved by the time a trade was executed, causing losses to traders.
 

The threat to Nasdaq came from start-ups called Electronic Communications Networks (ECNs), which were providing an alternative virtual platform for stock trading. On the ECNs, the customer did not have to call up a dealer. Order matching and execution occurred electronically. Mr Greifeld had won his spurs as the co-founder of an ECN called ASC, which he subsequently sold to a company called SunGard. It was his experience in creating this ECN that made him a prized catch for the Nasdaq board.

 
On the people’s front, Nasdaq was bureaucratic and slow-moving. Even before he joined, Mr Greifeld carried out an evaluation of its manpower. He hunted high and low within Nasdaq for people who would fit into his vision of the organisation, and placed them in key positions. He also laid off hundreds who he felt were not suited for the new, more driven and fast-paced culture that he planned to usher in. Only for positions he could not fill with insiders did he turn to outsiders. Readers will find many insights in the chapter called “People first” on how a leader should go about putting an appropriate team in place. 

 
A CEO who is trying to engineer a turnaround has limited time and resources. He must possess the ability to triage, or determine which businesses and tasks need to be accorded higher priority. If he spends time on non-essential matters, he could win numerous battles and yet end up losing the war. Nasdaq’s core business was transactions (exchanges earn a small commission on every transaction). Its dealer-based system had become obsolete. Mr Greifeld had two choices: He could develop either in-house the software for automating order matching and execution, or he could purchase it from outside. The former route is usually more cost-effective but slow. In a rapidly-evolving business, where time is of the essence, it is sometimes wiser to buy a company that possesses the much-needed technology. Though doing so requires paying a premium, it is justified when survival is at stake. What you also get by adopting this route is a proven winner that has bested several rivals.

 
Mr Greifeld used Nasdaq’s cash hoard, and even took a loan, to buy an ECN called Instinet. By acquiring and further building upon it, he was able to transform Nasdaq from a technological laggard into a leader.
 
The first part of the book is a veritable manual on how to turn around a moribund, bureaucratic, and technologically obsolete organisation. In the latter half, Mr Greifeld writes about the multiple acquisitions he undertook. This part contains insights on why international takeovers have become imperative, the pressures one faces as a negotiator, and why some succeed while others fail.
 

Grace under pressure is an essential quality in a leader. In 2012, Facebook chose to list on Nasdaq. Unfortunately, high trading volumes on listing day caused Nasdaq’s systems to falter. It was the worst fiasco of Mr Greifeld’s career for which he was roundly criticised, even lampooned, in the media. He explains in a calm and sober tone why the failure occurred, how he dealt with the barrage of criticism, and the steps he took to make Nasdaq’s systems more fool proof.
 
Most people learn from their mistakes and try not to repeat them. But the really smart ones learn from the experiences of others. Reading books such as this one may not turn you into a management wizard overnight, but they definitely have the power to shape your instincts. When faced with challenges in her own career, the reader will be better equipped to come up with appropriate responses. This book should surely find a place on the shelf of anyone keen to augment her leadership skills.

 
Market mover: Lessons from a decade of change at Nasdaq

Author:  Robert Greifeld

Publisher:Nicholas Brealey Publishing

Price: Rs 599