The bands are reuniting but what's the formula for success?

The Sydney Opera House (albeit a photo), has been the backdrop of every presentation for a very well attended investor conference this week.

The stage below has featured a rotating group of CEOs talking strategy, numbers and some snazzy slides.

The Opera House Steps were partly obscured in the photo, but one can only assume the Event Planner had a vision, that presenters would feel as though they were performing in front of one Sydney’s best landmarks.

Outlooks have been mixed, but there is one theme that reminded me of a famous night on those opera house steps.

If you were born in the 90s, google Crowded House Farewell. Those who are older may recall when ~150k people gathered to say goodbye to one of the biggest Aussie/Kiwi rock bands of the time.

But it wasn’t the end, 11 years later Neil Finn and his band mates were back, with a new sound, but a request to play the old classics.

The opening presentation featured a fireside chat with two directors from a recently ASX listed US-based gaming company. The presenters were no strangers, having previously run another successful gaming business, that is now one of Australia’s Top 20 companies. They were back, refreshed with a plan to pay down debt, innovate and reclaim the lost share to their former employers.

Musical royalty such as Kiss, Guns & Roses, The Eagles & Fleetwood Mac, have all reunited after a hiatus for various reasons, and it appears Aussie corporates are getting the band back together in their droves.

Across the hall, we had another talented gold mining exec who had assembled a collection of operating mines and tenements with development upside, less than 3 years after he exited a gold behemoth that was created on the successful merger of his former company.

On the ASX right now there is no shortage of current examples from software tech to building materials.

From a board perspective, hiring a leader with a track record and credibility is a no-brainer. As an incoming leader, it’s surely about unfinished business or the desire for a new challenge, or perhaps they miss the spotlight.

For investors we need to make the call – will Act 2 be as good as Act 1?

The stats are actually in favour of the rookie. A Harvard study found that "among CEOs who headed two successive companies, 70% performed better the first time - and for more than 60%, their second companies failed to keep pace with the overall stock market".

So when the bands reunite what’s the formula for future success…

While hardly definitive, I came up with 4 ingredients:

1. incentives that better align with effort and ensure everyone makes a return
2. A hunger to complete unfinished business
3. An opportunity to learn from the mistakes of the past and rehash the strategies that brought success
4. A blank sheet of paper and the opportunity to design what great looks like

If the motivation is purely to top up the kitty, to maintain a rockstar lifestyle, it will most likely end badly.

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Eley Griffiths Emerging Companies Fund

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