Emotional reasoning is a major reason why most Investment Groups (IGs) fail to find value together and instead succumb to the emotions of the more arrogant members by taking scattered piecemeal investing activity in almost every sector of the economy.
During a recent members about Amalgamated Chama (read as “chama” of “chamas”) Limited (ACL), a brain child of the Kenya Association of Investment Groups (KAIG), Patrick Kariuki, the chairman KAIG and Mwai Kihiu, the chairman Amalgamated Chama Limited, discussed the five key bonds that have helped successful investment group members find value together. These are trust, commitment to goal, a strong vision, good governance structures and strong leadership.
By setting out a vision, mission and broad goals of the group, a strategic plan provides a unifying direction for the group effort, only awaiting effective leadership to walk the people into the new horizon. It reduces a member’s role to participants in the good ideas initiated and leave the day to day production to be driven by competent teams such as committees. For example, an investment committee will be responsible for identifying opportunities, presenting to the board fro approval and executing the investment process.
Group members come to play at the next level such as approval and funding, where they consider feasibility and therefore does not accommodate individual emotions resulting from either big egos or ignorance on the opportunity.
A strategic plan further provides a unifying direction to the subordinate investment policies and a foundation for the investing strategies that allocate members funds. In this way a trusting relationship is achieved when members see the results of their effort through competent handling of their investment actions.
Investing strategies seek to achieve what a member would not be able to achieve alone quickly in an environment that also caters for the member’s personal risk and return concerns. For example, a dividend policy emphasizing reinvesting cements along term view of member’s relationship.
By avoiding “group thinking”, members find value together through competent leadership. An effective leadership, and allocation of roles and responsibilities to achieve a strategic plan id the sure tool to remove the group thinking effect.
Patrick Wameyo, Financial Literacy Educator and Entrepreneurship Coach This email address is being protected from spambots. You need JavaScript enabled to view it.