Background
Paul was a senior manager in Visible, a long established firm of financial advisers which also offered investment management services and was seeking to position itself as a leading wealth manager. As a part of this plan, Paul was charged with reviewing all of the businesses, investment products and services offered by Visible with a view to introducing a new investment platform to provide a class leading proposition to its clients.
Paul identified a number of potential platform providers and after viewing the products of a number of IT firms and carrying out a competitive tender, the firm of Spectral, a long established IT provider, was chosen as being the most able to identify with Visible’s vision and provide what was envisaged.
Paul was very pleased that Spectral had been chosen and was confident that they would be able to deliver and good progress was made. Inevitably, a number of unforeseen difficulties arose, which resulted in some delay, added to which as the project progressed a number of additional features were required which further delayed the launch.
However the Visible platform was finally ready and launched to a largely positive reception from the investment community and customer response was very good. As a result of this experience, the Visible executive determined that their configuration of the Spectral platform represented a valuable asset that could be marketed to other users, provided they did not represent a direct threat to Visible.
Paul was again charged with managing this exercise because of his in-depth knowledge of what the Visible platform offered and the competitive advantages it was felt that it would bring to a user. Paul approached a number of suitable potential users of the platform and after discussions with a number of firms received a positive response from Grey Bank, a high profile name, but one who did not provide direct competition to Visible.
Following a period of intense testing Grey Bank determined that the Visible platform which had been specifically customised to meet their requirements was acceptable and Paul was waiting keenly for them to sign a formal agreement. This would be accompanied by a high profile launch, with considerable fanfare, and Paul was quietly pleased at the prospect which he felt could only be highly positive for his career aspirations.
However, this satisfaction was short lived because at an industry meeting shortly before the scheduled signing day he bumped into representatives of Spectral , who told him that on the back of their successful platform sale to Visible, Spectral had managed to conclude a very good deal with Indigo Bank.
Paul was somewhat taken aback on hearing this news, since Grey Bank and Indigo Bank were similar types of organisation and therefore would be appealing to the same types of customer. More significant was the fact that Visible had sold their platform to Grey Bank on the basis that it offered unique advantages.
The Dilemma
If Indigo could now offer a not dissimilar product, how might Grey Bank view their proposed agreement with Visible? Might they accuse Visible of misrepresentation, or more importantly for Paul, might Grey Bank decide not to sign the agreement, or at least to delay signing? Paul wondered whether he or Visible had actually done anything wrong and whether he should make Grey Bank aware of the fact that the platform that they were offering to their customers was based on a product from Spectral and that, inevitably, there would be some operational aspects that they both shared, albeit that they looked quite different.
Paul was very conscious of the importance that Hugo, his Director, attached to this project which would earn them both great credit if it went well, but Paul as the project leader would be the one in the spotlight if there were any problems. Consequently, before discussing the matter with Hugo, Paul examined Visible’s agreement with Spectral to see whether it contained any language that said or suggested that Spectral could not sell their platform to anyone else without Visible’s agreement and was concerned to note that it did not.
Options
Paul then considered the various options which he could recommend to Hugo as the best way to proceed, which he felt were:
- That Hugo should immediately contact his opposite number at Grey Bank and tell them what Paul had learnt, but seek to reassure them by pointing out that the Indigo Bank product would not contain any of the enhancements made by Visible, nor any of the Grey Bank customisation, leaving it to Grey Bank to decide whether to proceed.
- Visible should carry on as planned, without saying anything about the Spectral sale to Indigo, since the Grey Bank product was similar only under the skin and so no direct comparison could be made. If Grey Bank subsequently complained, and they might not, Visible could deal with that when it happened.
- Paul should immediately contact Grey Bank and without mentioning anything specific, encourage them to sign and launch their new platform as soon as possible, warning them that he had heard Indigo Bank was also about to launch a new platform which might steal Grey Bank’s thunder.
The verdict
The fairest and most transparent approach is for Visible to alert Grey Bank to Spectral’s sale of a platform to Indigo Bank, and leave the decision to Grey Bank. This should avoid any potential problems in the future
Further reading