From the Stanford Research Initiative on Long-Term Investing via SSRN, 19 Jan 2026:
The Asset Owner Gearbox: Why Investment Innovation Grinds and How to Make it Turn
Abstract
Asset owners, defined herein as pensions, sovereign wealth funds, endowments, and foundations, are facing transformative pressures as AI, automation, and other autonomous systems reshape market structure, investment access, information advantages, operating costs, and the distribution of economic rents. Yet most of these mission-driven institutions were not built for a world of rapid change. Many were optimized for defensibility and procedural prudence rather than adaptation, leaving them increasingly mis-specified for the opportunity set and risk environment ahead. This paper explains why innovation in asset ownership is both necessary and persistently slow. Drawing on five years of fieldwork (including 35 case studies with access to C-level leaders and more than 100 semi-structured interviews worldwide), we examine how innovation actually occurs inside asset owners and why it so often stalls. We introduce a "gearbox" model in which organizational identity drives asset allocation and, ultimately, implementation. When asset owners spin the allocation gear faster than organization and implementation can adapt, the gears grind: initiatives stall, learning is outsourced, and change becomes symbolic rather than durable. We conclude with a practical operating model for turning catalyst windows into durable innovation capabilities
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The first-named author of the paper, Dr. Ashby Monk, is both the Executive Director and the Research Director of the SLTI.
