Comments

Earlier this week, I caught the commentators on CNBC talking about Elizabeth Warren (Harvard Professor, head of the TARP Oversight Panel, consumer advocate on banking). The comments all were of the ilk that there is nothing positive about a consumer advocate running a bank. The one comment that summed it up was that a consumer advocate was someone who hated banks.

Oh my gosh, NO!! I literally jumped out of the chair at the TV. It must be that "ripping the face off your customer" is their definition of banking.

Whatever happened to the idea of a business leader liking their customers and being in business because they are acting in the customers' best interest?

In the 1980s the Smithsonian magazine ran an article about an Italian financial instituion. It was a contemporary of the Medici Bank in the 15th century of Italy. The Medicis did not survive a second century but this smaller institution, serving the local population, doing nothing fancy, reinvesting its profits (50% into art, 50% into the business) was still alive and well with a stunning art collection.

A number of people have commented in the press on the greed factor for bankers. The latest that I have seen is in the _New York Magazine's article "The Wail of the 1%": ""'People go to Wall Street out of greed... When I was interviewing for jobs... the question came up: "How much money do you want to make?"... if my answer was "I'm here for intellectual betterment, their response might have been, "University is a great place for you."'"

There is no sense of the inherent value of banking, no sense of creating an institution with its quiet but well-serving place in history.

This struck a bell. In my college years, as I was looking at banking for a career, a friend told me it was not a good fit as I did not change for money. Recently, I have been labelled as someone who would have stood against a lot of the reasons for the current financial malaise.

I have significant concerns about the entire idea of paying for performance. Last week, a CFO of a financial institution said that he thinks that underpaying people and having bonuses for performance measured in gross terms and paid in that year is best, without regard for firm or division profitability. Ever since Michael Lewis's Liars' Poker I have been aware of that folly.

I would like to suggest that paying a leader all he is worth is a sign of bad leadership.

First, s/he is being paid for the performance of the entire organization and it is the entire organization that made the performance. S/he is being paid for the work of others.

Second, in itself, it is bad leadership.

Third, I love metrics. However, this "align personal greed with (allegedly) firm's interest" position makes the metrics king and leadership is a poor third cousin four times removed. Paying for performance destroys leadership. Steve Jobs does what he does because he has to.

I have always envisioned paying a flat reward structure across the team. This started with the realization that a CEO should pay their secretary (combination of the perfect British private secretary and the American corporate secretary) just as much as he pays himself and his "no" man, his consigliere.

(Aside: Does anyone know of a term for consigliere that does not have crime associated with it? I am looking for a term for an insightful, wise, blunt-to-chief, no concern for own advancement, advisor.)

Paying for performance according to convulted metrics creates a false god. Boards use it as a way to avoid answer the much harder much more nebulous questions: Is s/he the leader of us? Is s/he the best leader for us? Wills/he serve the organization and its stakeholders (not just shareholders) well?

Harder? Yes. Much more important? Absolutely!

Tom Peter's Mittelsand corporations have a much deeper in-the-gut idea of long-term value, building the strength of the company and builing up the customer by producing tremendous value. Overpaying the CEO of such an organization so s/he can stand head and shoulders separate from the rest of the organization serves only that person's ego.

Posted by Stephen Garner at April 24, 2009 10:00 AM

Okay Tom, there's your distilled credo at last:

"It's ALL about people, dammit"

Posted by RobCH at April 24, 2009 10:08 AM

Justifying the model, one of the students is quoted as saying: “You could design experiments to test the relative virtues of telephone, internet and branch visits... How could you incentivise people to bank online rather than in a branch?"

Err... doesn't this rather work from the assumption that people want online banking and not branch facilities? Shouldn't you actually work from the basis, "What do customers want and how can we effectively deliver it?"

I think the course could probably be taught in one seminar, entitled (as - in fairness - Prof. Levitt is very keen to stress): Do Not Confuse Correlation With Causality. Ever.

Posted by Mark JF at April 24, 2009 10:09 AM

We have a programme called "Question Time" in the UK where politicians and commentators take questions from the public. Here's an absolutely brilliant question from 23 April positing a potential return to good old fashioned values:

http://news.bbc.co.uk/2/hi/programmes/question_time/8016379.stm

Posted by Mark JF at April 24, 2009 10:16 AM

The idea of history helped gel an idea...

There is a lot of talk about updating the financial regulations for the 21st century. While there is some merit in some aspects of that, I believe that a source of the current problems in the financial arena is that we forgot the lessons of the past.

I think a lot of the current classes of bankers (over the past thirty years) did not have enough grounding in history and that is a source of the current issues. The financial industy often eats its young and therefore does not have enough wise old men.

Then I come up with the idea that Tom Peters the history fiend is the real reason why Tom Peters the business fiend is so often on the mark.

What say thee?

Posted by Stephen Garner at April 24, 2009 10:37 AM

The difficulty of this approach is not in deciding whether to put people first, but how to do so when different people have justifiably competing expectations of being placed first. Imagine a case where you want to celebrate the failure of a subordinate who just missed knocking one over the fence. At the same time, your customer is outraged over the delay this will cause and is demanding satisfaction/meaningful apologies. Your boss needs to be mollified, of course, because a similar situation happened just last month with a different subordinate. Throw in as many stakeholders you need to fill out the picture, and the point becomes clear. The right answer is to find the proper balance to put all of these people as "first" as you can under the circumstances. Right vs. Wrong dilemmas are the easy ones--it's making the correct decisions when faced with a Right vs. Right vs. Right etc. choice that matters most.

Posted by Cole Coconino II at April 24, 2009 2:04 PM

"Earlier this week, I caught the commentators on CNBC talking about Elizabeth Warren (Harvard Professor, head of the TARP Oversight Panel, consumer advocate on banking). The comments all were of the ilk that there is nothing positive about a consumer advocate running a bank. The one comment that summed it up was that a consumer advocate was someone who hated banks.

Oh my gosh, NO!! I literally jumped out of the chair at the TV. It must be that "ripping the face off your customer" is their definition of banking."

This is wonderful in a macabre/"Stephen-King-on-Business Strategy" way--I shal use it (with attribution). Thanks!!

Posted by tom peters at April 24, 2009 3:17 PM

Bravo for people and for excellence. YOu are right now - you should send us an article about your new business card :) nancy at leadership excellence

Posted by nancyjo at April 24, 2009 3:44 PM

Albert Einstein:

"We can't solve problems by using the same kind of thinking we used when we created them."

Business needs a new everything it seems.

Appreciate the TP rhetoric here since quite often I totally disagree with the flow/focus & threads that develop.

Earlier though on the label of an editor as an "idiot" - totally agree with that - because there are those who behave as such.

Relating to people 1st, 2nd, 3rd ...

2 days ago I saw a fire from my office window. Last night I was reading the local paper online & glanced at the fire article - Joyce - State Patrol - Sunset Highway - fatality: those terms jumped out ... I said "Cheryl - oh no!" to my partner.

I had met Joyce one time only in a supermarket 2 summers ago - damn I wish my memory was less sharp at times - she said she worked for the State Patrol & lived on Sunset Highway. Her husband died of smoke inhalation - a youngish 64 - it put him to sleep so he did not suffer.

It is about people in a loving way - this Earthly endeavor does not last very long & can end in an instant.

Posted by C Love at April 24, 2009 7:19 PM

TP - This is a most excellent post! It's brilliantly written and, oh so, relevant. Thank you much.

"Whoever tries the most stuff and screws the most stuff up and most rapidly launches the next try wins. Failures are not to be 'tolerated,' they are to be celebrated."

"He who tries the most stuff wins. Failures are not to be tolerated, they are to be celebrated."

These quotes remind me of my life since the age of ten. I have had quite a few failures since since this age, yet I never tire from trying yet again and again. (I have also had sweet some successes.) This was a heartbreak: Fifteen years ago I wrote a 400-page novel and after being rejected countless of times by literary agents and publishers who did not accept unsolicited manuscripts, I put it aside.

In the meantime I edited three books, one on philosophy (an international best seller on Camus and Sartre) one on business, and one on spirituality/self help. I also served as a ghost writer on yet another. I failed as a published author, but I kept going. Recently, I came up with another book idea and emailed a friend.

"I got a good idea for a book."
"You have a GREAT idea for a book. Do you need an agent?"
"Yes!"
"I'm ccing my wonderful agent and friend."

WHATEVER you do keep keepin' on, even in heartbreak! I’ve been there more times than not.

This morning I received an email from one of the greatest agents arguably today after having been introduced by this icon in the media industry. The times of failure forever sharpen me. The key is never giving up, even if you have to set one project aside momentarily. I have also been a serial entrepreneur; some ventures have fizzled out. But my consulting has been ongoing for many years, sometimes slower than others--but constant. Being an entrepreneur always puts me in a place of sweet insecurity. But I would have it no other way. My attitude dictates my life, not to mention my values soundly taught by my mother.

I love your new calling card,TP. It says it all. It’s everything that needs to be said. How we go about doing what is necessary to put people first is the quintessential golden rule: "Do unto others as you would have them do unto you." I love the repetition here too. What else is there to say--really? People are the essence of business and how we treat them, employees and customers, matters most.

"Business doesn't need a new framework.
Business needs a new attitude."

This is a great statement. Isn't this always the case for stagnation when the foundation is solid? The basis of capitalism, as one that ensures entrepreneurship, in essence a since of freedom, is assured. This is a good foundation. People first, along with regulations, as the golden rule often needs support, says it all.

Thanks again, TP! The post is much appreciated.

Posted by Judith Ellis at April 24, 2009 8:03 PM

My Old Aunt is not Quarter back for the Dallas Cowboys! But I do believe that we need new models for leadership of people who are struggling to keep up with our times.

People today are basically the same as always but the technology is different. That's what makes the challenges of leadership so different today versus 1950s, 60s,70s, 80s, etc. We need new frameworks for action or models for our leaders now as much as we ever have in the near or distant past.

Perhaps there is no more compelling example of the need for new models of leadership than Barack Obama. Senator Obama crafted a new model, framework for action, or leadership mould before he ran for the White House.

Call it what you will but the essence of Barack Obama the candidate was drawn out in stark contrast to his rivals by the fact that he embraced the challenges that new technologies pose for his constituents and the world. Barack Obama is a man focus on "people first" but he also understands that in order to put "people first" a leader has to deal with the challenges of this digital technology revolution.

I contend that BARACK OBAMA did bring his OLD AUNT to play Quarterback and what's more he won the game!

Senator Barack Obama was totally unlike past candidates. Why?

No one can be absolutely sure exactly why but here are eight simple suggestions:

1) He presented a relevant and a remarkable message - 'Change we can believe in'.

2) He found the key to new age politics - it is about ideas not experience.

3) He raised money online from the masses not from the usual power players in politics - it is about inclusion not exclusion.

4) He is a preacher not a doer - it is about inspiration not perspiration.

5) He had a message based on faith in a world of doom and gloom - it is about what you think can be done not what is currently being done.

6) He talks about his faults and weaknesses because he knows himself well - it is about transparency in thought and action not image.

7) He has tapped into the conversations of his electorate - it is about what people aspire to be not what they are told they are.

8) He offered electors a new sense of hope - it is a time for new beginnings not a time to refine old continuities.

Cheers, Richard.

Posted by Richard Lipscombe at April 24, 2009 8:06 PM

"Appreciate the TP rhetoric here since quite often I totally disagree with the flow/focus & threads that develop."

I'm sure TP is so happy to hear this, especially since he who has written these words often does not the wherewithal or ability to re-direct "the flow/focus & threads that develop." (He also most certainly is not as the one whose name bears this site.) In keeping with the football analogy, sideline quarterbacking, in essence with quips of this or that, is so very easy to do.

I do, though, like the story above; good on you C.

Posted by Judith Ellis at April 24, 2009 8:16 PM

"The Un-revolutionary"

I think many folks need a reason to change. A motivation to change. It seems to work well with something that is seen as the latest and greater revolutionary new idea that everyone else who appears successful seems to be using or at least talking about.

However, the underlying fundamentals are inevitably the same primarily I believe because in the end it is all about people interacting with people. And as someone already said, people have not really changed all that much as to their basic motivations.

Sometimes I have to sell blue sky to get things going, but I know it is doing the basics, and doing them well, that will ultimately make a huge difference. This can also be the difference between surviving or not if the "new thing" does not work out as expected.

Posted by Bruce Benson at April 25, 2009 12:09 AM

Tom, the Financial Times article you cited - "Business Needs to Speak Out Against Greed" - is a keeper. I've never been crazy about the term "greed" because it's so slippery that people can avoid identifying with it. (It's always OTHERS who are greedy.) But I love the conclusions of the piece: "It should outrage patriotic chief executives who know that a reckoning looms if ordinary people come to believe that US capitalism is a rigged system run by insiders for their own benefit...Chief executives face a choice. They can help bolster workers’ security, or they can hire more security guards and hunker down."

Posted by John O'Leary at April 25, 2009 9:35 PM

The fact that business leaders have changed management by WANDERING around to management by WALKING around has been a subtle change with less than subtle consequences.

Walking around doesn't sound as aimless as wandering around and business people - and here lies the problem - do not like aimless.

They like to walk around and get the answers they are looking for to the problem they are trying to solve. Not just wander around stumbling upon problems they didn't know existed with answers they don't know where to find.

Even worst, in time, walking around became the open door policy - you do the walking I ll just sit there and be "available".

Wandering around being prepared to be surprised was a gift that didn't sound scientific enough for the B schools eager for answers rather than asking the right questions.

Thank you for introducing the idea and continuing to promote it

Posted by emmanuel gobillot at April 26, 2009 4:16 AM

John brings up an interesting point about greed and the power of CEOs. He also addresses an important issue about personal responsibility and patriotism. I have been reading a great book, Morgan: American Financier by Jean Strouse. All of the reading that I have done on J.P. Morgan before betrayed him as a rather ruthless greedy power possessed banker. But while reading those accounts I always wondered about the other side of his story. After all, he seems to have single-handedly built industrial America and changed the global financial power structure from London to New York a century ago. He was also a great financier of Thomas Edison and a great private art collector and president of the Metropolitan Museum. He also financed excavations in Egypt.

As a banker, some thought that his power was too centralized—namely in him-- and the many stories told about him, as he did not often speak of himself, were not accurate. The difference between J.P Morgan and the current CEO is that he really seemed to really have a love for his country; his work wasn't merely about money and power alone. "Though cast as the high priest of modern capitalism, Morgan did not really believe in free markets," Strouse writes. "All of his adult life he tried to stabilize the emerging U.S. economy, TO DISCIPLINE SPECULATIVE PROFITEERS AND BRING THE MARKET DESTRUCITVE FORCES UNDER CONTROL."

Morgan was accused of precipitating the crash of 1901 and announcing that "I owe the public nothing." But Strouse tells another story. She writes that this line is "largely fiction" and that what ensued was not as the story reveals. In a hostile attempt to take over a railroad that Morgan controlled some of his rivals "secretly" bought stock in Northern Pacific while he was abroad. His partners were then instructed by Morgan to buy the stock left. This caused speculators to short the market to make a killing as the prices came down. But the prices never came down because no one was selling. NP prices rose astronomically from "$146 to $1,000 a share;" speculators dumped their other stocks in order to raise money to meet these prices. Stouse writes that this brought on the crash of 1901.

BUT Morgan does something quite responsible. "Morgan knowing that the crisis could ruin thousands of people and unhinge the U.S. economy, arranged by cable for his partners and raiders to postpone receipt of stock they had bought, and to sell enough shares of $150 to allow the shorts to cover. He then went to London and stopped a nascent panic there by offering roughly the same terms-not the actions of a man who thinks he owes the public nothing."

The problem today seems to be that CEOs and the like on Wall Street like to play the game but do not wish to be personally responsible for their actions; they also seem to have no core sense of ethics. They seem not to sincerely care about the public and their VAR models are detrimental to our financial system itself. The banks are now posting profits based on these models and guess what? WE WILL PROBABLY BE RIGHT BACK HERE AGAIN, AS THERE HAS BEEN NO CHANGE TO THE SYSTEM ITSELF. Hell, I could probably make a profit if given billions upon billions too. But guess what? As a person who wins the lottery, I'll probably need another bailout too. Even Morgan, thought of as "the high priest of modern capitalism," would not believe in such speculative models. Morgan seems like a conservative banker.

Posted by Judith Ellis at April 26, 2009 8:01 AM

"Man who stand on mountain with mouth open wait long time for roast turkey to fly in." -- Native American proverb (supposedly.)

While that may be true, if he ain't even standing on the mountain, he'll also miss the duck, and the goose, and...

Thanks, Emmanuel. You raised some very good points.

Posted by Dan Gunter at April 27, 2009 2:04 PM

From the beginning I've been rather annoyed with both Geithner and Summers and have written publicly of them on The Huffington Post and my blog. But after reading the New York Times article on Geithner over the weekend, my annoyance was greatly increased. The Treasury Department or the Federal Reserve of New York should not be a club.

Jo Becker and Gretchen Morgenson writes:

"An examination of Mr. Geithner’s five years as president of the New York Fed, an era of unbridled and ultimately disastrous risk-taking by the financial industry, shows that he forged unusually close relationships with executives of Wall Street’s giant financial institutions.

"His actions, as a regulator and later a bailout king, often aligned with the industry’s interests and desires, according to interviews with financiers, regulators and analysts and a review of Federal Reserve records."

Read the whole article here:

http://www.nytimes.com/2009/04/27/business/27geithner.html?_r=1&hp

So, tell me, how can Geithner be trusted with the public's interest? I was rather shocked when he was confirmed after it became known that he did not pay his taxes. But I should not have been. Members of Congress, both democrats and republicans, are financed by Wall Street banks. REALLY, SOMETHING HAS TO BE DONE TO PROTECT THE INTEREST OF THE PEOPLE!

Posted by Judith Ellis at April 27, 2009 2:48 PM

Also...this is a model-led fiasco AND a different model is needed.

Posted by Judith Ellis at April 27, 2009 2:50 PM

The New York Times' Paul Krugman adds his thoughts on pay/greed in the American financial arena at http://www.nytimes.com/2009/04/27/opinion/27krugman.html.

Posted by Stephen Garner at April 28, 2009 8:23 AM

Stephen - Can you re-post the link? The page seems not to be found. Thanks.

Posted by Judith Ellis at April 28, 2009 10:31 AM

One more try: the period at the end of the sentence above became part of the link. I am hoping this works...

http://www.nytimes.com/2009/04/27/opinion/27krugman.html

Posted by Stephen Garner at April 28, 2009 12:35 PM

Got it! Thanks!

Posted by Judith Ellis at April 28, 2009 12:41 PM

THIS IS JUST OUTRAGEOUS! PLAIN AND SIMPLE! THE FACT THAT THE ADMINISTRATION KEEPS ON WITH THIS OUTRAGEOUS PLAN IS MADDENING! THERE IS SIMPLY NO WAY TO DENY THE CLAIMS IN THIS PIECE. (AND, I AM NOT ALWAYS A HUGE FAN OF KRUGMAN'S OFTEN ULTRA LIBERALISIM!) THE OUTRAGEOUS THING IS THAT WALL STREET EXECUTIVES, WITH THE HELP OF TREASURY, APPEAR TO BE GETTING AWAY WITH IT! THESE GUYS ARE NO J.P. MORGAN! REALLY, WHAT HAVE THEY DONE TO WARRANT SUCH TRUST OF BILLIONS? REALLY!!! HOW HAVE THEY CONTRIBUTED TO SOCIETY? WHAT INNOVATION? UGH!!!

Posted by Judith Ellis at April 28, 2009 1:02 PM