There was an old saying, any publicity is good publicity, as long as you spell my name right. I wonder if Mr. Blankfein and Mr. Cohn, the leaders at Goldman Sachs would agree? After reading this morning’s Op-Ed piece in the New York Times, written by resigning high potential Greg Smith, I highly doubt it. In case you may have missed it, Mr. Smith, a twelve year veteran at the company and now former executive director of Goldman’s U.S. equity derivatives business in Europe and the Middle East, tended his resignation via the media today. In a scathing letter, the Stanford graduate and Rhodes Scholar finalist stated, “I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.”
Any of us that witnessed Mr. Blankfein’s testimony, or lack thereof, at the Congressional hearings following the worst financial crisis since the Great Depression, that Goldman Sachs, to a great degree, was part and parcel to, are not at all surprised by what Mr. Smith revealed in his Op-Ed letter today. Mr. Smith comments, “…that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.”
He makes an interesting point. Culture happens. Whether or not leadership decides to get out in front of it and tends to it with mindful care. It is why we emphasize the triumvirate of Leadership, Strategy, and Culture. It’s embedded in our logo. Take away or misalign a single element and your on the road to ruin. Even tacit leadership can enable this type of miscreant behavior to emerge and take root. I know, I’ve witnessed it first-hand. I once worked for a company that, at the end of the fiscal quarter, would send fraudulently invoiced equipment to go for a short little ride on delivery trucks heading nowhere but back to the warehouse once the quarterly books were closed. Thankfully, I wasn’t complicit or a part of the sales organization in that particular company at the time. But tacit corporate leadership turned their eyes away from the corrupt Vice President of Sales as long as he hit his numbers.
I immediately recalled those terrible days, early in my career, while working for that corporation when I read Mr. Smith’s statement, “How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.” That particular V.P. that I reference above was finally flushed out of the company, but not before he cashed in several million dollars worth of stockholder equity he helped to fraudulently create.
The fact of the matter is, integrity matters. Leadership is a sacred trust, not an opportunity to perform one’s best Jack Sparrow imitation. One need not be a Stanford graduate or a Rhodes Scholar to know how to lead a business the right way and for the right reasons. Capitalism can, and should, be a powerful social institution that builds wealth, the quality of life of our fellow global citizens, and elevate humanity to the next level of consciousness we will need if we are to survive. This was the driving impetus for spending three years writing my book, “The Transformational Entrepreneur“. I have every confidence that, going forward, mindful leadership will outcompete the corrupt, transactional model of the last century.
I’ll defer to Mr. Smith for a closing comment, “Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.”
From your lips, Mr. Smith…to God’s ear.
© 2012, Terry Murray.
© 2012, Bloomberg.