I was at a workshop led by the renowned management guru Gary Hamel last week, who has written multiple bestsellers, most famously Competing for the Future with C.K. Prahalad and most recently The Future of Management. Gary briefly mentioned an editorial that he had published in the Wall Street Journal a couple weeks ago called "Failures of Morality and Leadership." I checked it out, and not only is it insightful, the ending is pretty funny, as he proposes that all bank CEOs who get bailout money ought to be required to tattoo four things on their foreheads. Here is the section where Gary provides this advice (I notice that the WSJ didn't include the twist I heard Gary say, that these ought to be written backwards, so when they look in the mirror every morning, they will read it the right way!). There hasn't been much to laugh about in the crisis, but I laughed at this:
In the meantime, though it may be wise to add a stipulation to
whatever bailout plan Washington's wrangling bureaucrats manage to
concoct. Specifically, all the bankers who receive public money must
agree to have the following eternal truths tattooed on their foreheads:
Alchemy doesn't work. What was true for Isaac
Newton all those centuries ago, is true today, you can't turn dross
(garbage loans, in this case) into gold (triple A-rated securities), no
matter how clever you are.
Things that can't go on forever usually don't. If
an extrapolated trend produces ludicrous results (like million-dollar
starter homes), it will soon reverse itself—so don't keep betting it
won't.
There's an inescapable correlation between risk and return.
Maybe there's someone out there who can produce a positive alpha year
after year, but it probably isn't you, or anyone you know.
Stupidity is contagious. As a banker, you need to
reflect for a moment on the mad obsession you and your colleagues have
had with leverage and complexity, and then face up to the fact that
you're as susceptible to silly fads as Japanese schoolgirls.
This may not cure bankers' bulimia, but it's a start.
The last is my favorite — and empirically supported by much research on social comparison and behavioral contagion and the old Walter Lippman line, "Where all think alike, no one thinks very much."
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