We Trusted You!
Watching the US Senate Congressional hearings this week, I almost felt as if I were at the cinema watching a fictional drama. One of those movies where the villains were conspiring to wreak global havoc and the world was rescued by a heroic figure that brought it to light. I wish it were fiction, but alas, there were no heroes, and in fact, there may have been some villains indeed, and many of us can attest to the havoc wrought on the global economy. Sadly, the villains were people who had the trust of many and that trust was abused. While this issue seems to cut across multiple arenas of betrayed trust, be they elected, ordained, or contracted, they all manifest tribal behavior. This behavior has a broad range of nuances, but a common gene is present, the gene that creates hubris and disrespect for those they were supposed to serve and protect. This betrayal of trust will bring on anger and wrath that will swing the hammer of cynicism and regulation, and that is a shameful consequence. It is a saddening consequence for the overwhelming numbers of good, principled, decent, serving individuals, be they legislators, priests, automakers, or bankers.
But the hearings this week were with the top of the Goldman Sachs house, and the anger it has unleashed has only begun to unfold. What we witnessed was tribal behavior, one with its own language, heroes, culture, and their own paradigms of what is right or wrong. I won’t use the word values because that word is often aligned with positive and ethical behavior, and it does not seem to fit what we observed. Tribal behavior is fascinating, particularly, if you can be a spectator rather than a participant. It is almost inescapable in organizations where cultures that emerged are shaped by organizational or functional objectives, recognition, rewards, and a sense of entity that breeds an entitled behavior. These inescapable affinities are so powerful that they can create intellectual inbreeding, powerful paradigms, and degenerative “we versus them behaviors.” When really bad, winners display hubris and disrespect for others, and losers retreat into denial, protectiveness, or nostalgia. Scary, isn’t it?
Maybe we’re at the cusp of a new era. Historically, sea changes can start just like what we may be witnessing. Some are called revolutions because the rate of change accelerates from the gradual movement from one set of parameters and behaviors to another. The current economic parameters are undeniably multipolar and there is the juxtaposed coexistence of strength and fragility. A thread unraveling in Greece or Spain can tug hard at our pessimism and constrain our appetite for opportunities. Overlay that multi-polarity and interconnected fragility with contempt and mistrust of those who should be trusted to advise and guide our investments, a retreat into investment shrinkage is not hard to imagine.
Years ago, Warren Buffett warned us that the complex instruments that had no value, but derived their price from other instruments and risk analyses, would eventually bring catastrophe, even without disreputable actions. The Goldman Sachs hearings demonstrated legally scripted double-speak, tribal arrogance, and a belief that anything goes, as long as cleverness trumps all. What was not evident was any sense of social responsibility or remorse for undeniable harm done. History has not treated such behaviors with forgiveness.
As we look ahead, what about our organizations?
• Do our customers trust us?
• Do we earn that trust?
• How do we make decisions that have social or societal consequences?
• How do we strike a balance between principles and profits, growth and damage, today and tomorrow, or financial rewards and ethical responsibilities?
• Are our values clear to our employees, customers, and communities? Would an impartial observer conclude likewise?
• How much regulation have we earned? At what cost?
Thoughts?
