Post by rcksthill on Jan 17, 2013 0:06:16 GMT -5
An insulated boardroom is an ineffective boardroom
By Lucy P. Marcus
JANUARY 15, 2013
“The level of ignorance seems staggering to the point of incredulity. Not only were you ignorant of what was going on, but you were out of your depth.”
‑ Andrew Tyrie, MP, chairman of the Parliamentary Commission on Banking Standards (PCBS)
Last week senior executives of UBS testified before a British parliamentary panel about their part in the Libor-rigging scandal. What they saidsent a discouraging signal that they, and others in the banking sector, are still operating as if they are out of touch and tone-deaf in a sound-proof room.
U.S. and British authorities have implicated UBS, Citibank, Deutsche Bank and Royal Bank of Scotland, among others, in fixing the Libor rate over several years. UK lawmakers, responding to a public outcry, set up the Parliamentary Commission on Banking Standards to look into the UK banking sector’s professional standards and culture; discover lessons to be learned about corporate governance, transparency and conflicts of interest; and clarify the implications for regulation and government policy.
Andrea Orcel, chief executive officer of UBS’s investment bank, told the committee that “the whole executive board and board are very focused at recovering the honor and the standing that the organization had in the past.” But that’s still putting the emphasis and focus on the wrong thing. What these institutions need to be thinking about is rebuilding trust and stability. Using phrases like “recovering the honor” sends the message that they are focused on themselves and not on the effect their actions have on those around them – their clients, the employees and the global financial system.
The global financial system has depended on “trust me” and “we’re the experts,” and an implication that the whole thing is too complicated for people outside the upper echelons of the financial services industry to understand. But now, with the Libor-rigging scandal, with JPMorgan’s London Whale and with the perceived collapse of the banking system and bank bailouts, the financial services industry has broken that trust. It has become clear that a lot of the people in the industry, – indeed, a lot of people sitting around the industry’s board tables ‑ don’t understand what is happening there, either.
It is time for financial executives to think about the changes they can make to earn back people’s trust and demonstrate that they are trustworthy and can bring stability back. A blueprint would look something like this:
Action: Enough talk. There have been plenty of mea culpas, including in last week’s PCBS hearing, and lots of talk about what the financial services industry should do and what it needs to do. UBS’s Orcel talked about the need to “reform the governance, incentive structure and the overall supervisory approach right across the global financial industry.” People have lost trust, and no one is going to believe it until they do it. The focus is now on results.
Governance: Bank boards and senior management need more people who understand what the banks are doing, understand what they need to be doing, are unafraid to ask hard questions and are able to take swift, strong action. Barclays has a new chairman and a new chief executive, and they have set out clear ideas about re-examining what happens around the board table. They are saying all the right things, but they’ll have to demonstrate that they can bring about real change.
Transparency: If banks are taking action and making changes, people need to see it happening. JPMorgan’s board voted this week to make public an internal review on the failures that led to the loss of more than $6.2 billion. That is a step in the right direction. Any time there is a question of openness, the default answer has to be “yes.”
Accountability and performance: It is earnings week for some of the biggest financial services firms. It’s being reported that Barclays and Deutsche Bank will cut investment banker pay up to 20 percent. Pay packages and bonuses need to reflect the down times as well as up. If they do not, people will know it is business as usual. Also, it was reported this week that Goldman Sachs toyed with the idea of delaying UK bonuses to take advantage of a fall in tax rates but decided against it. Even considering such a move rekindles mistrust and the feeling that banks are simply not getting the public mood.
Lastly, the public has a part to play in all this. It was taxpayer money that bailed out a number of these institutions around the world. We cannot be passive and hope that others will sort this out for us. We all need to be speaking up on this issue, asking the questions of the institutions that we have bailed out and holding lawmakers to account to ensure they continue to monitor the financial services industry.
People did trust the financial services sector, but it broke that trust, several times over, and it is going to be a long road back. The industry will need to prove it is willing to be action-oriented and bring about real change, have oversight that counts and be transparent and accountable. Most of all, they have to know that people are watching, and that the attention is not going away.
Fish or Cut Bait.
It is a cliché, and under most circumstances clichés should be avoided. However, when talking about decision-making, it is entirely appropriate. The implication of a phrase like ‘fish or cut bait’ is to make a decision one way or another. Unfortunately, there are more than enough stories of businesses or people who failed at reaching goals because they could not make a choice and commit to the path ahead. I particularly like to reference ‘fish or cut bait’ because it directly talks about either stick with the current plan or abandon it – two very different choices.
In my experiences, I’ve seen many a project progress (forced is more like it) forward even though it could end up being a bad idea. Maybe there was an upcoming shortage of money, resources or other support; maybe the outcome was no longer a priority or even necessary. Whatever the case, leaders may be reluctant to stop. Some refuse to admit the true situation due to passion about the topic or some do not even see there is a problem. It is really tough to devote time, effort and money to a goal that struggles. But the question is: What do you do about it, and how can you handle the impact on the team? Keep in mind that an entire group of people has devoted time, effort and maybe money to the goal. A decision has to be made to either push forward or change, and neither one will be easy.
The first thing I do when faced with a fork in the road like this is look at the whole picture – review again what the end result is supposed to look like and then backtrack over the path that led to this point. It is important to keep clear where there were missed warning signals and what circumstances were outside the team’s control. The reason for this clarity is the next higher person in the chain of command is going to want to know these answers; so it’s best to get ready. I also would engage the entire team for this review. Other people see things differently and can offer valuable insight to help understand where things may have gotten off track and what the path forward might look like. People in groups can usually tell when situations get uncomfortable and have some wisdom in how to make them better.
Leaders must have the courage to look at a situation and be ready to leave the existing road completely, which can be rather intimidating. That type of change is rather personal for the leader and the team because it signals failure on some levels. The important thing to remember is that through all failure, there is the opportunity for greatness by learning from the experience. We have to be brave enough to change the end goal if necessary or change the plan for success or even both. The key to overall accomplishment lies in the attitude approaching the change and the communication of the change up, down and sideways through the chain of command. Everyone involved needs to be aware of where things are at, where they need to be and the structure to achieve the goal. Otherwise, the team will end up with another struggling endeavor and go through this type of change more than once on a task, which could be devastating to the team. As leaders we want to achieve; so either be ready to be patient, solid and calm to get the fish or cut the line, try a new lure/bait/location (hopefully improved from the last unsuccessful attempt) and fish again. Either way, we don’t stop fishing!
- Lori Buresh
10 Leadership Lessons for Gen-Y
Steve Tobak
It might be a brave new world, but an old-school approach to leadership still works. Take notes.
Wish I knew then what I know now.
You hear that sort of thing all the time; a lament to the wisdom that seems to come too late in life, or at least later than we'd like it to.
The current generation of up-and-comers certainly has its opportunities and its challenges. Having grown up with high-tech, they're probably best suited to thrive in the brave new connected world. And I happen to think the digital revolution has only just begun.
On the other hand, the world is in the midst of cultural and economic upheaval. Perhaps that's nothing new, but it is challenging, to say the least. There's so much information, so many choices, so much distraction, just those things alone present more complexity than any generation has ever had to deal with.
That said, I have a sneaking suspicion that the wisdom that comes from real-world experience applies to anyone in any generation. At least, that's the theory. Here are 10 lessons I've learned that I suspect will prove useful to the current generation of up-and-coming entrepreneurs and business leaders.
If you want to achieve great things, you have to do great work. If your goal is to just skate by in life, you can probably pull that off without much effort. But if you want to accomplish some great things that give your life meaning, you'll have to do great work. You only get out of this life what you put into it.
Take big risks. Roll the dice. Dive into the deep end of the pool. Throw caution to the wind. Be fearless. Success in business and your career are a function of your willingness to face your fears and take chances. That simple but powerful truth is probably the most important piece of advice anyone can give you.
Always seek to broaden your experience. Perhaps the best decision I ever made was to spend the first decade of my career with large companies that trained and groomed me and opened my eyes to a world of disciplines, markets, and opportunities. That, I believe, improved my odds of success in the startup world immensely.
Life is a marathon, not a sprint. There's a certain time factor related to all goals, strategies, and achievements. The bigger the objective, the bolder the strategy, the more rewarding the accomplishment, the longer it takes, generally speaking. That runs contrary to our attention deficit culture and our growing addiction to instant gratification. You need to fight that real-time tug to achieve long-term results.
There's a certain balance to the equation of life. In school, you learn that there's symmetry in the world. Every force has an equal and opposite reaction. Chemical equations must balance. Supply and demand are intimately related. Life is no different. It's full of tradeoffs and cause and effect relationships. You'll never get something for nothing. Everything has a price. First you do the work, then you get rewarded. You give, then you get. Those equations appear throughout your career, your life, the business world, everything.
You probably take yourself too seriously. Children have enormous egos. They think everything revolves around them. That self-centered worldview is essential to survival. But in adulthood, it can be a real problem. Maturity is very much about developing empathy for others, about understanding their needs and wants, what drives and motivates them. It's also key to effective business and working relationships.
Don't make self-limiting assumptions based on limited experience. When you're young, there's a temptation to be headstrong, to make sweeping decisions based on limited information. For example, it's popular these days to romanticize entrepreneurship, but it's not for everyone. Keep your options open.
Don't confuse freedom with entitlement. You're actually entitled to very little in life, but it should be enough. America's founding fathers were brilliant. "Life, liberty, and the pursuit of happiness" is phrased that way for a reason. With those basic building blocks, you're free to pursue what you will. The rest is entirely up to you. Your happiness and success are in your hands--and only your hands.
Real success takes real relationships in the real world. The Internet definitely leveled the business playing field. And social networks enable you to connect with virtually anyone. As a result, you can make a few bucks generating Twitter followers for Lady Gaga or Honey Boo Boo by sitting at your computer at home. But if you have higher aspirations than that, you'll need to develop real relationships with real people in real time.
Have faith that things will work out for you. Steve Jobs said it best in his 2005Stanford University commencement speech, "You have to trust that the dots will somehow connect in your future. You have to trust in something--your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life. The only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle."
One more thing. I wouldn't think of depriving you all of learning these lessons in your own good time. If you want to throw caution to the wind as I suggested earlier, go ahead and hit "delete." Be my guest. But there's an old expression that I think still applies in our information society: "Forewarned is forearmed." And, after all, you can never go back.
By Lucy P. Marcus
JANUARY 15, 2013
“The level of ignorance seems staggering to the point of incredulity. Not only were you ignorant of what was going on, but you were out of your depth.”
‑ Andrew Tyrie, MP, chairman of the Parliamentary Commission on Banking Standards (PCBS)
Last week senior executives of UBS testified before a British parliamentary panel about their part in the Libor-rigging scandal. What they saidsent a discouraging signal that they, and others in the banking sector, are still operating as if they are out of touch and tone-deaf in a sound-proof room.
U.S. and British authorities have implicated UBS, Citibank, Deutsche Bank and Royal Bank of Scotland, among others, in fixing the Libor rate over several years. UK lawmakers, responding to a public outcry, set up the Parliamentary Commission on Banking Standards to look into the UK banking sector’s professional standards and culture; discover lessons to be learned about corporate governance, transparency and conflicts of interest; and clarify the implications for regulation and government policy.
Andrea Orcel, chief executive officer of UBS’s investment bank, told the committee that “the whole executive board and board are very focused at recovering the honor and the standing that the organization had in the past.” But that’s still putting the emphasis and focus on the wrong thing. What these institutions need to be thinking about is rebuilding trust and stability. Using phrases like “recovering the honor” sends the message that they are focused on themselves and not on the effect their actions have on those around them – their clients, the employees and the global financial system.
The global financial system has depended on “trust me” and “we’re the experts,” and an implication that the whole thing is too complicated for people outside the upper echelons of the financial services industry to understand. But now, with the Libor-rigging scandal, with JPMorgan’s London Whale and with the perceived collapse of the banking system and bank bailouts, the financial services industry has broken that trust. It has become clear that a lot of the people in the industry, – indeed, a lot of people sitting around the industry’s board tables ‑ don’t understand what is happening there, either.
It is time for financial executives to think about the changes they can make to earn back people’s trust and demonstrate that they are trustworthy and can bring stability back. A blueprint would look something like this:
Action: Enough talk. There have been plenty of mea culpas, including in last week’s PCBS hearing, and lots of talk about what the financial services industry should do and what it needs to do. UBS’s Orcel talked about the need to “reform the governance, incentive structure and the overall supervisory approach right across the global financial industry.” People have lost trust, and no one is going to believe it until they do it. The focus is now on results.
Governance: Bank boards and senior management need more people who understand what the banks are doing, understand what they need to be doing, are unafraid to ask hard questions and are able to take swift, strong action. Barclays has a new chairman and a new chief executive, and they have set out clear ideas about re-examining what happens around the board table. They are saying all the right things, but they’ll have to demonstrate that they can bring about real change.
Transparency: If banks are taking action and making changes, people need to see it happening. JPMorgan’s board voted this week to make public an internal review on the failures that led to the loss of more than $6.2 billion. That is a step in the right direction. Any time there is a question of openness, the default answer has to be “yes.”
Accountability and performance: It is earnings week for some of the biggest financial services firms. It’s being reported that Barclays and Deutsche Bank will cut investment banker pay up to 20 percent. Pay packages and bonuses need to reflect the down times as well as up. If they do not, people will know it is business as usual. Also, it was reported this week that Goldman Sachs toyed with the idea of delaying UK bonuses to take advantage of a fall in tax rates but decided against it. Even considering such a move rekindles mistrust and the feeling that banks are simply not getting the public mood.
Lastly, the public has a part to play in all this. It was taxpayer money that bailed out a number of these institutions around the world. We cannot be passive and hope that others will sort this out for us. We all need to be speaking up on this issue, asking the questions of the institutions that we have bailed out and holding lawmakers to account to ensure they continue to monitor the financial services industry.
People did trust the financial services sector, but it broke that trust, several times over, and it is going to be a long road back. The industry will need to prove it is willing to be action-oriented and bring about real change, have oversight that counts and be transparent and accountable. Most of all, they have to know that people are watching, and that the attention is not going away.
Fish or Cut Bait.
It is a cliché, and under most circumstances clichés should be avoided. However, when talking about decision-making, it is entirely appropriate. The implication of a phrase like ‘fish or cut bait’ is to make a decision one way or another. Unfortunately, there are more than enough stories of businesses or people who failed at reaching goals because they could not make a choice and commit to the path ahead. I particularly like to reference ‘fish or cut bait’ because it directly talks about either stick with the current plan or abandon it – two very different choices.
In my experiences, I’ve seen many a project progress (forced is more like it) forward even though it could end up being a bad idea. Maybe there was an upcoming shortage of money, resources or other support; maybe the outcome was no longer a priority or even necessary. Whatever the case, leaders may be reluctant to stop. Some refuse to admit the true situation due to passion about the topic or some do not even see there is a problem. It is really tough to devote time, effort and money to a goal that struggles. But the question is: What do you do about it, and how can you handle the impact on the team? Keep in mind that an entire group of people has devoted time, effort and maybe money to the goal. A decision has to be made to either push forward or change, and neither one will be easy.
The first thing I do when faced with a fork in the road like this is look at the whole picture – review again what the end result is supposed to look like and then backtrack over the path that led to this point. It is important to keep clear where there were missed warning signals and what circumstances were outside the team’s control. The reason for this clarity is the next higher person in the chain of command is going to want to know these answers; so it’s best to get ready. I also would engage the entire team for this review. Other people see things differently and can offer valuable insight to help understand where things may have gotten off track and what the path forward might look like. People in groups can usually tell when situations get uncomfortable and have some wisdom in how to make them better.
Leaders must have the courage to look at a situation and be ready to leave the existing road completely, which can be rather intimidating. That type of change is rather personal for the leader and the team because it signals failure on some levels. The important thing to remember is that through all failure, there is the opportunity for greatness by learning from the experience. We have to be brave enough to change the end goal if necessary or change the plan for success or even both. The key to overall accomplishment lies in the attitude approaching the change and the communication of the change up, down and sideways through the chain of command. Everyone involved needs to be aware of where things are at, where they need to be and the structure to achieve the goal. Otherwise, the team will end up with another struggling endeavor and go through this type of change more than once on a task, which could be devastating to the team. As leaders we want to achieve; so either be ready to be patient, solid and calm to get the fish or cut the line, try a new lure/bait/location (hopefully improved from the last unsuccessful attempt) and fish again. Either way, we don’t stop fishing!
- Lori Buresh
10 Leadership Lessons for Gen-Y
Steve Tobak
It might be a brave new world, but an old-school approach to leadership still works. Take notes.
Wish I knew then what I know now.
You hear that sort of thing all the time; a lament to the wisdom that seems to come too late in life, or at least later than we'd like it to.
The current generation of up-and-comers certainly has its opportunities and its challenges. Having grown up with high-tech, they're probably best suited to thrive in the brave new connected world. And I happen to think the digital revolution has only just begun.
On the other hand, the world is in the midst of cultural and economic upheaval. Perhaps that's nothing new, but it is challenging, to say the least. There's so much information, so many choices, so much distraction, just those things alone present more complexity than any generation has ever had to deal with.
That said, I have a sneaking suspicion that the wisdom that comes from real-world experience applies to anyone in any generation. At least, that's the theory. Here are 10 lessons I've learned that I suspect will prove useful to the current generation of up-and-coming entrepreneurs and business leaders.
If you want to achieve great things, you have to do great work. If your goal is to just skate by in life, you can probably pull that off without much effort. But if you want to accomplish some great things that give your life meaning, you'll have to do great work. You only get out of this life what you put into it.
Take big risks. Roll the dice. Dive into the deep end of the pool. Throw caution to the wind. Be fearless. Success in business and your career are a function of your willingness to face your fears and take chances. That simple but powerful truth is probably the most important piece of advice anyone can give you.
Always seek to broaden your experience. Perhaps the best decision I ever made was to spend the first decade of my career with large companies that trained and groomed me and opened my eyes to a world of disciplines, markets, and opportunities. That, I believe, improved my odds of success in the startup world immensely.
Life is a marathon, not a sprint. There's a certain time factor related to all goals, strategies, and achievements. The bigger the objective, the bolder the strategy, the more rewarding the accomplishment, the longer it takes, generally speaking. That runs contrary to our attention deficit culture and our growing addiction to instant gratification. You need to fight that real-time tug to achieve long-term results.
There's a certain balance to the equation of life. In school, you learn that there's symmetry in the world. Every force has an equal and opposite reaction. Chemical equations must balance. Supply and demand are intimately related. Life is no different. It's full of tradeoffs and cause and effect relationships. You'll never get something for nothing. Everything has a price. First you do the work, then you get rewarded. You give, then you get. Those equations appear throughout your career, your life, the business world, everything.
You probably take yourself too seriously. Children have enormous egos. They think everything revolves around them. That self-centered worldview is essential to survival. But in adulthood, it can be a real problem. Maturity is very much about developing empathy for others, about understanding their needs and wants, what drives and motivates them. It's also key to effective business and working relationships.
Don't make self-limiting assumptions based on limited experience. When you're young, there's a temptation to be headstrong, to make sweeping decisions based on limited information. For example, it's popular these days to romanticize entrepreneurship, but it's not for everyone. Keep your options open.
Don't confuse freedom with entitlement. You're actually entitled to very little in life, but it should be enough. America's founding fathers were brilliant. "Life, liberty, and the pursuit of happiness" is phrased that way for a reason. With those basic building blocks, you're free to pursue what you will. The rest is entirely up to you. Your happiness and success are in your hands--and only your hands.
Real success takes real relationships in the real world. The Internet definitely leveled the business playing field. And social networks enable you to connect with virtually anyone. As a result, you can make a few bucks generating Twitter followers for Lady Gaga or Honey Boo Boo by sitting at your computer at home. But if you have higher aspirations than that, you'll need to develop real relationships with real people in real time.
Have faith that things will work out for you. Steve Jobs said it best in his 2005Stanford University commencement speech, "You have to trust that the dots will somehow connect in your future. You have to trust in something--your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life. The only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle."
One more thing. I wouldn't think of depriving you all of learning these lessons in your own good time. If you want to throw caution to the wind as I suggested earlier, go ahead and hit "delete." Be my guest. But there's an old expression that I think still applies in our information society: "Forewarned is forearmed." And, after all, you can never go back.