This is only a short article which lacks depth but is interesting in that it reveals the results of a recent poll to determine the 50 most influential management thinkers. One has to be suspicious of such lists which can often be poorly researched and produced to achieve headlines, but this one seems legitimate. It has been produced by the Times for many years in cooperation with London and Madrid Business Schools, and is based on a sample of 3,000 people.
There are comparisons with a similar survey two years ago so it is possible to see who are the rising and falling stars. As indicated by the headline above C.K Prahalad of the University of Michigan is seen as the most influential guru; he is best known for having introduced the concept of core competences into the management arena. His continuing influence is perhaps surprising as he has written very little since 2004 and has not come up with much that is original since his book ‘Competing for the Future’, jointly authored with Gary Hamel in 1996.
Even more surprising is the placing of Michael Porter of Harvard - famous for his ‘five forces of competitive advantage’ and number one in the 2005 survey - as only 11th, particularly when you look at some of those above him. Porter would be particularly concerned to see INSEAD’s Chan Kim and Renee Mauborgne ahead at number 5, with their - compared to Porter - rather shallow concept of ‘Blue Ocean Strategy’. It perhaps shows that a good label and a few headlines can push up your ratings in any one year.
It is interesting that some of those above Porter are practising businessmen like Bill Gates and Steve Jobs, which perhaps indicates a welcome move away from academic dominance. A surprising omission from the top 20 is Warren Buffet and a surprising inclusion is Richard Branson, perhaps confirming the European bias of the survey.
Another interesting development is the significant advance made by Malcolm Gladwell, author of the Tipping Point and the Outliers (as reviewed in past blogs). His advance from 8th to 2nd behind Prahalad is significant because he is neither an academic nor a businessman but instead a writer and journalist of Canadian origin. The wide publicity given to his latest book has obviously influenced his rating, together with an interest in his favourite topic - what makes people successful.
Other interesting snippets are that the top 20 contains six people of Indian origin and that the top 50 contains only five females. Much more important to us is the lack of an MTP tutor in the top ten! More seriously, we do find it surprising that Constantinos Markides of London Business School is not in the top 20; his work on the strategic aspects of innovation - ‘Fast Second’ - and another book on game changing strategies, have been very well received by managers on our courses and are certainly more valuable and practical than the work of some in this list. Perhaps it is proof that, to be influential, good PR and marketing are needed as well as original ideas.
To read this article go to
http://business.timesonline.co.uk/tol/business/management/article6873407.ece
Friday 27 November 2009
‘The Innovator’s DNA’ by Dyer, Gregersen and Christensen, Harvard Business Review, December 2009
This article is based on six years of research at Harvard, looking at the most successful senior level innovators and finding out what it is that makes them so successful. This immediately raised an objection in my mind, particularly when the name of Steve Jobs of Apple was mentioned in the first paragraph. I have read several biographies of this amazing man and note how he does things that other lesser mortals could never get away with; he seems to achieve the blind loyalty of his staff, despite treating them appallingly by most standards. To quote one of his biographers - ‘you can admire him but should never try to copy him’.
Nevertheless, despite this reservation, the article does have much to commend it. It starts by making a statement that should be of interest to those CEOs who see their role as facilitating innovation by others; the evidence of the research is that the CEOs of the most innovative companies like to do it themselves. It’s the one thing they don’t delegate.
There are five skills that are seen as fundamental to executives who want to be creative, what the research classifies as ‘discovery skills’ on which the most successful spend 50% of their time.
These are:
• Associating, making connections between different concepts and ideas
• Questioning, asking challenging questions, always why and what if, rather than how (Michael Dell tries to ask the questions that people don’t think he will ask)
• Observing, particularly how actual and potential customers behave in their everyday lives, small insights that can lead to new opportunities.
• Experimenting, trying out new ideas, not being afraid to launch pilots and test markets
• Networking, meeting people from lots of different fields (one particularly interesting insight was that the more countries you have lived in, the more likely you are to be innovative)
Other insights are that the really successful entrepreneurs have more than just these five skills. They also have a desire to change the world, to challenge the status quo, to take risks and to be unafraid of mistakes. Perhaps the other factor that allows this to happen is the ability to create a business that does not rely on risk averse colleagues and shareholders; it is interesting that most of those who are mentioned in the article started off with close private ownership.
The authors believe that ordinary mortals can develop the five skills by practice and I am sure that this will improve whatever qualities are being displayed now. However, I remain unconvinced that this would make me, or any other mere mortal, into a Jobs or a Dell. But, for those who want to encourage innovation, there is a lot to be learned from the article and the research on which it was based.
To read this article go to
http://hbr.harvardbusiness.org/2009/12/the-innovators-dna/ar/1
Nevertheless, despite this reservation, the article does have much to commend it. It starts by making a statement that should be of interest to those CEOs who see their role as facilitating innovation by others; the evidence of the research is that the CEOs of the most innovative companies like to do it themselves. It’s the one thing they don’t delegate.
There are five skills that are seen as fundamental to executives who want to be creative, what the research classifies as ‘discovery skills’ on which the most successful spend 50% of their time.
These are:
• Associating, making connections between different concepts and ideas
• Questioning, asking challenging questions, always why and what if, rather than how (Michael Dell tries to ask the questions that people don’t think he will ask)
• Observing, particularly how actual and potential customers behave in their everyday lives, small insights that can lead to new opportunities.
• Experimenting, trying out new ideas, not being afraid to launch pilots and test markets
• Networking, meeting people from lots of different fields (one particularly interesting insight was that the more countries you have lived in, the more likely you are to be innovative)
Other insights are that the really successful entrepreneurs have more than just these five skills. They also have a desire to change the world, to challenge the status quo, to take risks and to be unafraid of mistakes. Perhaps the other factor that allows this to happen is the ability to create a business that does not rely on risk averse colleagues and shareholders; it is interesting that most of those who are mentioned in the article started off with close private ownership.
The authors believe that ordinary mortals can develop the five skills by practice and I am sure that this will improve whatever qualities are being displayed now. However, I remain unconvinced that this would make me, or any other mere mortal, into a Jobs or a Dell. But, for those who want to encourage innovation, there is a lot to be learned from the article and the research on which it was based.
To read this article go to
http://hbr.harvardbusiness.org/2009/12/the-innovators-dna/ar/1
‘Is it fair to blame Fair Value Accounting for the financial crisis?’ by Robert C Pozen, Harvard Business Review, November 2009
A review of this article is included for our many contacts from the finance function, though it will hopefully be of general interest to all. However it is suggested that the full reading of the article should be confined to those with good accounting knowledge and an understanding of the issues involved. Though it is well written and simplifies as much as possible, there are some topics where even the best explanation is too complex for the lay person.
The question in the article’s title seems too obvious to require anything other than a quick ‘no’ but apparently serious commentators - including Steve Forbes, a high profile media figure and former US presidential candidate - have been putting forward this view. The authors reject the suggestion but, in their closing arguments, do concede that it has been a factor in reducing the stability of the banking system.
The basic question is not new and has been a subject of dispute in accounting circles since the 1970s when high inflation caused people to question conventional accounting reporting. Do you value assets at what you paid for them (historical cost) or what they are now worth? And if the latter, how do you value them? And does this apply to both assets that have gone up in value and those that have gone down?
Enron was an example of a company that moved away from historical cost methods and developed their own highly dubious ‘mark to market’ system which was used to produce imaginary profits and fraudulent results. This encouraged people like me to criticise the use of non-historical valuations and to recommend going back to good old conservative accounting methods.
However it was in an attempt to be conservative that the accounting authorities insisted on ‘mark to market’ methods for assets that have gone down in value and this is where the blame for the financial crisis has arisen. Should banks have to show investment assets at their current, maybe temporary, lower values and charge these losses in their accounting statements when they intend to hold such assets and in all probability, their value will recover? Isn’t showing such ‘theoretical’ losses only likely to increase the lack of confidence and create a downward spiral to bankruptcy?
There is not time to go into the detail of the highly complex arguments around different types of assets and valuation methods but it is worth mentioning the author’s rather elegant solution, similar to one that I have been advocating since the days of inflation accounting. If you want to show shareholders the impact of increased or reduced asset valuations, this can easily be produced as a separate statement apart from the main set of accounts. This separate statement can include all the information about methods, assumptions and reservations that inevitably accompany asset valuations and are necessary to fully understand them.
It may cause distrust to have two sets of books but that is better than pretending that one set of accounting statements can tell you everything. But such a solution is far too simple and logical for the accounting bodies of the world to accept so the debates and the misunderstandings will go on. And shareholders will become increasingly sceptical and confused about the results they are seeing.
To read this article go to
http://hbr.harvardbusiness.org/2009/11/is-it-fair-to-blame-fair-value-accounting-for-the-financial-crisis/ar/1
The question in the article’s title seems too obvious to require anything other than a quick ‘no’ but apparently serious commentators - including Steve Forbes, a high profile media figure and former US presidential candidate - have been putting forward this view. The authors reject the suggestion but, in their closing arguments, do concede that it has been a factor in reducing the stability of the banking system.
The basic question is not new and has been a subject of dispute in accounting circles since the 1970s when high inflation caused people to question conventional accounting reporting. Do you value assets at what you paid for them (historical cost) or what they are now worth? And if the latter, how do you value them? And does this apply to both assets that have gone up in value and those that have gone down?
Enron was an example of a company that moved away from historical cost methods and developed their own highly dubious ‘mark to market’ system which was used to produce imaginary profits and fraudulent results. This encouraged people like me to criticise the use of non-historical valuations and to recommend going back to good old conservative accounting methods.
However it was in an attempt to be conservative that the accounting authorities insisted on ‘mark to market’ methods for assets that have gone down in value and this is where the blame for the financial crisis has arisen. Should banks have to show investment assets at their current, maybe temporary, lower values and charge these losses in their accounting statements when they intend to hold such assets and in all probability, their value will recover? Isn’t showing such ‘theoretical’ losses only likely to increase the lack of confidence and create a downward spiral to bankruptcy?
There is not time to go into the detail of the highly complex arguments around different types of assets and valuation methods but it is worth mentioning the author’s rather elegant solution, similar to one that I have been advocating since the days of inflation accounting. If you want to show shareholders the impact of increased or reduced asset valuations, this can easily be produced as a separate statement apart from the main set of accounts. This separate statement can include all the information about methods, assumptions and reservations that inevitably accompany asset valuations and are necessary to fully understand them.
It may cause distrust to have two sets of books but that is better than pretending that one set of accounting statements can tell you everything. But such a solution is far too simple and logical for the accounting bodies of the world to accept so the debates and the misunderstandings will go on. And shareholders will become increasingly sceptical and confused about the results they are seeing.
To read this article go to
http://hbr.harvardbusiness.org/2009/11/is-it-fair-to-blame-fair-value-accounting-for-the-financial-crisis/ar/1
‘Why read Peter Drucker?’ by Alan Kantrow and ‘Drucker Today’ by Rosabeth Moss Kanter, Harvard Business Review, November 2009
HBR includes two articles on Drucker in its November issue to mark the 100th anniversary of his birth and this certainly provides a good opportunity to revisit the work of perhaps the most influential - and certainly the most prolific and long lasting - management thinker of our time. His influence is perhaps in need of revival because in the Times list mentioned above, he was at the top in 2001 but is no longer in the top 20. Of course one factor has been his death in the intervening period; no influence can last for ever.
Of the two articles, Moss Kanter’s is far more insightful and down to earth, as you would expect from someone of her reputation. She demonstrates Drucker’s wisdom by pointing out that much of what he said is relevant to the current economic crisis and, if it had been heeded, would have reduced the impact. In the 1980s he warned of the public backlash from excessive executive pay and also predicted the troubles ahead for General Motors, unless they became more innovative. Moss Kanter attributes this foresight to Drucker’s unique ability to spot broader trends and see beyond the need for short-term profit.
The Kantrow article is in fact just a reprint of one produced in the 1980s and suffers from over complication and theoretical wording. What Ross Kanter calls spotting broad trends, Kantrow calls ‘integrative thinking’ and the author rather pretentiously expresses the view that it was the way Drucker thought rather than the content of his output that was significant, not an easy or relevant separation to my simple mind.
It is however this article that provides the greatest insight into Drucker’s power and popularity. It is in the impact he had on high calibre senior people with concise but powerful statements of - what should be - blindingly obvious. Most impressive is how A.G. Lafley, CEO of Procter and Gamble, states that his leadership of P&G’s superb recovery was driven by Drucker’s simple statement - ‘There is only one valid definition of business purpose; to create a customer’.
Both articles mention Drucker’s wide influence on thinking in the developing world and it is interesting that Zhang Rumin, a CEO of one of China’s biggest companies, also attributes some of his success to the same Drucker quote which he ‘took to heart’ when developing the company’s strategy in the face of competitive challenges and a changing environment. Rumin has another Drucker quote on his wall - ‘Companies fail because the assumptions on which their organisations are being run no longer fit reality’.
Surely these two CEOs and their use of his quotations are a better and more convincing explanation of Drucker’s long-term appeal; he talked common sense and was able to produce memorable bite sized statements that have stayed in the mind of those who really influence events. A few simple sound bites can be worth far more than long articles in learned journals.
To read this article go to
http://hbr.harvardbusiness.org/2009/11/peter-drucker-today/ar/1
Of the two articles, Moss Kanter’s is far more insightful and down to earth, as you would expect from someone of her reputation. She demonstrates Drucker’s wisdom by pointing out that much of what he said is relevant to the current economic crisis and, if it had been heeded, would have reduced the impact. In the 1980s he warned of the public backlash from excessive executive pay and also predicted the troubles ahead for General Motors, unless they became more innovative. Moss Kanter attributes this foresight to Drucker’s unique ability to spot broader trends and see beyond the need for short-term profit.
The Kantrow article is in fact just a reprint of one produced in the 1980s and suffers from over complication and theoretical wording. What Ross Kanter calls spotting broad trends, Kantrow calls ‘integrative thinking’ and the author rather pretentiously expresses the view that it was the way Drucker thought rather than the content of his output that was significant, not an easy or relevant separation to my simple mind.
It is however this article that provides the greatest insight into Drucker’s power and popularity. It is in the impact he had on high calibre senior people with concise but powerful statements of - what should be - blindingly obvious. Most impressive is how A.G. Lafley, CEO of Procter and Gamble, states that his leadership of P&G’s superb recovery was driven by Drucker’s simple statement - ‘There is only one valid definition of business purpose; to create a customer’.
Both articles mention Drucker’s wide influence on thinking in the developing world and it is interesting that Zhang Rumin, a CEO of one of China’s biggest companies, also attributes some of his success to the same Drucker quote which he ‘took to heart’ when developing the company’s strategy in the face of competitive challenges and a changing environment. Rumin has another Drucker quote on his wall - ‘Companies fail because the assumptions on which their organisations are being run no longer fit reality’.
Surely these two CEOs and their use of his quotations are a better and more convincing explanation of Drucker’s long-term appeal; he talked common sense and was able to produce memorable bite sized statements that have stayed in the mind of those who really influence events. A few simple sound bites can be worth far more than long articles in learned journals.
To read this article go to
http://hbr.harvardbusiness.org/2009/11/peter-drucker-today/ar/1
Critical challenges for L&D by Ed Griffin, Training Journal, November 2009
In recent months there seem to have been rather too many articles asking how the L&D function can and should respond to the recession and I have reviewed several in this year’s blogs. And as I read the first few pages of this article, I thought it was the same old stuff - the need to be more focussed, to justify costs, to show value, to connect with the business and achieve senior level sponsorship. This is all true - and not just in recessionary times - but good L&D professionals should not need reminding of it.
It was only when the author began to reveal some quantitative data from CIPD research that I began to get interested. The most interesting result was the high percentage of L&D people surveyed whose companies were, as a result of the recession, placing greater emphasis on retaining people and developing talent in-house. This could lead to the counter-intuitive conclusion that the recession could provide an opportunity for more, rather than less, in-company training and the survey gave some evidence that this is indeed the case.
Unfortunately the examples in the article to justify this conclusion were unconvincing. Scotrail was mentioned by name as a company that was continuing to invest in its people during the recession but the other examples were anonymous and barely relevant. When a name is not quoted it is bound to make one wonder why a company would not want to be mentioned publicly as an investor in its people? Maybe because it is not well known enough to be credible to the reader?
The latter part of the article does move onto practical guidance with the suggestion that simple frameworks like ‘Must, Should and Can’ and ‘Relevance, Alignment and Measurement (RAM)’ can be used to help decide upon priorities when times are hard and budgets are low. Again this is not something that should be new to most L&D professionals.
To me the most powerful part of the article was the reminder at the end that L&D professionals should not allow the recession and other pressures to hold back their own personal development. The author asks a series of questions to test whether we are developing ourselves sufficiently, for example:
• How is the field of L&D developing?
• What impact do generational differences have upon learning strategy?
• What are the implications of social networking Internet sites for learning strategy?
These questions are important because, just like the cobbler and his own shoes, we can be guilty of forgetting that our own effectiveness depends on continued personal development.
To read this article go to
http://www.trainingjournal.com/tj/2548.html
It was only when the author began to reveal some quantitative data from CIPD research that I began to get interested. The most interesting result was the high percentage of L&D people surveyed whose companies were, as a result of the recession, placing greater emphasis on retaining people and developing talent in-house. This could lead to the counter-intuitive conclusion that the recession could provide an opportunity for more, rather than less, in-company training and the survey gave some evidence that this is indeed the case.
Unfortunately the examples in the article to justify this conclusion were unconvincing. Scotrail was mentioned by name as a company that was continuing to invest in its people during the recession but the other examples were anonymous and barely relevant. When a name is not quoted it is bound to make one wonder why a company would not want to be mentioned publicly as an investor in its people? Maybe because it is not well known enough to be credible to the reader?
The latter part of the article does move onto practical guidance with the suggestion that simple frameworks like ‘Must, Should and Can’ and ‘Relevance, Alignment and Measurement (RAM)’ can be used to help decide upon priorities when times are hard and budgets are low. Again this is not something that should be new to most L&D professionals.
To me the most powerful part of the article was the reminder at the end that L&D professionals should not allow the recession and other pressures to hold back their own personal development. The author asks a series of questions to test whether we are developing ourselves sufficiently, for example:
• How is the field of L&D developing?
• What impact do generational differences have upon learning strategy?
• What are the implications of social networking Internet sites for learning strategy?
These questions are important because, just like the cobbler and his own shoes, we can be guilty of forgetting that our own effectiveness depends on continued personal development.
To read this article go to
http://www.trainingjournal.com/tj/2548.html
Accidental Billionaires by Ben Mezrich, published by Doubleday
The author’s note at the beginning of the book tells you straight away that this is not a standard ‘this is how we conquered the world’ story. It reveals that the author has written the book in ‘story’ form and has used ‘re-created dialogue’. Even more revealing, the author has received cooperation from many of the people involved but Mark Zuckerberg - the main creator of Facebook - ‘declined to speak to me despite numerous requests’.
Thus this book has to be accepted for what it is, an incomplete and probably biased account of what happened, particularly as Eduardo Saverin, the original co-founder, did cooperate and features as one of the aggrieved parties in the disputes that later took place.
The big advantage of the chosen format is that it reads like a novel and engages the reader from page 1. The first half of the book is all about Harvard University and the life of students there, including the pressure to find the right social network and the chase for sexual engagement, both of which were fundamental to the idea and the success of Facebook.
Zuckerberg is painted as the typical computer geek who has established a reputation by reportedly turning down a million dollar offer from Microsoft even before he entered Harvard. He develops his Facebook model by simple observation of how social networks operate in real-life and how technology can enhance and improve the experience. There is some dispute about whether he borrows the ideas of others along the way but it is clear that his model is superior to all the many competitors at Harvard.
Saverin is a financial whiz who has already made money and provides the financial backing to set up Facebook and extend it to other Universities. But Zuckerberg opts out of Harvard and takes some fellow geeks to California to work on the technology while Saverin stays on the East Coast and tries to find financial backers and recruit advertisers.
They both succeed in their different ways but the differences in philosophy are too wide to be resolved and they fall out over ownership rights. In the meantime another group of Harvard students believe that Zuckerberg stole their ideas and the main result seems to be that the lawyers have a field day!
However all this does not stop the Facebook idea becoming the most amazing global phenomenon, second only to Google in its rate of expansion and impact on the modern culture. The title of the book certainly describes the financial outcome for Zuckerberg and probably Saverin once the legal disputes have been settled, but the use of the word ‘Accidental’ is perhaps more questionable. Certainly Zuckerberg did not seem to have money making on his mind when he started Facebook but the way he developed the idea to meet the needs of young people for social networking was by no means accidental.
All in all, a great read and a fascinating story with lots of lessons for would be entrepreneurs.
Thus this book has to be accepted for what it is, an incomplete and probably biased account of what happened, particularly as Eduardo Saverin, the original co-founder, did cooperate and features as one of the aggrieved parties in the disputes that later took place.
The big advantage of the chosen format is that it reads like a novel and engages the reader from page 1. The first half of the book is all about Harvard University and the life of students there, including the pressure to find the right social network and the chase for sexual engagement, both of which were fundamental to the idea and the success of Facebook.
Zuckerberg is painted as the typical computer geek who has established a reputation by reportedly turning down a million dollar offer from Microsoft even before he entered Harvard. He develops his Facebook model by simple observation of how social networks operate in real-life and how technology can enhance and improve the experience. There is some dispute about whether he borrows the ideas of others along the way but it is clear that his model is superior to all the many competitors at Harvard.
Saverin is a financial whiz who has already made money and provides the financial backing to set up Facebook and extend it to other Universities. But Zuckerberg opts out of Harvard and takes some fellow geeks to California to work on the technology while Saverin stays on the East Coast and tries to find financial backers and recruit advertisers.
They both succeed in their different ways but the differences in philosophy are too wide to be resolved and they fall out over ownership rights. In the meantime another group of Harvard students believe that Zuckerberg stole their ideas and the main result seems to be that the lawyers have a field day!
However all this does not stop the Facebook idea becoming the most amazing global phenomenon, second only to Google in its rate of expansion and impact on the modern culture. The title of the book certainly describes the financial outcome for Zuckerberg and probably Saverin once the legal disputes have been settled, but the use of the word ‘Accidental’ is perhaps more questionable. Certainly Zuckerberg did not seem to have money making on his mind when he started Facebook but the way he developed the idea to meet the needs of young people for social networking was by no means accidental.
All in all, a great read and a fascinating story with lots of lessons for would be entrepreneurs.
The Murder of Lehman Brothers by Joseph Tibman, published by Brick Tower Press
Joseph Tibman admits that this is a nom de plume and that he is really an investment banker still hoping to resurrect his career. My advice to him after reading the book would be to maybe give up the day job because he is an excellent writer. He combines brilliantly a description of what it was like at Lehmans as they headed for meltdown with a deep and thoughtful analysis of the causes of the global financial crisis.
He quite rightly does not look for one cause or one party to blame. He traces the underlying causes back to the Clinton years when deregulation and high risk borrowing for home buyers were first encouraged. He admits however that Lehman sowed the seeds of its own downfall by overloading its Balance Sheet with too much property lending, making the fatal mistake of not seeing or spreading the risks involved. He is particularly hard on the former CEO Dick Fuld who would not listen to advice from colleagues and forced all those disagreed with him to leave.
But the author also blames himself and most others at Lehman who ‘drank their own Kool-Aid’, a curious expression which seems similar to ‘burying heads in the sand’. They heard what they wanted to hear and did not see the warning signs; they could not believe that the company that had survived 9/11 could ever be defeated by economic turbulence, or could ever be allowed to go bust.
Perhaps this was because they had seen the USA government arrange for rival Bear Sterns to be bailed out by JP Morgan and thought that this proved that no major bank could ever be allowed to collapse. And it is in this connection that the author becomes most bitter, his ire being directed towards Henry Paulson, the former Goldman Sachs investment banker who was Bush’s Treasury Secretary.
Though the author has a vested interest, you cannot help but appreciate his argument. First of all - why Lehman when Bear Sterns and later AIG were saved? Secondly, the bankruptcy of such a major financial institution was the major factor in accelerating the global depression. And, in the author’s view, it was all based on the principle of ‘moral hazard’ - that banks must believe that it is possible to fail because otherwise they will take undue risks.
The book reads like a novel, has some excellent footnote descriptions of relevant financial and banking concepts and provides a great inside story of the Lehman collapse; it is highly recommended.
He quite rightly does not look for one cause or one party to blame. He traces the underlying causes back to the Clinton years when deregulation and high risk borrowing for home buyers were first encouraged. He admits however that Lehman sowed the seeds of its own downfall by overloading its Balance Sheet with too much property lending, making the fatal mistake of not seeing or spreading the risks involved. He is particularly hard on the former CEO Dick Fuld who would not listen to advice from colleagues and forced all those disagreed with him to leave.
But the author also blames himself and most others at Lehman who ‘drank their own Kool-Aid’, a curious expression which seems similar to ‘burying heads in the sand’. They heard what they wanted to hear and did not see the warning signs; they could not believe that the company that had survived 9/11 could ever be defeated by economic turbulence, or could ever be allowed to go bust.
Perhaps this was because they had seen the USA government arrange for rival Bear Sterns to be bailed out by JP Morgan and thought that this proved that no major bank could ever be allowed to collapse. And it is in this connection that the author becomes most bitter, his ire being directed towards Henry Paulson, the former Goldman Sachs investment banker who was Bush’s Treasury Secretary.
Though the author has a vested interest, you cannot help but appreciate his argument. First of all - why Lehman when Bear Sterns and later AIG were saved? Secondly, the bankruptcy of such a major financial institution was the major factor in accelerating the global depression. And, in the author’s view, it was all based on the principle of ‘moral hazard’ - that banks must believe that it is possible to fail because otherwise they will take undue risks.
The book reads like a novel, has some excellent footnote descriptions of relevant financial and banking concepts and provides a great inside story of the Lehman collapse; it is highly recommended.