Poking through 11+ years of posts I find information that’s as useful now as when it was written.

Golden Oldies is a collection of the most relevant and timeless posts during that time.

Sometimes old posts just depress me. I wrote this one in 2008 and it’s still applicable today. With very slight alterations, it would be just as applicable in 1908 or 1808 or even earlier and it will probably be just as applicable in 2118 and beyond.

Expecting companies to “do the right thing” when they think the right thing will impinge on their bottom line is just plain stupid. It hasn’t worked historically and I doubt it will work in the future; certainly not on the tech world, whose arrogance makes Wall Street look humble.

The only thing stupider is businesses’ inability to understand that the right thing is often more profitable — of course, they could take a lesson from Blackrock,  but more about that tomorrow.

Read other Golden Oldies here.

Yesterday I asked, “What else does Wall Street and the financial industry do besides cripple corporate strategic efforts?”

They fight for self-regulation, assuring watchdog agencies and Congress that they are good guys that should be trusted to do the best thing and that the economy will tank if any kind of control or regulation is enacted—and they win.

They win based on the money spent to focus the efforts of well-connected lobbyists on stopping cold, or at least significantly watering down, any legislation or rules that might offer protection to us—the people who keep them all in BMWs and champagne.

Wall Street and the other financial services industries aren’t alone in this, every industry does it, but the money guys seem to be exceptionally successful—until something blows up. Then, when public outcry is loud and tempers are hot, Congress has the leverage to pass anything—whether it fixes the problem or merely makes them look like they care.

Deregulation was one of the prime factors in the S&L mess in the eighties; earnings pressure combined with personal greed fueled many of the recent corporate financial fiascos—think Enron, WorldCom, Adelphia Communications, Citigroup, Goldman Sachs, J.P.Morgan Chase, Deutsche Bank, and others.

And now, of course, we have the Sub-prime debacle with which to contend.

And after each of these, Congress, the SEC and others all run to add laws and rules to prevent it from happening again.

The repercussions from the latest snafu (Navy term meaning ‘situation normal—all f*ked up’) are reverberating through the credit markets making it more than difficult for corporations, small business and just plain folks to access it.

Who will step into the breach to provide investment and liquidity?

Private equity and big hedge funds—both with even less regulation and even larger egos and greed factors than more traditional Wall Street firms.

But a land grab by big hedge funds and private equity firms might create new problems. The Securities & Exchange Commission and the Finance Industry Regulatory Authority oversee investment banks to some degree, and the Federal Reserve is moving in that direction. But hedge funds are largely unregulated and aren’t bound to make any disclosures to anyone but their investors. Even that information is often incomplete. A move by hedge funds into traditional corporate finance would mean even less transparency than exists on Wall Street now.

It’s a sad fact that the 214-year-old force that was instrumental in building the most powerful industrial nation on the planet could be just as instrumental in presiding at its demise.

Understand, it’s not that I have much faith in government regulation, but have seen little-to-no proof that self-regulation works—it’s too much like having the fox care for the hen house.

So-called government intrusion is the result of the inability of various industries to “self-regulate” for any reasons other than short-term profit, doing as much they can get away with and pushing the boundaries beyond what’s reasonable.

So you tell me, how can we get well-reasoned laws that aren’t defeated or seriously watered down by special interest groups and industry lobbyists before the crisis?

Image credit: pinkfloyd

What do Hampton Creek, Theranos, Zenefits, Lending Club, WrkRiot, ScoreBig, Rothenberg Ventures have in common?

They all channeled the “fake it ‘til you make it” ethos of Silicon Valley.

Only they didn’t make it.

Previous well-known cheats include MiniScribe, WorldCom and Enron and they’re only the tip of the iceberg.

Cheating is the getting of a reward for ability or finding an easy way out of an unpleasant situation by dishonest means. It is generally used for the breaking of rules to gain unfair advantage in a competitive situation. — Wikipedia

Yesterday’s post focused on the prevalence of cheating at all school levels and its acceptance as a laissez-faire, “everyone does it” attitude.

Of course, cheating isn’t new, but the more ubiquitous it’s become the more it’s been shrugged off.

And it’s this cheating mindset that has shaped Silicon Valley over the last decade or so.

Along with faking it is the “do whatever it takes to win” form of cheating as exemplified by Uber’s Travis Kalanick.

Cheating on ideas, such as meritocracy and fairness, has certainly contributed to the rise of the bro culture, also exemplified by Uber and recently documented by Susan Fowler. However, as Uber engineer Aimee Lucido points out, Uber is far from being alone.

It does seem that a large percentage of the egos that drive, and aspire to drive, innovation, along with the egos that fund that drive, have lost touch with the society they claim to serve and, instead, bought into an attitude espoused by Donald Trump.

“And when you’re a star, they let you do it. You can do anything.”

We would be better off if they would channel Sophocles, instead.

Image credit: Sean MacEntee

Enron is back in the news because Jeff Skilling’s appeal is currently in front of the Supreme Court (his sentence may be reduced or overturned on a technicality).

Arthur I. Cyr, Clausen Distinguished Professor at Carthage College, offers an interesting commentary on Skilling, the Enron debacle and Arthur Andersen.

Leadership personality is telling in any organization. Skilling from early days as a McKinsey consultant was notorious for an exceptionally aggressive, grasping style. Business author and former colleague Tom Peters described him as apparently able to “out-argue God.”

The damage that attitude causes knows no bounds and holds true wherever it is found.

Enron, stock option backdating and finally the derivatives of the financial meltdown are all from the same seeds.

In hindsight, Enron’s death was symptomatic of growing global problems. In an age of great prosperity and exceptionally cheap credit, people fairly easily could put greed before good judgment.

Greed before good judgment says a lot, but not quite all.

Even when greed isn’t the driving force there is ideology—an inflexible force that proponents claim eliminates the need for any judgment at all.

Good management, however, requires flexible, insightful human strengths. Regulation and law enforcement only provide context.

Cyr’s final comment sums up the true solution as well as the why rules and even laws don’t work.

Image credit: Svadilfari on flickr

The scandal at Satyam in India brings forth an interesting thought. In an article by him, Jitendra Singh, a Wharton management professor who is currently dean of the Nanyang Business School in Singapore says, “…companies with “the bluest of blue-chip reputations [such as] Infosys and TCS” could actually gain in the current environment, because of a potential “flight to quality” among client companies.” The third-tier and weaker companies will probably undergo a lot more scrutiny.”

Why does it make sense to do in-depth due diligence on third-or-lower tier companies, while taking top tier companies on faith and accepting their reputations with only cursory review.

Until their dirty linen came to light. Bernard Madoff’s hedge fund, Jeff Skilling’s Enron, WorldCom and Tyco were all considered top-tier.

This attitude of blindly accepting what is said by the top and increasing due diligence on lower levels is found everywhere, but it really permeates the hiring process.

I’ve lost count of the executives and managers I’ve known who went with cursory or no reference checks because the candidate

• was a C-level executive;
• graduated from a top-tier school;
• earned over $100K;
• had a PhD;
• was referred by an executive or board member;
• etc.

but ran exhaustive reference checks on every candidate below VP or director, including credit and criminal checks.

Does that make any sense to you?

Image credit: flickr

Yesterday I asked, “What else does Wall Street and the financial industry do besides cripple corporate strategic efforts?”

They fight for self-regulation, assuring watchdog agencies and Congress that they are good guys that should be trusted to do the best thing and that the economy will tank if any kind of control or regulation is enacted—and they win.

They win based on the money spent to focus the efforts of well-connected lobbyists on stopping cold, or at least significantly watering down, any legislation or rules that might offer protection to us—the people who keep them all in BMWs and champagne.

Wall Street and the other financial services industries aren’t alone in this, every industry does it, but the money guys seem to be exceptionally successful—until something blows up. Then, when public outcry is loud and tempers are hot, Congress has the leverage to pass anything—whether it fixes the problem or merely makes them look like they care.

Deregulation was one of the prime factors in the S&L mess in the eighties; earnings pressure combined with personal greed fueled many of the recent corporate financial fiascos—think Enron, WorldCom, Adelphia Communications, Citigroup, Goldman Sachs, J.P.Morgan Chase, Deutsche Bank, and others.

And now, of course, we have the Sub-prime debacle with which to contend.

And after each of these, Congress, the SEC and others all run to add laws and rules to prevent it from happening again.

The repercussions from the latest snafu (Navy term meaning ‘situation normal—all f*ked up’) are reverberating through the credit markets making it more than difficult for corporations, small business and just plain folks to access it.

Who will step into the breach to provide investment and liquidity?

Private equity and big hedge funds—both with even less regulation and even larger egos and greed factors than more traditional Wall Street firms.

“But a landgrab by big hedge funds and private equity firms might create new problems. The Securities & Exchange Commission and the Finance Industry Regulatory Authority oversee investment banks to some degree, and the Federal Reserve is moving in that direction. But hedge funds are largely unregulated and aren’t bound to make any disclosures to anyone but their investors. Even that information is often incomplete. A move by hedge funds into traditional corporate finance would mean even less transparency than exists on Wall Street now.”

It’s a sad fact that the 214-year-old force that was instrumental in building the most powerful industrial nation on the planet could be just as instrumental in presiding at its demise.

Understand, it’s not that I have much faith in government regulation, but have seen little-to-no proof that self-regulation works—it’s too much like having the fox care for the hen house.

So-called government intrusion is the result of the inability of various industries to “self-regulate” for any reasons other than short-term profit, doing as much they can get away with and pushing the boundaries beyond what’s reasonable.

So you tell me, how can we get well-reasoned laws that aren’t defeated or seriously watered down by special interest groups and industry lobbyists before the crisis?

Your comments—priceless

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Image credit: pinkfloyd   CC license