• About

burningmanagementblog

~ Life imitates management..management imitates life

burningmanagementblog

Tag Archives: Lehman Brothers

The Stark State of Our Corporations

02 Friday Jun 2017

Posted by Burning Manager in Uncategorized

≈ Leave a comment

Tags

Alan Joyce, Avatar, climate change, corporations, District 9, Donald Trump, Iron Man, Jeff Immelt, Jeffrey Skilling, leadership vacuum, Lehman Brothers, LGBTIQQ, Margaret Court, Margaret Thatcher, Paris Climate Accord, Qanats, refugees, social policy, Stark Industries, Tony Stark

Iron-Man-Robert-Downey-Jr-Interview-1200x600

It’s the stuff of movies, particularly sci-fi, where the corporation, generally with some arch technology, ends up thwarting and subordinating the State. People become slaves to some corporate juggernaut able to monitor and control our every move. Think Omni Consumer Products (Robocop), The ICS Network (The Running Man), RDA Corporation (Avatar), Multi-National United (District 9) and my personal favourite, Energy Corporation (Rollerball). Just occasionally you see a mega corporation doing good, a la Stark Industries in Iron Man. But it’s the exception rather than the rule.

This week we have been ‘rocked’ by one of the most predictable events in recent political history; the departure of the US from the Paris Climate Accord. No right-minded person could think that climate change is some sort of fake news or hoax. Even Margaret Thatcher, way back when, commenting on climate change said even if you weren’t convinced wouldn’t you err on the side of caution? It can’t do any harm surely? Well Donald Trump thinks it can – to his blue collar coal-mining constituency who voted him in at the very least. The dystopian world that many feared would eventuate with the election of Donald Trump seems to be unfolding before our very eyes. You can almost admire Trump. He thinks something – without any basis in fact – and then follows through on his irrational assumptions. His thoughts on the matter are writ large in the media, especially Twitter.

PicMonkey-Collage-680x454

So too recently has our very own champion of women’s tennis Margaret Court used the media to espouse her distorted beliefs. Just lately she has felt compelled to make some pretty ‘out there’ comments about gay people and transgendered children. Her linkages of LGBTIQ people to Nazis, communists and the devil is the stuff of pure befuddled fantasy. She has so much of an issue with gay people (especially lesbians in the game that gave her so much of her wealth and fame) that she has refused to fly on our Australian carrier Qantas because its CEO is an openly gay man and a supporter of marriage equality.

The withdrawal of the US from the climate accord has left a leadership vacuum in climate change. In fact it would appear that the inward focus of Trump is leaving a leadership vacuum across a range of fronts. Take for example the breath-taking proposition of Communist China assuming the leadership mantle of free trade. Where climate change in the US is concerned it would appear that corporations will fill the void. Big names like GE, Du Pont, Exon Mobil, Tesla have indicated that they will step into the breach. It’s easy to see why. Those who embrace new technology get the jump on it. If you are a market follower it can be nearly impossible to play catch up. US corporations do not want to see energy innovation become the domain of other countries.

15-115

It’s just not in public/climate policy where corporations are stepping up taking on quasi State-like roles. In social policy there are a number of CEOs of corporations who are embracing societal issues. Partly this is driven by responding to consumer pressure, partly due to internal pressure as millennials increasingly take up key roles in organisations. Woe betide any company that under pressure from its media savvy millennial workforce thinks that incremental evolution not revolution is the best way forward on social issues. This is a demographic who demand to see results now.

Alan Joyce, the CEO of Qantas, as an openly gay man has pinned his rainbow colours to the marriage equality mast. Good on him for that. More and more we are likely to see Corporations acting in the stead of the State. While governments play politics, Corporations have an enviable potential to actually deliver if they choose so to do. It will attract the ire of those who disagree with the moral/philosophical issue being championed. Margaret Court’s recent tirade is testament to that. With a clear road ahead it is hard not to imagine corporations pushing the boundaries across a range of issues previously regarded as the preserve of the State.  Space flight is one very clear example.

Corporations now appear willing to step up when voids are created. Climate change is an existential threat so the role played by Corporations as good global citizens will be crucial if we are to survive the climate change threat. The more governments shy away from taking big bold decisions in the face of huge challenges, the more the public will come to rely on Corporations to save us from our elected politicians. This is a genie that cannot be put back in the bottle. We know who we elect warts and all. The intense scrutiny of the media in the 24 hour news cycle has seen to that. Social media has heightened our gaze. If Corporations become de facto leaders through absentee government then we have to ask just how much do we know about these unelected power brokers? Perhaps as Shareholders now we need to know where Directors stand on a range of issues from climate change, gender equity, marriage equality, LGBTIQQ rights, migrants and refugees etc. rather than just what business qualifications they have and what other Boards they sit on?

65-12-012

Victor Hugo described history as ‘an echo of the past in the future; a reflex from the future on the past’. History has taught us that when Corporations have unfettered freedom, think the East India Company, things don’t always go as we would like. Science fiction writers and directors most often cast the Corporation as evil in their imagined future and we all know how accurate they are in predicting the future look of things (hover boards aside).

1321_cc-vs-gw-vs-wx-768px

So next time you applaud your government for standing aside and letting ‘us’ get on with it, or celebrate the fact that our jobs will be safer and our electricity bills lower without action on climate change, reflect on this. It may not just be coastal erosion and devastating climactic conditions your grandchildren are fighting, but also some nebulous all-encompassing Corporation that cannot be elected out of office. Remember for every Jeff Immelt there is a Lehman brother or a Jeffrey Skilling. And remember we can’t rely on Iron Man. Our choice will be more stark than that!

 

 

All Credit to Shorty

20 Wednesday Jan 2016

Posted by Burning Manager in Uncategorized

≈ Leave a comment

Tags

AAA, Alan Greenspan, Allianz, Amercian Express, AMEX, ANZ, Bear Stearns, BOQ, Brad Pitt, CDOs, Commonwealth Bank, Deutsche bank, Dick Smith, Get Shorty, Goldman Sachs, Lehman Brothers, Margot Robbie, Mastercard, NAB, Rating agencies, Steve Carell, Steve Smith, The Big Short

 

file_606778_big-short-cast

I did something a little odd last week. I saw The Big Short with my stock broker. It wasn’t intentional. I had just settled into my seat then along he came with his family and plonked himself down right in front of me. An ex-Goldman Sachs man, I had cause on more than one occasion to lean forward and give him a reminder nudge (of the ‘nod nod’ ‘wink wink’ variety) or comforting hand on shoulder.

Great movie. Eminently watchable, even for those for whom the world of banking and finance holds little interest. It takes the audience on the magic carpet ride that was the Collateralised Debt Obligations (CDOs) in the US Housing market and the shameless acts of the banks and, worse still, the ratings agencies. The cast were routinely in fine form especially Steve Carell and the very brief interlude by  Margot Robbie explaining what a CDO is, while drinking champagne in her bubble bath, worth the price of the ticket alone.

30192FEB00000578-3396122-OPening_scene_Margot_Robbie_plays_a_champagne_swilling_blonde_in-a-14_1452644414548

I once populated the world of Private Equity in London so have some of the flavour of the heady environment, or more accurately bubble, in which these rarefied species exist. In fact I have been at one time a bubble-dweller myself. Never threw a dwarf – I admit- but did see dwarves thrown. It is, by nature, a high adrenaline ride where self comes before team, comes before company, comes before common good. This is portrayed accurately by the Ryan Gosling character as he sets up his company Deutsche Bank for a fall and himself for a windfall (as a funny aside I right clicked Deutsche to get the correct spelling and it came up with douche which when inserted in a sentence as  ‘douche bank’ sounds remarkably and accurately like something else).

I haven’t come here to bury the banks, nor praise them though. I just want to reflect on some issues around the Customer. What the film does very well is show us how little regard was given to the customer in the all the deception that was the CDO scandal. Wrapped up as much more stable than they were, sub-prime mortgages were bundled and then rated as AAA by the ratings agencies and the banks flicked these on as ‘copper-bottomed’ investments to the unsuspecting institutions and the public. There might be those who would suggest that it’s caveat emptor out there and sophisticated investors must be ever vigilant. While schadenfreude is a lovely cold gazpacho, it is worth reminding ourselves that along with the ‘filthy rich’, local councils and charities were duped into what they thought were sound investments and we all suffer as a result.

Seldom does an evening at home pass (except of course on Netflix) that we aren’t seduced by advertising that the banks are wonderful and they really have our best interests at heart. Take for example Steve Smith, our illustrious cricket captain (and good reliable bloke), who with the assistance of Commonwealth Bank (our largest and of which I am a shareholder) helps out a long-suffering cricket Mum with a makeover while he takes the kids to cricket. Who can CAN make this happen? – Commonwealth Bank of course. This is competing with the ‘NAB gets you’ clearly targeted at small business, until they call in the loan and then really get you. Bank of Queensland poses the question as to whether you can really love a bank? The advert’s underlying thesis is you can – BOQ who else? Try asking Bear Sterns or Lehman Brothers account holders that question.

The fact of the matter is a lot of money is being spent duping us, the public, and I think we all know this but tolerate it. Perhaps the difference here between the CDO scandal and the current advertising is we didn’t know what the banks were doing before the GFC with CDOs etc. It would appear Alan Greenspan didn’t so you can’t blame us. The common ground here is that there is a serious and morally questionable re-calibration of the truth in both cases. Take for example Dick Smith going into liquidation with the possibility of workers not receiving their entitlements. If the financial press is anything to go by, the decision by the banks to ‘pull the pin’ was based on timing whereby Dick Smith had received its inventory and sold it but not paid most of its suppliers (Apple and Samsung being two notable savvy exceptions) and cash had been generated by the sale of gift cards, most of which have not been redeemed and will not be honoured. I would love to see the Steve Smith advert re-cast with the long-suffering cricket Mum being given the day off, not to go to the day spa, but truck herself around the shopping centres trying to buy something using her Dick Smith gift card. My hunch is she would look a lot more frazzled on returning at the close of play!

Getshort

The myth that we have constantly fed to us is that the banks value us as a customer. I had my own first-hand experience lately with my Com Bank Mastercard that put this to the test. Having used the Allianz travel insurance associated with using my card to buy a holiday, I unfortunately had cause to claim based on a delay and missing flights and accommodation in the UK and Spain. Allianz, if their adverts are anything to go by, are a ‘Yes: What’s the question?’ kind of company. Their advert has their lovely Call Centre person going ‘Ah Allianz’ finishing the sentence of the poor fool who had just done something stupid and exclaiming ‘Ahhhhhh!!’. My experience was slightly different. Without drawing this out my response from them was  ‘Ah Allianz…NO’. So I thought I would cancel my credit card given Allianz was merely an agent acting on behalf of Commonwealth Bank. And so I proceeded to do so. That was an interesting exercise in tenacity requiring a few conversations with the call centres. Never in one of the conversations did any of those I spoke to at the Bank ask what they could do to put it right and what would keep me as a customer. I’ve never had one late payment and I’ve always paid in full by the due date. The cynical out there might suggest that’s why they couldn’t care less about me breaking my ties with them. Contrast that with Amex who I rather uncharacteristically had an issue with recently. They asked me what they could do to make me feel valued and while I was putting my mind to that, they proffered 30,000 rewards points. To scale that, I would have to spend $30,000 to get that through my own endeavours. Wow!

At our place we have found as we have moved from the articulation of the concept of cherishing the customer, and put our efforts into actually meaning this, – rather than getting the client to think we mean it – our business has grown. That doesn’t mean you can’t have the stern discussions when needed. That doesn’t mean there are some customers you actually don’t want. But the key here is honesty, integrity and being authentic. These are fantastic characteristics to have in business, as they are to have in life. In The Big Short Brad Pitt plays the character with the conscience. When the two young protégés celebrate when they realise they have just struck pay-dirt when shorting against the housing market, he makes it clear that their ‘whooping and hollering’ is a preface to a worldwide collapse leaving millions out of work and destitute. A timely intervention.

I’ll leave you with some lines from the movie.

‘The banks got greedy and we can profit from their stupidity.’

‘Fraud has never ever worked. Eventually things go south. When the hell did we forget all that?’

‘You target strippers with bad loans?’ ANZ might find this line a little close to the bone!

‘The American people are getting screwed by the big banks.’ You slot a country of your choice in here.

Chilling words and all arising from deception. A deception that is perpetuated in our living rooms every night. Don’t take my word for it, suspend judgement until the final line of the movie just before the credits roll….

Recent Posts

  • Happiness Can’t Buy Healthy!
  • Self-improvement is all the rage!
  • You Snooze…you win!
  • What’s In a Number?
  • Big Pharma – it’s time to cook!

Recent Comments

Your SCHEEME is Rad… on Your SCHEEME is Rad Man
joshymaters on Mystics and Statistics on the…
joshymaters on The Match Before the Matc…
Cool Offices | Const… on Cool Offices

Archives

  • June 2021
  • April 2021
  • November 2020
  • June 2020
  • March 2020
  • February 2020
  • December 2019
  • October 2019
  • August 2019
  • July 2019
  • March 2019
  • January 2019
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • February 2018
  • December 2017
  • November 2017
  • September 2017
  • August 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • July 2015
  • June 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014

Categories

  • communications
  • Uncategorized

Meta

  • Register
  • Log in
  • Entries feed
  • Comments feed
  • WordPress.com

Recent Posts

  • Happiness Can’t Buy Healthy!
  • Self-improvement is all the rage!
  • You Snooze…you win!
  • What’s In a Number?
  • Big Pharma – it’s time to cook!

Recent Comments

Your SCHEEME is Rad… on Your SCHEEME is Rad Man
joshymaters on Mystics and Statistics on the…
joshymaters on The Match Before the Matc…
Cool Offices | Const… on Cool Offices

Archives

  • June 2021
  • April 2021
  • November 2020
  • June 2020
  • March 2020
  • February 2020
  • December 2019
  • October 2019
  • August 2019
  • July 2019
  • March 2019
  • January 2019
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • February 2018
  • December 2017
  • November 2017
  • September 2017
  • August 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • July 2015
  • June 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014

Categories

  • communications
  • Uncategorized

Meta

  • Register
  • Log in
  • Entries feed
  • Comments feed
  • WordPress.com

Recent Posts

  • Happiness Can’t Buy Healthy!
  • Self-improvement is all the rage!
  • You Snooze…you win!
  • What’s In a Number?
  • Big Pharma – it’s time to cook!

Recent Comments

Your SCHEEME is Rad… on Your SCHEEME is Rad Man
joshymaters on Mystics and Statistics on the…
joshymaters on The Match Before the Matc…
Cool Offices | Const… on Cool Offices

Archives

  • June 2021
  • April 2021
  • November 2020
  • June 2020
  • March 2020
  • February 2020
  • December 2019
  • October 2019
  • August 2019
  • July 2019
  • March 2019
  • January 2019
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • February 2018
  • December 2017
  • November 2017
  • September 2017
  • August 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • July 2015
  • June 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014

Categories

  • communications
  • Uncategorized

Meta

  • Register
  • Log in
  • Entries feed
  • Comments feed
  • WordPress.com

Blog at WordPress.com.

  • Follow Following
    • burningmanagementblog
    • Join 100 other followers
    • Already have a WordPress.com account? Log in now.
    • burningmanagementblog
    • Customize
    • Follow Following
    • Sign up
    • Log in
    • Report this content
    • View site in Reader
    • Manage subscriptions
    • Collapse this bar
 

Loading Comments...