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The Great Recession: The Dark Side of Leadership

(Transcript of Toastmasters, 4th level speech given in Aug 2014.)


Trust me I’m a Leader

I am angry about the greed, selfishness and stupidity of the leaders that created the greatest recession in our lifetime; about the livelihoods destroyed; and the fact that justice has not been served. I believe The Great Recession was not a banking crisis, it was a moral crisis.

The recession was no accident it was a man-made disaster designed to enrich the leaders of powerful institutions: in government; at our regulators, and most of all the leaders in finance.

In my speech today we delve into the witches’ brew that poisoned the economy, causing it to fall to its knees and leave it gasping for breath.

To uncover the malaise of the economy we must explore both the system failures and the leader / follower psychology that lead to these systems failures. The faults in human nature that may explain how we got into the mess, and why justice has not been served.

The First Poison: Deregulation 

To get to the root of the cause we must venture back to the scene of the crime, to 1980’s America. Under Reagan’s Republican presidency each safety mechanism within the banking began to be removed; the result of fierce lobbying and bribing from the finance industry. This deregulation was akin to removing the brakes and safety cage in a Formula One car to make it faster. A deadly act.

The deregulation of finance continued in America and England under each new successive government. Left and right-wing parties were each equally enchanted by finance’s money.

A Deadly Combo

First: the belief that home-owners vote Republican. Home ownership moved from being an economic issue to a political one because right-leaning governments believed home-owners were more likely to become republican or conservative voters. Governments therefore skewed house building and buying by promoting home-ownership. A political intervention that led to huge mortgage debt and housing inflation.

To make the first ingredient dangerous, though, you must add financial engineering. The wizardry that made finance complex and opaque through, currency swaps, futures, derivatives, hedging and Collatarized Debt Obligations (CDOs). All designed to make billions out of thin air, simply by siphoning the world’s money into the financial mathematician’s dark arts.

The scene was now set, the controls on banks had been removed, governments had promoted mortgages as an achievable dream, and new financial tools could reward and disguise insane lending practices. A model now known as sub-prime mortgage lending.

But all of these dangerous ingredients could have been stabilized with just a small pinch of ethics and morality. Alas, this precious resource had been destroyed by greed across the finance community a long time ago.

Consequently, poor Americans were hoodwinked into buying mortgages they could never afford. They were sold a dream – at high interest – that they could never repay. Their bad debt was then packaged up together and placed into the financial wizards’ black box, the most infamous being the CDO.

To complete the illusion that billions of dollars of poor Americans’ debt was pure gold they were rubber rubber-stamped AAA ‘safe’ by the rating agencies – the highest grading.

The scene was set for the final act; turning toxic debt into pure gold. How did they achieve this? The dark lords of finance marshaled their foot soldiers to smear the debt all over the global financial system by selling it to gullible and greedy banks from London to Sydney. In addition, any debt they could not off-load was insured with naive insurers, such as AIG. And voila, they turned toxic sludge into gold!

Banks and the financial systems all over the world were infested with the poisonous debt they had been miss-sold. All this happened at a time of cheap money, and the delirious believe that boom and bust cycles had been eradicated by the new economy that leaders in finance and government had engineered. This led to banks making larger bets and taking on more risk; all designed to enlarge their egos and bonuses.

Sub-prime mortgage debt became the deadly virus that nearly killed an, already, rotten banking system.

The House of Cards Collapses

During the orgy of finance, the finance professionals were getting higher and higher; on the money they were raking in; the cocaine and champagne they were devouring, their growing egos’ sense of triumphalism. They thought they were the masters of the universe by getting drunk on the witches’ brew. They were having a great party.

But then brew ran out, the delusional curse lifted and the harsh reality came crashing in.

The finance community woke up on September 22, 2008 to find one of the largest investment banks, Lehman Brothers, had collapsed with $613 billion of debt, triggering a global financial meltdown.

They finally saw the consequences of their over-indulgence, their selfish risk taking and the harsh reality of what they had created. The financial leaders were no longer brilliant business-men, masters of the universe. They were merely greedy, short-sighted, egotistic men who got it wrong – but it was us that had to pick up the pieces, the little tax payer.

Through the financial meltdown that ensued millions of us became unemployed, and millions more were thrown back below the poverty line.

But the architects and the benefactors of the excess; the bankers, they went unscathed. Their bonuses were kept, their careers continued and none of them appeared in court. Why?

A Deeper ‘Why’

My research into why the crash happened, why no justice has been served, and why so few lessons have been learned revolves around two unfortunate traits of our psychology.

  1. The belief in leaders

We believe in powerful, even narcissistic leaders, the ones who’s confidence conveys much greater wisdom, intelligence and vision than is real. They sell us the promised land and we follow.

  1. Learned helplessness

In the face of confident and strong leaders we become malleable and helpless. We stop thinking for ourselves; we stop challenging and, ultimately, outsource our futures to someone else.

The evidence for these psychological traits is beautifully captured in a series social science experiments. The research study listed below took place at several universities in America.

Three students walk into a room for testing, they are given simple tasks and quizzes to perform. One of the three students in each session is given the role of timekeeper and coordinator. The timekeeper is given one of three titles, either: Assistant, Timekeeper or Boss.

In these tests, which included a plate of biscuits, each person given the title Boss when timekeeping became louder, selfish and dominating. And the majority of them even performed better than the other two in the tasks and quizzes. They also spoke with their mouth full and made a mess with the biscuit crumbs. Obviously, normal social rules don’t apply when you are the boss.

In every session the person labeled Assistant became quieter, contributed less and performed poorly. The label of timekeeper on the students had no noticeable difference.

These students all entered the room as equals, and by randomly allocating titles each person allowed themselves to fit into an implied hierarchy.

Imagine how powerful the force of hierarchy and titles is in the real world of business. Employees are fed company propaganda that are reinforced by a media driven by a business agenda. How many employees felt their leaders were wrong leading up to the crisis but dismissed their own judgment because the world presented these CEOs as faultless, successful visionaries?

Stopping the Cycle

Too much power and control is being concentrated in the hands of leaders at our institutions, we must learn to be strong and challenge the leader, to shine a light on their lies and bad decisions. If we do we might stop the next crises.

We must break free from the corrosive constraints that hierarchy and titles impose on us, because there is only one label that counts, and that’s Human Being. We all have a voice and the right to a better life. There is only one person who will lead you to your promise land and that is you.


Further reading:

Bank of America fine

New banking rules in USA

New banking rules UK

Documentary explaining the financial crisis

Book on the dark side of  leadership

Social Psychology Experiments

Russell Brand’s take on leadership

Toastmasters 4th Level Speech


Quick call the CRO (that’s a Corporate Reputation Officer)

saints-and-sinnersYes it may surprise some of you that the CRO role exists. At first you might say, “gosh I never new companies employed such people” and then once you accept the fact you may then ask, “well what on earth have they been doing?”

We are supposedly working in a reputation economy, a term coined by the Reputation Institute, but Anglo-Saxon corporations and institutions are suffering from battered reputations.  The wall of shame is plastered with our tax-dodging American cousins, the likes of Google, Amazon and Starbucks and our own scandal-ridden organizations, ranging from the BBC, NHS, Met Police to our dodgy Libor rigging banks.

All of these organisations care about their reputation, the CROs and their ‘C’ suite will have reputation risks logged in their Risk Register.   But it appears ego, a lack of accountability and pocketing short-term profit has run roughshod over reputation. Probably because reputation is notoriously hard to measure and because it’s everyone’s and no one’s actual responsibility (the CRO only ever advises).

I’d like to think the recent scandals might deliver a new caliber of CRO. Someone who would have said at Google’s board meeting, “Eric I know we aren’t technically breaking any laws, and paying tax to those ungrateful Brits will cost us millions but I think you should safe-guard our reputation and live up to our ethos of ‘do no evil.”

Or maybe at the Met Police a CRO might have plucked up the courage and said, “surely our job is to protect and help the victims of crime rather than dig up dirt on them to save our own pathetic hides”.

The one silver lining amongst all this selfish, bad behaviour from society’s so-called leaders is many of us are further up the moral high ground than we originally thought.

A Surprsing Story of Yammer Adoption

yammerOur first flush of success with Yammer was actually born out of a far grander ambition, that was: to replace our old Intranet with one of those shiny new social Intranet versions. An Enterprise Social Network (ESN) possibly.

The Int Comms team and IT colleagues had been rigorously following the text-book steps to gain board approval for budgets. The Business Case was written, the CIO and HR Director were on board, and the major platforms had been reviewed: SharePoint, Vibe and Joomla.

But we couldn’t get approval from the board. Our problem was two-fold, firstly we did not have a culture of collaboration amongst our front-office consultants. And secondly budgets were being cut, and the board did not think the Intranet was ‘broken’ and in need of scarce investment money.

The business view was the Intranet was the place you visited, consultants ‘worked’ in the proprietary recruitment software.

Soon after, though, a glimmer of hope came via the new CEO. He had ushered in a new ambition to service clients globally through international Account Managers and new director-level Sector Heads.

One of these sector heads made the link between one of his biggest business problems and the social/collaboration myself and IT had been touting. Although, as is typical in a sales environment, he wanted a solution now.

The Internal Comms team and IT sat down and agreed the quickest solution was to give Yammer the opportunity. Yammer had been sitting there in the background and had been tinkered with by the comms and tech hobbyists. Lots of people had picked it up but like a sickly, crying child at an orphanage but no one had, truly, adopted it.

So the Intranet project team changed its focus from a big ESN solution to achieving Yammer adoption with one section of the business: Banking & Finance. This was our plan.

To over-come the sales consultants reluctance to share and collaborate we’d focus on two specific goals for Yammer and collaboration:

  1. Build and share knowledge of our major international banking clients and uncover leads for projects; the Holy Grail in recruitment.
  2. Socialise the new banking sector strategy via a white-paper document.

To smooth the path for this desired change we set up conference calls with each office involved. In the calls consultants were sold on the concept of collaboration and shown how to use Yammer. All the banking clients were set up as groups in Yammer in advance, along with sector-trends groups for technology and skills.

The Sector Head Director involved himself with regular updates via Yammer, and a community manager was put in place. The community manager ensured all client meetings were posted (access to the sales systems gave visibility to the client meetings history).

The new business that was won via Yammer updates was recognised by the Directors and the consultants were rewarded.

The new banking sector strategy was outlined in a white-paper accessible via Yammer (but hosted on SharePoint for security). This move generated interest and buy-in from leadership in particular.

After several months we had 90% sign-up of the target group and 80% of all client-meeting details were posted on Yammer. Clients started to receive a better service from informed consultants, and business was being won. And the sector strategy benefited from feedback and suggestions from several countries.

To wrap up I’d recommend those Internal Comms functions trying to drive through new social Intranets and a culture of collaboration pick very specific opportunities, choose tools which are easy to integrate and always work closely with your IT dept.

And for those astute forward thinkers who are thinking, “what do you do with the Yammer groups if you choose another solution for your ESN?” Do your research, I’d start here:

… and the Winner of Best Service Brand is: Pimlico Plumbers


Has the BBC rectified the damage The Apprentice made to the image of business: quite possible by making Peter Jones Meets? Last Sunday’s episode gave us a fascinating insight into one of the most famous plumbing brands on the market, Pimlico Plumbers (granted there aren’t many contenders).

The cause and effect of their brand management came bounding through.  Firstly the cause, Charlie Mullins the cockney MD has an unflinching commitment to his service, image and brand. And the effect, my word it bloody well works; their typical score on Internet reputation sites is on average 9.4 out of 10 – incredible! Many of us only dream of building such strong reputations for our brands. And he’s done it in plumbing.

This small outfit has achieved the effective brand management larger companies invented but maybe they should take a lesson from Pimlico. Charlie Mullins may not win any awards for his visual brand identity but his small team of: HR Manager, Marketing Manager and Customer Service Manager have created a culture completely aligned with their brand bible. Apparently Charlie created the ‘bible’ just after he narrowly lost everything to liquidators and replaced all his staff.

Well they do say you can drive through change more effectively if you are on a burning platform. His platform had burned and he was paddling in a sinking lifeboat.

As with all great brands their message and promise is simple and clear:

  • We’ll turn up on time,
  • We are presentable,
  • We’ll give you transparent prices (not the cheapest)
  • We’ll give honest advice
  • We’ll clear up afterwards.

In an age when all businesses are trying to build engagement with their brand to get staff “living the brand” it comes almost as a shock when Peter Jones asks Charlie what happens if anyone fails to live by the brand bible, his response, “they are sacked”.

As draconian as this approach sounds though every plumber knows what he or she is signing up to. This celebrity-courting operation is famous for its rigid rules but also its success, and the plumber’s wages. And they probably like the adoration their service creates.

But as inspirational as their story is what can brand managers and HR really learn from and apply from these plumbers? Without Charlie over-seeing every detail and keeping everyone in line with his bible would the company and brand still thrive. Or would it break down into just another mediocre plumbing outfit.

Time will soon tell because Charlie is off to set up in sarf Londoner’s paradise, Marbella. Good luck Charlie, the ex-cons are looking forward to their leaky bogs being sorted out.

Smart Protestors Influence Change

tumblr_m65exoShnm1qbwvhpo1_500Fresh on the back of a change management session from the godfather of “viral change”, Leandro Herroro, I witnessed a scene which reinforced one of his theories about change. Which is: people only change their behaviours if people close to them (both in personality and proximity) change theirs.

The corporate world is always banging on about change but I’m particularly preoccupied with it because we are rolling out a new corp strategy. We are guilty of playing buzzword bingo, it seems, in every meeting. I’m constantly spewing out terms like change management, change programme and changing mind-sets.

So back to the scene. Whilst strolling to a business meeting in the City I noticed a protest against biomass energy outside a bank. On closer inspection I recognised some of the protestors (I’ve been protesting against climate change since 2005) but because I was dressed as the enemy, suit and tie, I put my head down to avoid being seen. At the same time two city boys observing the protest remarked, ‘look at those bloody tree-hugging w*nkers why don’t they shut up!’

Hmm, guess the protestors may not have achieved their desired result with these two chaps. I doubt those city boys will be going back to the office and asking their managers to reconsider investing in biofuels. Or rallying their colleagues against the futility of burning wood because it creates more emissions than coal, and maybe asking their board to take a more ethical approach to investment and CSR.

I shall be recommending formal business attire for all future protests in the city at our next protest planning session.

New CEO Blog site – technology and luck

imagesThe CEO took some convincing he needed to write a blog but for the last few months he’s seen the point of it all – leadership and dialogue all from the desktop. But no matter what I did with the copy the site was dull; how dull? We were languishing on a standard SharePoint 2000 site knocked up by IT, it was as engaging as the Ministry of Tax’s guide to Self Assessment.

So when the CEO said: “can I at least have some pictures, it’s so boring looking” I had to agree. But how to fix it quick, CEOs are never patient.

Now internal comms people have a mantra you’ve got be well, talking and listening to the folks around the business to know what’s going on. Well one function I’m always in touch with is The Online Team and the previous week we’d been shooting the breeze about their new web architecture Joomla.

Now the great thing about doing God’s work (the CEO is holy in most corporations) is you can drive through most requests with “It’s for the CEO”. Sure enough the following week through the combination of Joomla and the gravitas of the requester we had a new working blog, even if it was just a demo. One happy CEO. Over the next few weeks we worked up the design and adjusted the functionality; in total it was four weeks from idea to launch.

Now our good luck didn’t stop there. We actually had something interesting to say for the first post on the new blog site. The CEO posted his thoughts on the recent Strategy Day AND we have a big push to re-locate staff to the new Japanese and Russian offices so we hyped that up too. Result: lots of traffic and lots of comments; many of which were about the new site.

So thank you fate, Joomla and the Online Team – the Brand, Culture and Comms team are bathing in the warm glow (of brief ?) success!

CEO succession in SThree style

FreddieMercuryKingToday the 31st Dec 2012 is the end of a remarkable journey because Russell Clements officially retires from SThree. The full story starts 26 years ago and no doubt this epic tale will be captured in his memoirs. But for the moment I want to focus on the last six months, from the moment the announcement he would retire was made.

When I was initially told Russell was retiring back in May I was a little stunned. Changing CEOs at any company is a big deal but for me (and many others) it was a massive deal. This wasn’t just about replacing some jobbing CEO cruising through a list of plcs. No this guy helped form the company with the founding partners 26 years ago.

A person, a leader who was considered one of the smartest, most opinionated, driven and entertaining characters of any FTSE 250 board. A person so committed to our “work hard and play hard” culture that at 48 I can see why he had to hang up his boots.

So the challenge for us managing the change (including the swapping CEOs) was to give Russell a suitable send off, and to move the new CEO, Gary Elden, into the leadership position.

For Russell’s farewell an unofficial deal was struck. The deal was: all of us in SThree would show our gratitude and respect by giving Russell the biggest farewell any UK plc CEO has ever had; in return you Russell will attend over two month’s of farewell parties.

Well both sides played their role wonderfully. Farewell staff video postcards from all offices, and former SThree leaders were produced and Russell attended over 30 farewell parties across the world at our various office city locations.

My role in planning the change through the corp communications felt morbid at times. I had worked closely with Russell for 12 years, since he first gave me the job at SThree, and the process felt eerily like arranging his funeral!

But I’m glad and relived to say everything went better than planned. Russell was given a send off more akin to a rock star and the new CEO Gary Elden is firmly in place as the new leader. Everyone is confident about Gary and his new strategy.

So good luck and thank you to Russell and to Gary; bring it on in 2013!