Money vs. Culture

New York Times
I am a Greg Smith, late of Goldman Sachs, fan.  Bloomberg gave their counter argument today 
"Apparently, when Greg Smith arrived at Goldman Sachs Group Inc. (GS) almost 12 years ago, the legendary investment firm was something like the Make-A-Wish Foundation -- existing only to bring light and peace and happiness to the world."
Sure, everyone needs to make money.  But I think there were two important points Smith was trying to get across:


1. To make money you must have happy customers who keep coming back.  This is a cultural choice that companies make.  I wrote a blog a while back when IBM turned 100.  The killer quote was:
"I believe that if an organization is to meet the challenges of a changing world, it must be prepared to change everything about itself, except its beliefs." - Thomas Watson, Jr.
His point to the Goldman Board was that the culture needed to be redirected back to the basics that had made them successful for 143 years.

2.  He personally was not comfortable with the culture.  Good for him in choosing to leave.

Comments

Jordan Desilets said…
I think this goes back to the basics of when we are seeking a job ourselves. If we just go for the highest paying job out there that we are capable of getting you may find yourself very un happy at your job and in your home life Vs. if you look to something you can get passionate about. The Big Firm needed to keep customers happy and we as individuals look to keep family happy.

Thanks Bob for creating a company where we can have both...passion and profit. My family thanks you as well.
March 15, 2012 at 9:05 AM
Jack said…
Like :)

Some "experts" say it takes 10 years to change a company culture. I say "bull&^it". I've seen a poor leader poison a culture within 6 months and a superior leader turnaround a culture of a big company in a year.
March 15, 2012 at 12:13 PM
Post a Comment

Popular posts from this blog

Ringside Winding Down

A year ago, a group of us met in a pizza parlor to discuss how we could bring the social web to every website and business. In January, we launched Ringside Networks with seed funding from Matrix Partners, one of the best VC firms in the country. By the end of March we released into open source an initial beta of our Social Application Server – a very ambitious project. We got some very positive reviews on our approach, our implementation and the need in the marketplace for every website to become social. We were ready for our Series A round of funding, and in late May we received a number of term sheet offers from the very best VC firms. As we were about to finalize our funding, one of the biggest non-evil Internet companies asked if we would have interest in being acquired instead. After a lot of thought and debate, we decided that the larger company would enable us to get our technology to market sooner and with more impact. The story sounds almost too good to be true. And it w...
Read more

Capitalism vs. the Three Legged Stool

Image
Wikipedia defines: " Capitalism  is an  economic system  in which trade, industry and the  means of production  are controlled by private owners with the goal of making  profits  in a  market economy ." This definition has always bothered me. I prefer a different model where there is equal recognition of the three primary drivers behind the success of a company: Owners Employees Customers I like to think of it as a three legged stool, where each leg is as important as the other.  One gets too large or small and the stool tips over. The free market is supposed to take care of Employees and Customers.  Employees because the Owners will create so many jobs that due to supply and demand, employees will receive competitive pay.  Customers because if the owners are not building the right thing, then they can go elsewhere. As someone who has helped to build about 10 startup companies now, I have seen the power in mak...
Read more

Galbraith Revisited

Image
To follow up on my post from a while ago, Galbraith sited 5 key reasons for the 1929 crash and following depression: 1. The bad distribution of income. 2. The bad corporate structure. 3. The bad banking structure. 4. The dubious state of the foreign balance. 5. The poor state of economic intelligence. To compare this to today: 1. Bad income distribution. 1929 - Top 5% received about 33% of all personal income. 1929 - Top 1% held 44% of all wealth. 2000 - Top 1% received about 20% of all personal income. 2004 - Top 1% held 34% of all wealth. Here is a picture of the real income gains between 1979 and 2005 by percentage. It is clear that the top income groups are gaining ground faster than lower income groups - creating an income distribution that approaches 1929. 2. Bad corporate structure. In the 1929 era there had been a large rise in a "vast structure of holding companies and investment trusts... In particular the dividends from the operating companies paid the interest on t...
Read more