By Phil Read
As the anniversary of the collapse of Lehman Brothers has just passed, I think it is important toreflect on the casuses of its demise. Many explanations have been offered, but one important angle has been overlooked. Lehman Brothers was in the grip of four games, which were played consistently by the senior management over at least the last two years.
Instead of looking at their mistakes and correcting them, they spent much time assigning blame for their plight to others. Even after the collapse Fuld was still at it. "Wearing an unapologetic scowl, Fuld spent three hours explaining to Congress this week why it wasn't his fault that a 158-year-old institution evaporated under his watch. In scattergun fashion, he blamed the Federal Reserve, naked short-sellers, a "systemic" lack of confidence, media sensationalising and inconsistent regulation."
"No Bad News" and "Shoot the Messenger"
Negative data was never taken at face value, and those bringing it were punished. "Fuld had used this aggression to consolidate his reputation as the most successful chief executive in the banking business and one of the most respected corporate leaders in America. But the style also contained the seeds of disaster. It meant that nobody would or could challenge the boss if his judgment erred or if things started to go wrong."
"Old War Hero"
The organisation was repeatedly told that they had weathered storms like this before and come out stronger, and that there was no need for change or panic. Fuld had had buyers for Lehman Brothers months before the collapse, but had refused to even consider them saying that "the company was independent and had "risen from the ashes" even in very hard times, and that this was "just a rough patch".
Games at work can cause real damage to the livelihood of the those who depend on our companies - shareholders, employees, suppliers. All the more need to understand and minimise their impact.