The “Deciders”

The “Deciders”

Ever know one of those men or women who just happen to do one job so well that they keep getting promoted. Up and up and up. They may even have an educational pedigree that makes it all look so much more impressive. I work in the entertainment industry, and I see these fair-haired “boy or girl wonders” make a few good (lucky?) picks on film projects or TV shows, be declared “geniuses,” and move up the corporate ladder.

I also see bright folks who worked hard to get to a place of power, make all the right decisions based on that hard work, and then just assume that they “have the gift,” and believe that their decisions going-forward will all be good even if they stop working and learning in a changing universe. They keep applying what they’ve learned so well in the past and are even terrified of deviating from their experience path for fear of jinxing their decision record. They’ve learned to “talk the talk” and “walk the walk” such that everyone around them is convinced that they always have the right answer. They also tend to surround themselves with folks who confirm their perpetual “genius.” This can work for a while, but…

As empirical facts contradict their new choices, even as the marketplace and technology conflict with their perception, they are so isolated and surrounded by “yes” men and women that they actually believe that the choices were good at the time and whatever made them fail could not possibly have been foreseen or have been their fault. Blame others or “circumstances”!

They often remove people who contradict them and hang out with other equally “powerful” people to enjoy the heady lifestyle of the rich and powerful. They attend posh, invitation-only retreats, engage in lots of public speaking and public appearances, hobnob with world leaders… instead of spending time learning about the changes that will eventually provide the instrument of their demise. Sometimes, they'll even preach clear and distinct paths to future growth that are flat out wrong just to cover up an earlier mistake that is now proving costly.

I’ve seen broadcast television network chiefs tout the invincibility of their model, the necessity of broadcast network advertising to “mass market” products and services – even in a world where mass marketing has been dead for almost a decade and where network ratings average under 3 million viewers in prime time (out of about 100 million household(s) with television in the U.S.). When CBS – the highest rated network – plunged by over 70% in stock value in the current meltdown, the market caught up to the myth. Studio executives in search of a never-ending supply of “stupid money” were waking up to find that production financing for films was getting hard to come by these days.

It is so strange to watch this set of behavior patterns repeat itself at the highest levels of the federal government. I seem to recall a Harvard MBA, head of one of the most powerful investment banks on earth, groveling before the Securities and Exchange Commission to persuade them to relax the borrowing restrictions placed on financial institutions so that his investment bank could borrow more to buy theoretically valuable stuff like… er… subprime mortgage derivatives and credit default swaps. The SEC deferred to this powerful and legendary genius' sterling pedigree and said yes on April 28, 2004.

Sure his company bailed on a lot of that (apparently not-so-valuable) stuff after he left, and yeah, those borrowing levels proved toxic to two of the banks that got relief from those borrowing restrictions – Bear Stearns and Lehman Bros. His old firm is currently “de-leveraging” from the mistake of letting debt pile high on the company’s books (or as they called it, "significant market dislocation").

But in his next job, this Harvard ("genius") became a global political force; he was now a Cabinet Secretary to the President of the United States. He was hobnobbing with the hobnobbiest of the hobnobers. Unfortunately, he was still making the same decisions, surrounded by the same folks he had back at the firm. Funny thing though, for almost a year, every major decision he made turned out to be wrong. He announced new policies, selling them to Congress with his charismatic aplomb (and the credibility of his Harvard MBA and his tenure as the CEO of the leading investment banking firm in the world), and then reversed his own decisions, changed course and made contradictory pronouncements.

His governmental job description looked a lot like how he carried out his CEO responsibilities in his waning days at the bank. He advised and served major corporate institutions. He hung out with top financial ministers and “did what they did” even though his country was profoundly different. He was now faced with the responsibility of fixing the derivative mess he (lobbied so hard to) create. Only now, the economy was plunging at his every move. As the child revealed what everyone was too afraid to admit in Andersen's classic tale, the markets could now see that the emperor had no clothes. You’re not at Goldman Sachs anymore, Henry Paulson, and that Harvard MBA isn’t big enough to cover your posterior. Sadly, Henry, the markets are just like you... completely without direction!

I’m Peter Dekom, and I approve this message.