For a somewhat unconventional, but I think ultimately insightful, view of what has gone wrong in the private sector of our economy, and what needs to be fixed to avoid future financial crashes, look no further than the Chicago Bears football team and its "offensive coordinator", Mike Martz .
What does a football team have to do with the economy? In my estimation, plenty. Why did we have the financial crash? Apart from flawed government policy, on Wall Street, we saw:
• Inflated egos, to some extent based upon prior success, blinding executives to the perils of their current course of action;
• Decision-makers in positions based upon distant or illusory success;
• Over-reliance on 'what worked before', despite major differences in circumstances, and increasing indications of problems; and
• Insistence on 'shooting the messenger' or blaming those tasked with carrying out a flawed strategy, or even reporting on its outcome, for its failure, rather than showing loyalty and taking responsbility.
What do we see with the Bears and Mr. Martz? In his capacity as OC, he is essentially the head coach for the offense. How did he get there? He was in a similar position with the St. Louis Rams when they won the Super Bowl in 1999, and with many players who are either in the Hall of Fame (Marshall Faulk) or expected by most in the football world to eventually be there or at least have a solid shot (Kurt Warner, Isaac Bruce, Orlando Pace, Tory Holt, Aeneas Williams). While Mr. Martz and his schemes undoubtedly were important in the team's success, he still had a great deal of support from his subordinates.
Since 1999, he has had a mixed record, serving as the Rams' head coach in 2001 when they reached the Super Bowl, but were the victim of a stunning upset by Bill Belichick's New England Patriots, and as OC for the Detroit Lions and San Francisco 49er's, neither of which achieved much. After being out of coaching, he landed with the Bears in 2010, where his offenses have not been renowned, although the team has done well.
Why have his deficiencies come to the fore for discussion here? As noted by a renowned Chicago sports columnist, David Haugh, when Mr. Martz was forced by an injury to the Bears' starting quarterback to rely upon an inexperienced backup, he insisted upon asking the backup to perform difficult tasks ("plays") which would have been a challenge for anyone.
Worse, when they failed to work as intended in a critical game where victory was within reach, he pointed the finger at the backup for his poor 'execution' of the plays, and never acknowledged that they were poorly selected here. He insisted upon falling back on their prior success:
The system too often represents the root cause of the offense's most calamitous moments, even if Martz prefers to blame his players for them -- more on that later....
Calling a screen pass on second-and-1 from the 7 against the Raiders was bad enough when Kamerion Wimbley intercepted it and changed the game. But Martz made the situation worse when he indirectly indicted Hanie and refused to acknowledge any risk involved with the call.
"I've done that for 20 years and it's never anything but a good play really," Martz said. "We didn't execute it very well.''
It was reminiscent of the way Martz blamed "execution'' for the dumbest call of his tenure -- the failed end-around to Earl Bennett on third-and-3 with a minute left in the NFC championship game.
Too often during his two seasons in Chicago, Martz appears out of touch.
See anything familiar? A high level manager who achieved earlier success, possibly through serendipity, years earlier, insisting upon continuing the same approach despite much different circumstances -- different, less skilled or experienced players -- and repeatedly blaming someone else for failure, because of their own belief in their infallibility, never questioning or changing their own methods. Even the Bears' injured starting quarterback, Jay Cutler, Mr. Martz's subordinate takes him to task for not recognizing the need to adapt to current circumstances: '"Mike has to be careful with that because we don't really know what Caleb's comfortable with,'' Cutler said.'
Why do I write this? Apart from being a long time Bears season ticketholder, I'm also a corporate lawyer, and law school teacher, and as such a very interested observer of management methods, especially as they relate to global economic prospects. In this regard, I've published several law journal and other pieces on corporate governance in these pages, and elsewhere, including a very recent article in the University of California - Davis Business Law Journal entitled "Pay + Board Composition + Personal Behavior Does Not Equal Corporate Governance: In Search of Conceptual Change" in which I advocate major changes in our approach to governance. Whether or not the Bears make the playoffs this season will not materially impact America's GDP or national debt.
However, I strongly feel that this situation is indicative of much broader problems in the economy which must be identified and addressed at early stages before they can lead to future meltdowns. I'm writing so that the broader audience of investors, lawmakers, regulators and governance scholars recognize problematic behavior on the part of management, and step in early enough to prevent or contain its damage. When managers may not be well qualified for their current positions, but insist upon risky behavior and blaming subordinates for early indications of its risk level, its time for those above them to step in. Churchill was probably correct that [to paraphrase] 'World War II was won on the playing fields of Eton.' I'm going further and saying that we need to learn from the lessons of the playing fields in order to avoid repeating the debacles of Wall Street.