Dear Mr. Blankfein,
Goldman Sachs is clearly at a crossroads. It's not about whether the firm will be found guilty of the fraud charges lodged against you by the SEC.
It's not about whether your firm will survive and continue to prosper. There's little doubt it will, no matter how many standoff Senate hearings are held, and no matter what sort of financial reforms get enacted.
The real issue, Mr. Blankfein, is what kind of company you want Goldman Sachs to be going forward.
The threat you face is also an opportunity to rethink the role you play among your peers, and to redefine your company around something beyond simply maximizing profits.
Your challenge is to move beyond how much value you can add to the bottom line, and to widen your perspective to consider how much value you can add in the world.
Let's start with your employees. What kind of promise are you making to the young people who come to work for Goldman? Some would argue they're among our nation's best and brightest. They're almost certainly among the highest achieving and most driven of their peers.
In 2008, 40 percent of Harvard's graduating seniors went into banking or consulting and many of them went to Goldman. But here's a more telling statistic: only 20 percent of those seniors -- 1 in 5 -- would have made the same career choice if money were not a factor in the decision. The rest -- 80 percent -- would have chosen to go into the arts, the media, or public service.
Are we better off that they chose banking? Are they?
The value exchange you and your fellow bankers offer to top college graduates is time for money. You pay them more than anyone else does, and what you ask for in return is nearly all of their time and mind share.
It's a thin, one-dimensional exchange. They learn to trade, create arcane financial instruments and make deals, but not much else. And with that narrow perspective, the end has increasingly come to justify the means, and your industry ultimately imploded as a result, to everyone's detriment.
The people you hire don't have the time or the encouragement to reflect on who they want to be, to challenge themselves creatively, or to contribute to the world in which they live.
Instead, the most successful among them become money-making machines. Is it a surprise that they see their work not as a calling, but as a means to an end -- getting rich enough, fast enough that they can retire early, so that they can be free to do something more satisfying?
Here's what a former Goldman associate told a Washington Post reporter last week: "A lot of people decide to sacrifice much more time than they normally would because the money is so good, and then they believe they deserve extremely high pay because they're giving up so much time. It's not malicious. But there are a lot of unhappy people who end up in that situation."
I run an organization that helps companies better meet the needs of their employees. We've done a fair share of work in banks. Over and over, we've met people who drive themselves hard and work long hours in the pursuit of extraordinary material rewards. But we've also encountered a lot of bankers with a hunger for more satisfaction from what they do and more meaning in their lives.
Mr. Blankfein, after your testimony this week, most Americans don't buy your claim that Goldman is in business to "help government raise capital to fund schools and roads," or to "work with pension funds, labor unions and university endowments to help build and secure their assets for generations to come."
Instead, most Americans believe you and your fellow bankers are in business to secure your assets for generations to come.
Rather than trying to get more out of your people, could you consider investing more in meeting their higher needs for meaning and value, so the promising young college graduates you recruit come there for some reason beyond money.
It's striking that among Goldman's famed list of 14 business principles, not a single one has anything to say about your role in the community, or in the world. Or even about investing in your own people.
Is there something beyond providing superior returns that Goldman could come to stand for? Why not use more of the company's vast wealth, power, and intellectual capital to help address the world's economic challenges and add value to people's lives -- not as a way to burnish your image, but rather because that's what a great company ought to do.
If you stand for something more than money, the people you hire won't have to choose Goldman by default solely because you pay them more money than anyone else. And if you begin to meet their need for meaning and value, you'll truly attract the best and the brightest, and they'll help you redefine and recreate Goldman Sachs.
Sincerely,
Tony Schwartz
Follow Tony Schwartz on Twitter: www.twitter.com/TonySchwartz
There is no mistaking that the way we're working isn't working. Figuring out why this is so -- and what we can do about it -- is the animating idea behind The Way We're Working Isn't Working.
Here's the greatest benefit this new test offers to voters. It lets us say to politicians, once and for all, on one of the most crucial issues of our day, those words every citizen longs to say to a long-winded public servant: Put up or shut up.
After Mr. Blankfien get's done reading you memo, I hope he reads my comment, quits his job and uses his millions to do something for the biosphere. [sarcasm]
Never ... going ... to ... happen.
Unless you make them. They won't be any more responsible but the world will be vastly better off.
'they believe they deserve extremely high pay because they're giving up so much time. It's not malicious.'
brings up the inevitable alternative view on this subject:
That it is the worst joke in history to find that capital allocation on this planet is not driven by rational decision making at all. It is driven by the career choices and the narcissism and the emotional trauma and sickening sublimations of self-hatred of people who could have flourished and instead were destroyed by apparatchiks.
Yes, I agree. Mr. Blankfein will have to think about that.
And if he cannot find any good business case why he should be thinking about that, then he should be going back to business school. He might learn that there is more to rational decision making than meets the eye.
It might turn out to be something along the lines why the Soviet empire failed.
It's not just Goldman Sachs that's the problem but the fact that the entire PONZI scheme of 1.4 quadrillion in worthless derivatives and credit-default swaps must be wiped out of existence through a global ultra-strict Glass-Steagall standard.
1.4 quadrillion is many times more then the global GDP and has no right to be collected by the thieves who run these frauds like Goldman Sachs and JP Morgan.
A choice is not 'what will Goldman Sachs do in the aftermath' but 'will the United States destroy once and for all the fraud of worthless derivatives and credit-default swaps by putting gambling casinos, such as Goldman, into RECEIVERSHIP and Chapter 7 liquidation'?
From: Kraus, Peter
Sent: Wednesday, September 26,2007 10:15 PM
To: Blankfein, Lloyd
Subject: Re: Fortune: How Goldman Sachs defies gravity
I met with 10+ individual prospects and clients (and 5 institutional clients) since earnings were announced. The institutions don't and I wouldn't expect them to, make any comments like ur good at making money for urself but not us. The individuals do sometimes, but while it requires the utmost humility from us in response I feel very strongly it binds clients even closer to the firm, because the alternative of take ur money to a firm who is an under performer and not the best, just isn't reasonable. Client's ultimately believe association with the best is good for them in the long run.
Our current educational system is a TOTAL SCAM. Read Martin Anderson's famous 1992 book "Impostors in the Temple".
http://www.amazon.com/Impostors-Temple-Decline-American-University/dp/0671709151”
It's structural, Tony; there's no point in wishful thinking about how people might uncover the lost hippie in themselves.
My elder daughter is a vet and my younger daughter is an engineer, and both of them have already seen most of their classmates opt out of their professions and go into something sales-oriented, which pays much more money. It's always the easy way to go. That's why I noticed Blankfein.
Deja moo - I've seen this bullshit before.
GS is a dinosaur....think about it, the Hudson Bay Trading company failed pretty fast after a hideous assault on the wildlife of America.....we all wish for the demise, not re-forming, of GS.
May they fail soon.
Not that I'm really a believer...
"Anything is one of a million paths. Therefore you must always keep in mind that a path is only a path; if you feel you should not follow it, you must not stay with it under any conditions. To have such clarity you must lead a disciplined life. Only then will you know that any path is only a path, and there is no affront, to oneself or to others, in dropping it if that is what your heart tells you to do. But your decision to keep on the path or to leave it must be free of fear or ambition. I warn you. Look at every path closely and deliberately. Try it as many times as you think necessary. Then ask yourself, and yourself alone, one question.... Does this path have a heart?.... If it does, the path is good; if it doesn’t, it is of no use. Both paths lead nowhere; but one has a heart, the other doesn’t. One makes for a joyful journey; as long as you follow it, you are one with it. The other will make you curse your life. One makes you strong; the other weakens you."
- Carlos Castaneda
rather than skimming off moving other peoples money around, ponzi schemes and risky gambles