Lehman Brothers: The Demise of a "Common Cow" November 11, 2008
By Andrea Doyle
Last June's issue of Incentive featured an interview with Contented Cows Moove Faster co-authors Bill Catlette and Richard Hadden. They described companies that "get it" as those whose employees put extra "oomph!" in their work. Unfortunately, the majority of today's companies don't get it, they said.
They described "Contented Cow" companies as being employers of choice. Many have been repeatedly featured as a Best Company to Work For, by leading business journals. The "Common Cow" companies are not necessarily the worst companies to work for, but they have neither the reputation of being employers of choice nor any strategy that the pair can find that recognizes the connection between people and profits.
In the financial services sector, they described Goldman Sachs as being a "Contented Cow" and Lehman Brothers as a "Common Cow." This description was made months before Lehman's bankruptcy filing.
"We obviously had no way of knowing that the market's regurgitation of packaged 'liar loans' would bring about the demise of Lehman," says Catlette. "When we updated our list of Contented and Common Cows earlier this year, we felt that, relative to its competitors, Goldman Sachs enjoyed a distinct reputational advantage for attracting, managing and retaining a talented workforce. Moreover, by virtue of its selection as a Contented Cow, we were predicting that Goldman would continue to outperform Lehman Brothers. That said, while it would be easy to join a long list of people, including U.S. Rep. Henry Waxman (D-Calif.), who are piling on Lehman CEO Dick Fuld, I'm not sure that it serves any purpose to do so. Not unlike the bomber pilot whose 'target fixation' causes him to crash and create a big smoking hole in the ground because he can't take his eyes off the prize, Lehman management was similarly blinded to the realities of their situation until it was too late. Consistent with its Contented Cow traits, Goldman Sachs was much quicker to mitigate the risk of its own portfolio of collateralized debt obligations."
The premise of the pair's book is that the primary competitive advantage of organizations able to earn their employees' discretionary effort is speed…speed of ideas, thought, decision making and execution. "In this case, that speed afforded Goldman the time to maneuver for a softer landing and a much better outcome," adds Catlette.
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