If you don’t know, Elizabeth Warren chairs the Congressional Oversight Panel (COP) for the Troubled Asset Relief Program (TARP). She’s been in the news a lot recently for her comments and opinions on the TARP program, many of them, not very flattering to banking executives. So why would I agree with her?
If you listen carefully to what she has to say, three things jump out at me that I agree with firmly. First, she is a proponent for Transparency. Absolutely! Pardon my stealing this from Barbara Mandrell (going old school!), but Nicolet was transparent when transparent wasn’t cool, so Ms. Warren’s belief in this lines up directly with our values.
Second, she wants consumers/customers to have a “seat at the table”. Bad things happen when you develop products for profit, not for customer need. Put your customers at the center of your decision-making and good things happen. Customers need to be a part of a company’s alignment strategy. True entrepreneurs will read this statement with bewilderment not understanding how a company can actually run contrary to this strategy.
Finally, a quote from Ms. Warren that is right on the money (from Business Week, Sept. 21, 2009, p. 24), “If there’s no credible threat of liquidation, then capitalism doesn’t work – and that’s true whether we’re talking about peanut butter manufacturers or hedge funds. After so many bailouts, it is critically important to design a system in which the winners survive and the losers get flushed away.”
Couldn’t agree more with this statement. In the real world, where entrepreneurs live, if you run your business into the ground and you lose investors money, you don’t run that business anymore. There are no bailouts and no, “Sorry, we knew we were deceiving our customers, but we won’t do it again” statements. You’re done.
I’m not a proponent of bank failure. That is one of the worst possible outcomes for a community. However, I am a proponent of not tacitly rewarding (read: keep their jobs, perks, mega-salaries, etc.) people/companies for blatantly doing the wrong things.
Folks, it’s this simple. Follow the money! If people are paid commissions for sales of financial products, can you really be sure that they are in YOUR best interest? If a company has to produce quarterly results for a profit-hungry group of analysts, are they really doing what is in the customer’s best interests LONG-TERM?
Remember this: Behavior Rewarded is Behavior Repeated.