The Lesson of Lehman: Do the Opposite

In a fascinating article in Forbes recently, Harvard Business School Professor Michael Beer sets out his answer as to why Lehman Brothers collapsed into bankruptcy a year ago just now. Beer believes that the senior leaders at Lehmans, and the other financial institutions which crashed last year, made a series of choices about how to build their firms that contravened crucial principles concerning purpose, strategy, risk, motivation and truth.

Purpose: They Failed to Establish It
Strategy: They Failed to Stay on a Path
Risk: They Didn't Limit It, Financially or Culturally
Motivation: They Weren't Playing for a Team
Truth: They Didn't Let It Speak to Power.

Many of the financial services firms that succumbed in 2008 were old, revered and proud, and their leaders thought they were presiding over healthy, enduring institutions. Yet few of those leaders understood what a truly healthy institution looked like, let alone the leadership principles for building one.

According to Beer, the lesson from Lehman is that it is vital that the leaders of companies coming out of the recovery--especially of those with the greatest power in the global economy--understand the five critical choices about higher purpose, strategic focus, limiting risk, motivating through team values and enabling truth to speak to power. Those choices need to be a standard by which we judge our corporate leaders, so we can spend the nation's next 232 years looking forward, not backward.

http://www.forbes.com/2009/09/14/lehman-strategy-failure-leadership-managing-risk.html

The Lesson of Lehman: Do the Opposite