President’s Letter

The Era of the Long Tail Crisis

Will it ever end?

Much ink has been devoted to the travails of JP Morgan Chase, once the darling of Wall Street and even much of Main Street. As of this writing, JPMC is still spending its way out of scandal with financial settlements of historic proportions. It’s been a curious journey for CEO Jamie Dimon. It’s hard to imagine anyone handling an imperfect situation any better on the legal and reputational fronts.

But JPMC’s travails also make the point that since the Great Financial Crisis we have entered a new phase: what I call the Era of the Long Tail Crisis. In this era the “crisis” for an organization never really ends – it just lurches, or pivots, from one moment, or event, to another and in some Zen-like waking nightmare, wherever the CEO goes, there he is. . .in the same place. Or so it can feel that way.

How did we end up here? Even though I’ve been advising clients on crisis issues for decades I don’t think there’s an easy answer. And even though there isn’t much that I haven’t seen at both the human level and at the commanding heights of the organization, this is new. The best we can do is to begin to measure what’s changed at three different and related levels:

  • Individual Empowerment: Greg Smith, Fabrice Tourre, Edward Snowden. It’s a long list. Individuals who became the story at the meta-level of significance. Smith, who explained why he left Goldman Sachs; Tourre who fought the power and lost; Snowden who fought the power and evaded capture. Add to that a new generation of whistleblower cases that have emerged and employee discrimination matters. The once lone person in corporations big or small has become empowered and emboldened like never before.
  • Government Activism: There’s a new sheriff in town. Or rather sheriffs. The SEC will no longer accept “neither admit nor deny” in all cases. The CFTC differentiates between fraud with intent and recklessness. The DOJ wants billions and billions of dollars to settle cases and no Wall Street firm is too big to jail. And it’s not over. You can expect regulators and law enforcement to be far more vigilant going forward.
  • The Speed of Now: The rate at which news travels, stakeholders respond, information goes viral, opinions are shaped, and decisions are made has accelerated dramatically. The notion of the “news cycle” has changed. There are now “cycles within cycles” and they happen across media – print, digital, the written word, the compelling image. There’s no longer a sense of a hierarchy of management over the news process, let alone control. It’s not just happening because of social media. Social media is only enabling deeper changes demanded by you, me, all of us.

The CEO and management needs to stay up to speed with the world not just around them but inside their organizations. In the new Era of the Long Tail Crisis that’s not easy to do. The core challenge is not necessarily dealing with the Greg Smith’s of the world. By the time a Greg Smith published his op-ed in The New York Times the damage is done. The question is what is happening in the corporate culture that creates those situations and what can management do to prevent them from ever happening?

Of course, that begs the question what most influences the shaping of corporate culture? It’s clearly a wide variety of variables. Most important among them is the behavior modeling throughout the organization, beginning at the top. Books will be written about what Jamie Dimon did, and did not do, in that regard. I’ll certainly be reading them.

 

Best,

Montieth M. Illingworth
President, Montieth & Company
November 22, 2013