Friday October 31, 2014

Cautionary Tales

New works provide insight into the successes and failures of headliners.

The media frenzy stemming from the downfall of Wall Street has become a boom period for the Fourth Estate as both business leaders and regulators find themselves learning from their mistakes. Now, it seems, everyone from journalists to fraud investigators to would-be presidents are offering up fresh analysis or prescriptions for what ails American capitalism.

As the economy recovers, so do those who stumbled before and during the crisis. In Andrea Redmond and Patricia Crisafulli’s Powerful Lessons from Leaders Who Endured Setbacks and Recaptured Success on Their Terms, leaders such as JPMorgan Chase’s Jamie Dimon and former Hewlett-Packard Chair Patricia Dunn, are profiled. Redmond and Crisafulli’s exhaustive research dissects each individual, chronicling the highs and lows that afflicted their characters and helped shape their careers. Former Chairman and CEO of Procter & Gamble, Durk Jager, reminds readers: “There is life after what you experience or what you have gone through. It is not necessarily apparent at that period of time.”

Mark W. Johnson’s book: Seizing the White Space: Business Model Innovation for Growth and Renewal highlights the differences between companies that failed and those that succeeded in their respective industries. He first addresses Apple CEO Steve Jobs’ attempt to “refloat the sinking ship” by wrapping “a good technology in a great business model.”

Johnson provides interesting juxtapositions: the successes and failures of companies such as Southwest and Song Airlines; the reasons why computer manufacturer Dell built a strong following for itself in a market where it didn’t start off as the best quality product; and why Amazon emerged from the dot.com bubble a success story.

Former Massachusetts Governor Mitt Romney in his second book: No Apology: The Case for American Greatness criticizes populist politics, President Obama and outlines his conservative views on everything from healthcare to foreign policy. Romney has not officially declared himself a 2012 candidate for the White House, but political pundits view the book as a platform for just that.

Romney, for example, concedes that increasing the number of insured Americans is preferable. He acknowledges that the Wall Street bailout was essential, praising former Treasury Secretary Henry Paulson. His views paint a sharp contrast to other more conservative or rogue political aspirants.

Parked at his desk at a Boston equity derivatives firm, Harry Markopolos, author of No One Would Listen: A True Financial Thriller, was given a prospectus outlining financier Bernard Madoff’s strategy and asked to replicate a similar outcome. Markopolos quickly realized that the numbers didn’t add up and launched what became a decade-long crusade to incite the SEC to take action.

According to Markopolos, the SEC should have launched investigations that concentrated on the workings of Madoff’s suspect “money management” hedge fund, not his legitimate market-making business, which resulted in only minor infractions. He says the SEC failed to recognize that Madoff’s two businesses were located on two different floors in the same building. His warnings went unheeded the SEC only learned of Madoff’s vast Ponzi scheme after his sons turned him into authorities.   While he thinks that the SEC under Chairman Mary Schapiro has improved, he cautions that investors remain largely unprotected—and he wouldn’t mind taking a crack at Schapiro’s job himself.

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