In business, as in life, truth is stranger than fiction.
In late June, media reports surfaced that J.P. Morgan's total losses from its recent trading error may reach $9 billion. That's an astounding figure for what amounts to a single trade, but still significantly lower than the $17.5 billion that Forbes' Peter Cohan assesses as the true cost of the bank's mistake.
From the none-of-us-could-have-made-this-up category, one key cause of J.P. Morgan's multi-billion-dollar blunder was the extended absence of Ina Drew, head of the bank's Chief Investment Office, who had been stricken with Lyme disease, an illness caused by a deer tick bite.
While the full ramifications of Ina Drew's garden encounter with a tick will long be debated among economists, politicians and B-school professors, the storyline provides some helpful reminders for anyone hoping to lead a healthy business.
Fight Complacency
Most business owners intuitively understand that success doesn't equal safety. Nevertheless, when times are good, we are prone to getting caught up in the "feel-good bubble." We don't want to worry about a foreboding future. We see what we hope to see, and a feeling of invincibility worms its way into our bones. This is why so many early-stage businesses experience feast-or-famine cycles, in which entrepreneurs, during good times, ease up on future-oriented marketing, which of course leads to an inevitable dry spell. When you next feel invincible as a business owner, heed the words of Jamie Dimon, J.P. Morgan's celebrated CEO, on staying vigilant: "The big lesson I learned: Don't get complacent despite a successful track record. No one or no unit can get a free pass."
Map Your Vulnerabilities
One of the great myths about successful entrepreneurs is that they are bold risk-takers, when in fact, most are just skilled managers of risk. Avoiding complacency doesn't mean constantly worrying about everything that could possibly go wrong. It means regularly coming up for air and thoughtfully mapping out your greatest vulnerabilities and risks as a firm. All this requires is an ability to see your business as a whole, and the time for uninterrupted critical thinking. For many businesses, the process can be distilled on the back of an envelope. Ask yourself: What could kill us? What kinds of events or causes might lead to such scenarios? Are these causes preventable? If so, how? If these scenarios come about, how might we handle them?
Don't Tolerate Unhealthy Conflict
Why was Ina Drew's presence so crucial to the performance of an investment unit brimming with world-class talent? The answer is that Ms. Drew's reports, split between New York and London, tended to behave more like warring tribes than a collaborative unit. Without Ms. Drew's mediating supervision, regular meetings between the two offices erupted into shouting matches, and trading decisions across the team became less integrated. As the leadership vacuum lingered, the London office drifted toward an increasingly aggressive and risky approach. As you think about your own company, where do tribal fault lines or dysfunctional conflict endanger the health and growth of your venture? How might you remedy the situation?
Ensure Nobody's Indispensable
Being indispensable to your employer is often touted as a foolproof career strategy. But from the business's perspective, indispensable leaders can represent dangerous vulnerabilities for your company. When Ina Drew was absent from J.P. Morgan's investment office, a chain of events began moving the firm toward the massive loss. While there's no guarantee that Ms. Drew's presence would have prevented the scenario, it's clear that the company was not prepared to function effectively while missing such a key cog in the management works. How would you respond if one of your top people was suddenly gone? What if you were suddenly gone? Could your business function effectively for even a few weeks in your absence? These are difficult questions to ponder, but developing sound backup plans will force you to better understand your company's strengths and weaknesses, and ultimately improve your odds of sustaining the health and growth of your firm.
John Bradberry is the CEO of ReadyFounder Services and author of 6 Secrets to Startup Success (AMACOM, 2011). He helps entrepreneurs and their ventures improve performance and achieve healthy growth.
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