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Dec
16
“You should never underestimate the man who overestimates himself.” —Franklin D. Roosevelt
This is part two from some of the lessons I learned while reading Duff McDonald’s, Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase.
Keep Lists
On a single sheet of paper, Dimon kept a number of smaller handwritten lists, including “Things I Owe People” and “Things People Owe Me.” He started this at the beginning of his career and continues to manually manage them today. As for a list of books Dimon recommends for the aspiring CEO, “he would start with Shakespeare, adding Built to Last by Jim Collins and Jerry Porras, Only the Paranoid Survive by Intel’s Andy Grove, Warren Buffett’s annual letters, and Graham and Dodd’s Security Analysis.” Dimon also had a list for three components of a successful deal: business logic, the ability to execute and price.
Ego is Ugly
The strong working relationship that Dimon and his mentor, Sandy Weill, shared would ultimately dissolve, mostly because Weill wasn’t ready for Dimon to overshadow him. There was a point when Weill should have turned over the reigns of Citigroup to Dimon, but Weill wouldn’t do it.
In the fairy-tale version of Dimon’s career, he succeeds his mentor [Sandy Weill] and leads Citigroup to greater glory. In the fairy tale, Citigroup is not on the verge of extinction 10 years later, while Jamie Dimon is leading one of its only healthy competitors. The future of American banking, in other words, was shaped by this very moment. How much different history might have been had Sandy Weill done what Dimon fully expected him to—assure him that the job would soon be his. But Weill was not yet ready to think past his own career. He was living in the present, and he was sick to death of Dimon’s thinking they were equals. Dimon was his junior partner. And he didn’t need a junior partner on the board…
Put Some Skin Into Your Game
Dimon left Citigroup and spent 18 months figuring out what he wanted to do. He landed at Bank One, a regional bank in Chicago that would eventually go on to become JPMorgan Chase after several years of mergers and acquisitions. Upon his arrival to the top post at Bank One, “Dimon told the board he believed in ‘eating his own cooking’ and rewarded their confidence in him by purchasing 2 million shares of stock at $28.37 a share, for some $57 million, the day before his appointment was announced. The move showed he was all-in and from that day forward, nobody questioned his commitment to the job.”
Disciplined Thought Leads to Disciplined Action
This one is right out of a Jim Collins playbook. “A weak economy creates opportunities for strong companies,” said Dimon. During the crash of 2007-2008, “People expected me to come in and start doing deals,” says Dimon. “But that’s not me. I’m different. You can’t start a war until you have an army, and we couldn’t even run our own business well. I said, ‘No, we’re going to get this thing fixed and from that strength, if something makes sense, we’ll do it.’ You have to earn the right to do a merger.” This thinking “did not endear him to his spoiled colleagues. ‘He’s going down like cod liver oil,” one banker told Business Week magazine.” Someone else told Euroweek, “The news that Jamie is flying in is similar to being told that Ivan the Terrible is coming for tea.”
Consultants Should Not Be Used for Inside Jobs
Dimon doesn’t think too fondly of consultants. He especially dislikes the idea of thinking they can actually accomplish work that should be done from the inside. “We do still use smart people to do consulting for us. But it has to be with a very senior person and there is no phase two. By that, I mean at the end of the project, I have the brain and they have the money. I don’t need anyone to implement anything. That’s a joke. You can’t have outside people implement stuff inside companies. It doesn’t work. And by the way, if that’s going on, what the hell are your own people doing?”
Surround Yourself With People Who Speak Their Mind
Jamie surrounded himself with smart people who were not afraid to speak up. Jamie was the perfect model for this as his relationship with his mentor, Sandy Weill, proved time and again. Jamie was notorious for intense debates and verbal wars when it came to making sure decisions were made in the safety of wise counsel. “When you worked for Jamie Dimon, he expected you to speak your mind. If you didn’t, he’d just as soon replace you. ‘I don’t care if we do the trade or don’t do the trade,’ he told a reporter. ‘I care that we do it right…. If you work in a company where you can’t walk in the room and say what you think, you create an atmosphere where you don’t do the best you can and where people don’t disclose things.’” This environment of honest debate would often energize the team. “When you worked with [Jamie] it was almost impossible to view something as a stopping point. He was always thinking about what things could be.”
Boring Is Not Always Bad
“The International Monetary Fund estimates that stock market bubbles happen about every 13 years, and that housing bubbles occur every two decades.” Although Jamie doesn’t claim he had any corner on understanding the timing of things to come, he was always running the scenarios in his head. What’s the downside? What’s the upside? What is the worst that could happen? After a season of much market criticism for JPMorgan Chase’s consistent and relatively conservative approach to growth, Wall Street finally conceded. “At the start of 2008, Wall Street analysts had completely come around to JPMorgan Chase. Being boring was now a virtue.”
Don’t Use Re-Orgs and Change to Shift Blame
“Wall Street is a pressure cooker, and when the pressure started to get intense in 2007, the more insecure of its chief executives started firing everybody around them to make sure outsiders knew where they should place the blame. Such a strategy does enhance one’s short-term job security, but the problem with it is that when turnover gets too high, no one really knows what’s going on anymore. As proof of the point, before they themselves were dismissed, Bear’s Jimmy Cayne, Citigroup’s Chuck Prince, Merrill Lynch’s Stan O’Neal, and Lehman’s Dick Fuld had all participated in their own little orgies of firing. Dimon has resisted doing the same thing, and his firm is surely the better for it.”
It’s Okay to Be a Force of Nature
I’ll close with Duff McDonald’s assessment toward the end of the book. “It’s impossible to deny that most people who wander into [Jamie's] orbit come away feeling as if they’ve just encountered a force of nature. At a time when true Wall Street leaders seem in desperately short supply, Jamie Dimon has emerged as a moral and managerial compass for both his industry and the country itself.”
It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself for a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat. —Citation from a speech Theodore Roosevelt made in Paris in 1910
Dec
15
Lessons From Last Man Standing, Jamie Dimon: Part 1
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“Buy straw hats in winter.” —Bernard Baruch
Following up my earlier post, here are some lessons I learned while reading Duff McDonald’s, Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase.
Self-Starters Have an Advantage
In college, during his final year at Browning, Dimon’s calculus teacher had a heart attack and the replacement didn’t know calculus. If Dimon and his handful of fellow classmates were going to learn, they’d have to teach themselves. “Three of the students decided to throw in the towel, but Dimon and the remaining two—one of whom was Jeremy Paul—spent a challenging year of self-instruction. ‘As far as working experiences go, that was pretty intense,’ recalls Paul. ‘Each day we’d go into the classroom and there was no teacher, just us. And we’d sit there, trying to work our way through the problems.’”
Mentoring Relationships Are Huge
In 1985, banking giant Sandy Weill left a top job at American Express. A year later, Weill took over a small company named Commercial Credit Corporation, that would eventually become Citigroup (after almost 20 years of mergers and acquisitions). Jamie Dimon was the guy Weill brought on from the beginning. “So began one of the greatest mentor-protégé relationships in the history of American business. Sandy Weill saw Jamie Dimon for what he was: an ambitious young man with an enormous capacity for hard work.” One of the more practical lessons that Weill would impart to Dimon was that “You can’t control income. It varies based on conditions outside of our control. But you can control expenses.” “And,” says Dimon, “he taught me one of the most important things in my career, which is not to rest on your laurels.”
Know What You’re Doing, Make Things Happen
One of the lessons McDonald distills from Dimon is to make sure you actually know what it is you’re doing. A novel concept in the banking industry! “Don’t go chasing the flavor of the month unless you actually know its ingredients. Just because other people are making money in something, don’t be tempted to follow suit unless you understand the complexities involved and how they profit from it.”
“Dimon was widely regarded as the man who made things happen when they needed to happen. If there were costs that had to be cut, Dimon was the man for the job. The company needed higher credit ratings? Dimon figured out how to get them. What he brought to the table was the basic ability to understand the underlying drivers of any business—the two or three things that really mattered—far more quickly than his peers.”
Ethical Leadership Must Be A Value
One day during a class in American history–history is one of Dimon’s favorite subjects–the only African-American student in his class was dismissed after the teacher decided she had had enough of the student’s acting out. “Once the door closed behind him, the teacher turned toward the class and muttered, ‘Six hundred thousand died to free the slaves, and this is the gratitude we get.’ Dimon stood up, grabbed his things, and walked out the door. ‘He blasted me for not going with him,’ recalls Paul. ‘And he was right.’” Decades later, in 2008, Dimon’s job was effectively “to clean up the entire financial system. And in so doing, he proved a point he’s been focused on his entire life: that you can still win while doing the right thing.
Saying ‘No’ Allows You to Say ‘Yes’ Later
“It’s a well-known maxim that one of the hardest things about running a business is to maintain the ability to say no and thereby save limited resources for the best opportunities. Over time, most companies simply lose their discipline.” This discipline to save resources for prime opportunities was what ultimately made Dimon the last man standing on Wall Street during the collapse of 2008. “Don’t do anything stupid. And don’t waste any money. Let everybody else waste money and do stupid things; then we’ll buy them.”
“Know when to be capital rich. Both the economy and Wall Street have cycles, and he who is capital rich when the competition stumbles will see opportunities abound.
“Buy businesses with significant cash flow, preferably at a discount, prune their expenses without sacrificing revenues, and then use that additional cash flow from those cuts to buy more companies until you end up owning Citigroup.”
“We think [the business] should be prepared for adverse times,” Dimon told analysts in a conference call. “In fact, we think if you’re strong in adverse times that that puts you in the position where you actually can do more interesting things, either hire people or buy other companies that are having a tough time.”
I’ll post my final thoughts tomorrow.
Dec
14
Last Man Standing by Duff McDonald
Filed Under Inspiration, Leadership | Leave a Comment
For as long as I can remember, I’ve always been fascinated with the mainstream business world. I’ve been a longtime subscriber to Fortune, Fast Company and BusinessWeek. I thought by now I would have completed my MBA, having applied to a program two years ago. To be perfectly honest, I struggle with understanding exactly where I fit in this world as it relates to a career. Up to now, my life has been primarily invested in nonprofit religious sectors. While business principles apply across industries, there is something very intriguing about working in the mainstream business world (banking, tech, media, etc.). Unfortunately—or perhaps fortunately—I have this little strength called “belief,” which is always beckoning me to make sure I’m working on things I believe in. Bottom line profit is not something I get really passionate about. Profit, in my opinion, is just one of the ways to keep score.
I digress.
I just finished reading Duff McDonald’s book, Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase. Not only did this book provide a riveting front row seat–albeit with a rear view mirror–to the U.S. financial collapse (and micro successes) over the past several years, it provided what appears to be rare access into the life and mind of Jamie Dimon. Today, Jamie is the top dog at JPMorgan Chase and worked his way there after taking an unlikely path out of Harvard Business School. It’s an incredible story of “clarity, consistency, integrity, and courage.” Says McDonald, “Dimon was quite literally the only chief of a major bank to have properly prepared for the hundred-year storm that had hit Wall Street with such vengeance.” By sticking to his values, “Dimon has unquestionably become the dominant banking executive of his era.”
My plan is to unpack some of the lessons I learned over the next few days on this blog. More to come.
Dec
6
I can’t remember who recommended it to me, but Gene Edwards’ A Tale of Three Kings: A Study in Brokenness is a book I needed 10 years ago. Published in 1992, this little tale is short on words but deep on transformation.
Edwards does a masterful job at framing the biblical stories of David, Saul and Absalom into one narrative that pierces right to the heart of those who have been broken in and by leadership. Especially “Christian” leaders.
My highlights…
“What do you do when someone throws a spear at you?”
“God did not have–but wanted very much to have–men and women who would live in pain. God wanted a broken vessel.”
“You cannot tell who is the Lord’s anointed and who is not.”
“There is a vast difference between the outward clothing of the Spirit’s power and the inward filling of the Spirit’s life. In the first, despite the power, the hidden man of the heart may remain unchanged. In the latter, that monster is dealt with.”
“Legalism is nothing but a leader’s way of avoiding suffering.”
“Beginning empty-handed and alone frightens the best of men. It also speaks volumes of just how sure they are that God is with them.”
“The Sauls of this world can never see a David; they see only Absalom. The Absaloms of this world can never see a David; they see only Saul.”