Debate over the financial regulatory reform bill -- recently signed into law by President Obama -- misses the most important points: What causes market bubbles, and how can we prevent them?
At the center of every bubble stand individuals drunk on money, power, and comparing themselves favorably to others. At a recent conference among self-satisfied high-fliers, I heard the following exchange, which was followed by high fives and promises to do even better next year:
Greedy Guy No. 1: "How much did you make?"
Greedy Guy No. 2: "$600,000!"
Greedy Guy No. 1: "Oh. I made $2.1 million!"
It was a snapshot of a meeting between people locked in the throes of personal competitiveness.
As my co-authors and I wrote in Tribal Leadership, 48 percent of workers report that this sort of one-upmanship is common at the office. We call these "I'm great" cultures -- or more accurately, "I'm great, and you're not" cultures. They feature people who are out to prove their superiority to everyone else on a daily basis.
These cultures are common across industries. "I'm the best surgeon in town," says the doctor. "I create more leads than anyone else," brags the salesperson. "My department is the only one exceeding plan on all metrics," says the manager. Members of "I'm great" cultures will go to great lengths -- even breaking laws if need be -- to get more for themselves and reveal their superiority. Their goal is not greatness in the sense of creating a legacy, but to be greater than others.
Drop new regulations into an "I'm great" culture, and the game morphs into finding a way to make a killing in spite of the new hurdles. Those who succeed in this tougher climate become the ones to beat. Same game, slightly different rules.
So, let's be clear. The only way to prevent another financial crisis on Wall Street is for Wall Street itself to create a new breed of leader who refuses to operate this way. Wall Street needs people who say, "We're going to identify and live by core commitments, instead of seeking short-term gain." "I'm great" must be replaced by "We're great."
The good news? "We're great" can out-perform, out-innovate, and out-execute "I'm great." Wall Street could be not only more moral, but also more successful.
The government can't compel these leaders to step forward. The onus is on the industry to put an end to the mentality that enabled the bubble. So, what steps can you take to transform your "I'm great" culture into one that fosters innovation -- for the good of all?
Image courtesy Flickr uesr David Paul Ohmer CC2.0