Denial leads to disaster for J.P. Morgan
J.P. Morgan CEO Jamie Dimon has been in the hot seat for over a month now, with the media spotlight firmly affixed to his firm’s mounting losses. When interviewed by sources like The Wall Street Journal in early April regarding questionable trading moves, Dimon insisted the company was firmly in control and had no cause for concern. Problem is, at least last time I checked, losing $2 billion of your customer’s money is a pretty legitimate cause for concern. What was the result of this clash of corporate message and reality? Here’s a great explanation, from a CNNMoney article by Roger Ehrenberg:
Fast-forward to today: he looks like a terrible leader, one who allowed a trader one of the biggest risk books on the planet without knowing how it was impacting the firm’s financial position. Why on earth would he make a statement about this trader’s activities without truly understanding their impact in depth? His typical bravado backfired in this case. He should have heard the rumblings, did a deep forensic dive into the facts, developed a view and then communicated to the media. He chose not to follow this approach and got absolutely skewered. And deservedly so. He failed Crisis Management 101.
We’re not saying that you shouldn’t be confident in your organization, but when you’ve got an overwhelmingly obvious crisis at hand, it’s time to admit that mistakes have been made. Then, you can move to resolve the issue and set things right. By continuing to deny the growing situation until a $2 billion dollar bombshell blew up its face, J.P. Morgan completely dropped the ball on crisis management and, in the eyes of the public, much of that blame will fall directly on the face of the organization — Jamie Dimon.
The BCM Blogging Team