JPMorgan: Jamie Dimon and the horse he fell off

May 24, 2012

If there’s one person you probably don’t envy right now, it’s Jamie Dimon.

In the past week, the JPMorgan CEO has been summoned to testify before Congress and learned that his company is facing investigations by an alphabet soup of federal agencies, from the CFTC to the FBI to the SEC. He’s also had to spend a lot of time in the middle of a media feeding frenzy, offering mea culpas and referring to himself and members of his team as “stupid,” “sloppy” and “dead wrong.”

In short, Jamie Dimon has been knocked off the large, white horse he rode through the financial crisis.

Now, echoing the general consensus, nothing illegal appears to have occurred in the course of JPMorgan’s $2 billion-plus trading loss. No taxpayer money was involved, and the investigations, it seems, are largely pro-regulation, political grandstanding with a dose of schadenfreude thrown in. At least so far, nothing has happened that’s actually going to seriously damage the bank’s long-term value to shareholders. It’s just that – well, it’s just that JPMorgan made a mistake.

Guess what? It happens all the time, from Wall Street to the factory floor. Work is hard, fast and complicated. People make mistakes. God knows we’ve both made them, and if you’ve got a few years of work under your belt, so have you.

Which leads us to our main point, which is really not about JPMorgan at all, or at least not about it alone. Rather, it’s about one of the most common crucible moments in leadership – a big messy failure. Thankfully, very few screwups will garner the same level of public attention as JPMorgan’s trading loss. But the principle we’re getting at is the same. Over the course of your career, you won’t be measured just by how many mistakes you make, because you’ll make your fair share, but you’ll be measured, as importantly, by how well you recover from them.

Look, a mistake can do two things to you when you’re a leader, no matter what your level in an organization. It can define you, or it can galvanize you.

The right choice is obvious, but unfortunately, far too often, the defining thing happens anyway. The mistake becomes a leader’s identity. Stricken by guilt or self-doubt or both, he enters something of a vortex, obsessing over the blunder, searching incessantly for all the reasons it could have happened, conducting endless meetings to go over processes and procedures to prevent it from ever happening again, talking to everyone who feels affected in any possible way, and letting the breast-beating go on and on and on.

Some of that is fine, of course – indeed, some of it is absolutely necessary, especially the “autopsy.” You definitely don’t want the same mistake to happen twice! But that darn vortex of self-defeat is always around – and it only goes in one direction, down.

That’s why it’s critical for you in the post-mistake period to move swiftly from self-examination and self-flagellation to resilient renewal, to getting your people refocused and re-energized. “The past is over,” you need to say to your troops as many times as it takes. “What matters now is the future. Here’s what it looks like, here’s how we’re getting there and what’s in it for you.” The picture painted has to be exciting in its reach and vivid in its detail. And it’s got to feel real – even gritty. No platitudes or generics. People can smell, well, let’s just call it “baloney,” a mile away.

The all-too-human complication in this, of course, is that after a mistake happens, you might not be emotionally prepared to get your team all psyched up again. You may be feeling the searing discomfort of upper management’s skeptical gaze on your back, not to mention a tighter leash around your neck. You may be wondering if you really have what it takes to lead your people. Your people, in turn, may be feeling beleaguered and increasingly doubtful themselves.

And so, the vortex beckons.

Just don’t go there. Own your mistakes, analyze their causes, learn from them and clean them up – of course. But then, let them go and get back to the future. If you’re a leader, that’s where your head and your heart – and your people – belong.

And as for Jamie Dimon? Given his long record of success, we’re confident he’ll soon be back in the saddle. And years from now, we assure you, relatively few people will remember JPMorgan’s trading blunder. But everyone who works for him around the globe, a quarter-million strong, will know that he dusted himself off, got back on his horse and rode on – stronger and a whole lot wiser.

Jack Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University. Suzy Welch is an author, speaker and the former Editor of the Harvard Business Review.

PHOTO Jamie Dimon, chairman and chief executive of JP Morgan Chase and Co, speaks at the 2012 Simon Graduate School of Business’ New York City Conference in New York, May 3, 2012. REUTERS/Keith Bedford


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Jamie met his Moby Dick, but he could take this bitter-sweet tune from Mark Knopfler:

‘He sticks to his guns
He take the road as it comes
It takes the shine off his shoes
He’s says it’s a shame
You know it may be a game
But I won’t play to lose’

Posted by Neilwal | Report as abusive

Climb back on that wild horse :)!!!

Posted by Neilwal | Report as abusive

The Welches sound very much like apologists for a man of their own class. Climb back in the saddle? A rah-rah, lets look forward and not backward speech to the troops? Please spare us the country club whiskey and golf course moralizing. A man of lesser stature, and no upper class connections, would have been summarily fired for such an egregious lack for leadership and oversight.

Posted by IntoTheTardis | Report as abusive

Speaking of grandstanding, I love the smell of baloney in the morning. And it probably costs Reuters no more than a nominal $1/year.

Posted by TobyONottoby | Report as abusive

This is an insightful article…but looks like a lot of people who are posting on this live in Greece, hate free market, envy successful people, ready to elect Hollande (and Oh!bumma) Has America changed? A

Posted by Ash-Roy | Report as abusive

Why not send Jamie off to run a hedge fund with Jack Welsh’s money (no loans from banks allowed)? Break up JP Morgan/Chase and place consumer deposits into a regulated public utility corporation where a public service commission would set fees and other costs to depositors for maintaining checking and other accounts.

Posted by skimish | Report as abusive

Jack and Suzy Welch are missing the big issue here. When you make a mistake, you usually have to pay for it. If I over pay for a contractor, I pay for the mistake. If an underling at JP Morgan makes a mistake, he/she either loses a promotion, salary increase or even their job. What has Jamie Dimon lost? Nada… How much did any of the traders who made these whose losses suffer. Well Ms. Drew got paid $14 million last year so obviously she won’t have to pay.

Who is paying for this error? JP Morgan shareholders and indirectly the tax payers in the USA. Morgan will deduct these losses to reduce their income taxes which they hardly pay any in the past years (due to losses).

Mr Welch, to lead you must show that when mistakes happen on a scale of $billions that you are willing to rethink your whole business model. Nothing, absolutely nothing has been said that Dimon and the rest of Wall Street have learned any lessons about trading losses in derivatives. They keep at it as long as it fattens their pockets and the US taxpayer bankrolls their losses.

Posted by Acetracy | Report as abusive

Great article. Jack always has a way to see the beyond a mistake and keep moving forward.

Those who complain are cowards, afraid to act.

Posted by moxsee | Report as abusive

Thank you, Ash-Roy, for reminding us that our patriotic duties include insulting the President of the United States, casting suspicion on the loyalty of our fellow citizens, and praising the former CEO of GE for his insight when he spouts clichés in his monthly puff piece, which, in this installment, is exploited as an opportunity to take swipes at the United States Congress, the CFTC, the FBI and the SEC. Has America changed? You betcha.

Posted by TobyONottoby | Report as abusive

JPM throws good money after bad to cover losses – Decoder (2:30)

JP Morgan sold about $25 billion dollars of valuable securities in order to cover a $2 billion trading loss. That, according to Reuters Alwyn Scott, only adds to the bank’s woes. (May 25, 2012) reuters-tv-jpm-throws-good-money-after-b ad-to-cover?videoId=235653878&videoChann el=117772

Posted by TobyONottoby | Report as abusive

Endless meetings and autopsies for for a failed Martingale strategy when Dimon don’t mess with me thought he had the Fed printing press at his back. The curtain has parted and no amount of rallying cries o the troops from a bankster works when no judge, no justice s bust.
This Welch jam is a better take for Yahoo, but it’s so done already. We need more Individual Electric than General Electric here.

Posted by HiOnow | Report as abusive

$2.32 billion in TALF dollars to subsidize GE Capital Credit Card Master Note Trust. That’s a lot of jack, Jack. Which mega-business was it that told Treasury they couldn’t meet payroll if commercial paper wasn’t propped up? Strange .. nobody seems to know.

In any vent, it’s clear that “corporate culling” doesn’t apply to executives.

Like you say, “People can smell, well, let’s just call it ‘baloney,’ a mile away.” Guess what? We can even smell it a few inches away, when it’s staring at us from our computer screens.

Posted by michaelolenick | Report as abusive