Change

If you want to defeat any kind of vicious fraud–comply with it literally, adding nothing of your own to disguise its nature.

– Ayn Rand
Spoken by Francisco d’Aconia to Hank Rearden in Atlas Shrugged

I have been a leader in a number of organizations that were in dire need of change. Building a “case for change” is usually difficult. People seem compelled to continue in their dysfunctional ways despite their inefficacy or discomfort. I have learned that sometimes you have to let things fall to the floor and break before you can pick up the shards and create the change that the organization so desperately needs.

Atlas Shrugged struck me as a testament to this approach to change management, albeit with a more poetic and metaphorical approach. In Rand’s world the capitalistic model is failing due to the parasites of laziness and entitlements. Her approach is to let it collapse on itself and pick up the pieces after the crash. Francisco d’Aconia runs a global network of copper mines. He maintains the illusion that all is well and that his mines are productive . . . until one day they are not. He then utters the profound statement quoted above.

How many times do we protect dysfunctional or broken systems by covering up their true nature? It is human nature to try and see things better than they are. But in so doing we prolong the healing. We tell ourselves that troubled relationships are different than they are. We fail to see things through in our minds to their logical conclusion.

In some ways, I can’t help but wonder if this is not what has happened to our banking industry. A profit model that is based solely on revenue generated by transactions, with no accommodation for the quality or future of that transaction, has been pushed to its logical conclusion. Our regulatory system has complied with the fraud literally and we are watching the collapse of banking as we knew it. I hope that they system that comes along to replace it offers more focus on longer-term investments and less on bonuses and short-term profits.

Lying

What upsets me is not that you lied to me, but that from now on I can no longer believe you.

– Friedrich Nietzsche

Like most children, my parents raised me with an unending plea to always tell the truth. In my mom’s eyes, a clean conscience was to be valued above all else. “Besides,” she always said, “if you tell the truth, you don’t have to remember what you said.” I have carried this commitment to truth and honesty with me, almost to a fault. It has served me well.

As I have observed the global meltdown of the financial industry I can’t help but believe that it has been forever transformed by a blatant lack of trust. When the banks stopped lending it was clear that they no longer believed one another. The Bernie Madoff case was the icing on the cake. It seems to me that it will take a long time to restore trust and confidence into the financial system. In the process, I am not sure what kind of “financial system” will actually emerge on the other side.