In April, many economists and business leader would have called Jamie Dimon, CEO of JPMorgan, “the smartest guy in the room.” He gained a reputation for shrewdness and economic know-how for guiding the iconic bank through the 2007 recession mostly unscathed.
That all changed in May when the bank announced that it had accrued $3 billion in losses in only six weeks. Dimon and Co. placed “bets” that were, according to Dimon, “flawed, complex, poorly conceived, poorly vetted and poorly executed.”
The losses are made all the more onerous when one considers that Dimon was one of the leading critics of regulations that might have prevented bank’s ability to hedge their portfolios. In other words, Dimon has seen other banks make these same mistakes before, but he did not learn his lesson.
As a leader for your company, it is important to learn from your mistakes. This is easier said than done because it involves a certain amount of humility to admit when you’ve made a mistake, but the entire organization will benefit from this display of anti-hubris.
The second lesson comes from Dimon’s above statement about the nature of the bets he and his buds placed.
When you’re considering your company’s next move, do you want “flawed, complex, poorly conceived, poorly vetted and poorly executed” to be the defining terms of that move? Probably not.
Whether you’re “one of the smartest people in the room” or not, you need good risk assessment. Just because you survived one economic dust up doesn’t mean you’re immune from the next one. Just because one risky investment paid off doesn’t mean you’re invincible. There is no amount of luck that can take the place of good risk assessment.
Finally, reputation needs to be maintained. If you built your company’s name on shrewdness, the way Dimon did with JPMorgan, you can’t be content to rest on your laurels. You need to wake up everyday and begin thinking about how you can bring a shrewd mindset to your company that day. The bank’s total losses have exceeded $3 billion. That money can be made up again through a series of wise investments and shrewd business maneuvers. The thing that has been irreparably lost is the company’s reputation. Whether it’s customer service or a wide selection of goods, your company must constantly check itself to make sure that it is growing business but keeping its reputation in mind.
If you’re looking to grow your business, learn from JPMorgan. Learn from your mistakes, put good risk assessment in place and constantly keep your reputation in mind when making business decisions. If you learn from their mistakes, you’ll be saving your company a lot of time and money.