Friday, November 6, 2009

Rebranding Wall Street

GAAAAHHHH! I hate Wall Street! Or, at least, I think I hate Wall Street. I really don't have any contact with them other than my bank account, which isn't really a Wall Street firm and wasn't bailed out. In fact, the only contact that I do have with them is all the news that I watch. So, I guess it's pretty easy for me to dislike them right now along with a majority of Americans.

Early in my career, I worked for a company that prided itself on not being well known outside of their industry and the investing institutions. They had been burned in the past, and it was understandable that wanted to reposition their brand to speak directly to specific groups of stakeholders who did business with the company on a regular basis. Personally, I don't think it was the best strategy in the world, but it worked. It built up the credibility among those who needed to know and turned them into advocates for the organization.

Unfortunately for Wall Street, this strategy will not work for them and it probably never would have in the past. The financial crisis exposed a crisis in branding that no one could have ever expected. In a way the brand of Wall Street was somewhere between the gold plated, tacky world of Donald Trump and the actual Wizard of Oz (pay no attention to the man behind the curtain). There was wealth, power and a mystique that outsiders would never really understand. And, it worked. It attracted top talent from universities and other industries and created machines whose only purpose was to print money. It worked so well that they became the keystone of our economy. Whether you were starting a business that made tangible objects for other human beings to consume or refinancing mortgages, the money passed through Wall Street in some way.

Turning every person on earth who handles currency or eats rice into a stakeholder, Wall Street had a lot of people to answer to when the economy went down the toilet and they didn't. They relied on mystique elements of their brand and said, "Don't worry we'll figure this out and after we save ourselves you will magically be okay." Now, their credibility is gone and it's time to build a new promise. But, it's going to take more than a new logo and a few ad buys. There has to be an inside out rebranding.

So, here - without further ado - is what I would do to fix Wall Street's image.

Part One: The Internal Struggle

Corporate culture plays a key role in branding. The people who make up the organization and their attitudes toward create an often neglected element of the brand. For example, if everyone hated working for Berkshire Hathaway or Google or Microsoft the information would eventually get out, especially in the digital age that we are living in, this information would eventually reach the other organizations that the company does business with and make these companies think twice about doing business with them. This phenomena is magnified if everyone who works for a company is -pardon my French - an asshole. I can remember conversations with a few people in the risk management industry telling me stories of how a certain underwriter was filled with employees who were less than savory individuals. When that company found itself in big trouble and needed to assure clients that they were stable it was difficult fight not only because they had to explain their financial stability but also pretend like they were buddy-buddy in the past.

Therefore, the first step in rebranding Wall Street is probably the most difficult: they must change the internal attitudes of employees to show that they care a little about what happens in the world outside of Lower Manhattan. In an interview with Fresh Air on NPR, New York Times writer Andrew Ross Sorkin discussed how then Treasury Secretary Hank Paulson viewed his former company Goldman Sachs. For better or worse, Paulson saw that if his old ship sank the next big company to fall would not be another bank, but General Electric. This egocentric attitude turned out to be a good thing in that we avoided an even greater catastrophe; however, I could not escape the thought that it takes time to nurture such ideas within an organization. Plus, once these concepts take hold they begin to steer that company's outlook.

But, how can you humble a bunch of hotshots?

As it turns out, it's not about humbling. It's about instituting the idea within this organization that they are connected to the economy and their communities. When I worked for Dow Chemical, they had nurtured the idea that each office and plant - wherever they might be - plays a role in the day to day lives of people that they don't see. Rather than purchasing logo space on European soccer jerseys or buying the naming rights to a building to get their brand out, they helped their brand by treating their employees well and helping them get involved with simple things like charities. Each community then viewed the employees like a normal neighbor and opinions of the organization as a whole went up.

So what can a Wall Street firm do?

Right now, things are going to have to be drastic. When it comes to topics that anger the common person like myself, nothing boils my blood more than bonuses. (I can understand that the company wants to reward its employees for a job well done, but just giving the money to those behind the wall isn't changing my perception of them.) Substantial portions of gigantic bonuses at the top will either need to be returned or donated. Then the company has to announce that they will consider reinvesting the quarterly profit in the economy to continue growth, rather than just giving to themselves money to buy yachts. After all, these companies are investment banks and they should be investing.

Next, the companies need to focus on their personnel by instilling a culture of responsibility and integrity. In the wake of the Enron collapse, anyone who dealt with energy trading in any form had to go through serious training to eradicate the bad behaviors of the past that had gone unmitigated. In addition, energy trading floors hired an equal number of risk managers to traders. This quickly killed the casino mentality that once ruled the room. (Now, I am not saying that it was a panacea but it definitely helped.) The problem personnel either quit or were fired because of their behavior. If the investment banks took a harder line on their individual risk management in their day to day operations, it might bring back the rational notion of slow, strong growth to the business as opposed to the overnight success stories they loved to tell.

What will happen if they don't make these internal changes?

If Wall Street is unwilling to change its ways the people are only going to get angrier, and in the short run this won't mean a thing because we cannot do much about from the outside. What the angry mob can do is vote and elect leaders who will place restrictions on these companies that will be more cumbersome and more irrational than any controls that they could put in place on their own. Yes, these banks have plenty of money to pay for lobbyists but there will be a tipping point. All Wall Street needs to do is look back a few years the collapse of the big accounting firms like Anderson to see that if the government steps in again, they are going to get a Sarbanes Oxley before another bailout.

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