The Wells Fargo Moment at Your Business

The Internet cheered as Elizabeth Warren questioned, and commented to Wells Fargo CEO John Stumpf that "you should resign." I watched my Facebook and LinkedIn feeds light up with Cheers for Senator Warren and blame placed right at the feet of Mr. Stumpf. Senator Warren's question would have been extremely tough for any CEO. She is well versed on the banking industry and extraordinarily thorough in her research which would have created an uncomfortable moment for any CEO. Would you want to have to answer these questions? Before you read on, you may want to watch the interaction in the following C-Span video:

I have been quiet on this topic over the past week as it picked up steam, but now is the time to offer some views. I have written extensively on the Mylan EpiPen situation, and in my view the Wells Fargo situation is not much different. As I have said in my post "It's a Dog Eat Dog World" the world is changing, and we are shifting from a business world centered on "what we do" to one about "how we do" it. The key will be having the right partners at your side.

"You squeezed your employees to the breaking point" - Senator Elizabeth Warren

This situation in the business world has been boiling for some time but it has not been seen by senior leaders or investors, but it has been noticed by employees and Customers. Mylan and Wells Fargo are currently feeling the wrath, but the reality is that your business could be next. In our efforts to appease the investment community we have been pushing businesses, their employee base, and their own Customers to the brink. We have been driving prices up to increase revenue or profits to maximize short term investment performance, regardless of the long term impact to any of these constituents. In many ways it has become a drug for leaders when they achieve great results and appear on CNBC for praise at the tremendous quarter. Mylan's board offered amazing bonuses to senior leaders for growing profit margins to extremely high levels. The easiest way to enhance the bottom line? Raise prices. Of course that uproar will lead to investigations and new regulations that will impact every company in the industry as well as the current leadership teams. Not to mention the damage to the overall brand, and the loss of trust that has been created with their own Customers.

Wells Fargo has been the envy of the banking industry for years, particularly around their ability to cross sell and grow the relationship with their Customers. Unknown to many in the investment community, this was not always done in the most upfront manner. As I am sure many of you have read, over the past 5 years over 5300 people lost their jobs for establishing unauthorized accounts to achieve these cross sell goals. Some people are now pointing to the culture of the organization. Others are pointing to a "few bad eggs." I find the idea of culture to be a misnomer. We have to be honest, people are out for themselves in many ways. This is true of the lowest level employee, the Customers, or even a CEO. This does not mean they are bad. Often they are trying to do the best they can to achieve success so they can provide for their family. This was true with Mylan and within Wells Fargo. That being said, I have a little secret to tell you, the same is true within your company as well. People will do what they are measured on with the hope of recognition, money, promotion or many other things. Unfortunately how they get there might be a bit of a challenge. Sadly I can see this Wells Fargo moment happening to so many other companies and their CEO's.

"[low level employees] Do not have the money for a fancy PR firm to defend themselves" -Senator Elizabeth Warren

In the past we would rely on our public relations agencies or marketing agencies to help shift the dialogue away from these type of issues but the effectiveness of changing the conversation is less and less. These are now populist issues. No type of spin or message will be able to change the dialogue. As I mentioned earlier, in our effort to seek short term investment returns, we often, although maybe unintentionally, stepped on most of our constituents, including our employees and Customers. This happens in every larger organization with a variety of leaders. It is not always the CEO but could be lower level employees trying to make their career skyrocket. I suspect that many within the organization knew of these issues, but often people do not want to share bad news upward. I have to assume that some of these were caught through the normal compliance or management process but no one wanted to dig deeper, instead they focused on the individual or individuals involved and not the systematic issue. They feel accomplished because they did their job, but did they do it fully? They took the easy route, which is all too common in business.

The key to avoiding these problems starts with trusted partners. Not people that will tell you what you want to hear, but people that will tell you what you need to hear. This is not always easy in business, because we often punish the people who do just that. We have all heard the phrase "shoot the messenger" and if you have worked in a larger brand, you have seen it happen. We should be rewarding this bravery.

Today I am pleased to announce that I am a partner in a new consultancy centered on trust, people, strategy, & technology. The world around us in changing everyday and we need the right guidance from trusted sources. All partners have worked in the trenches and with top CEO's to create the right focus inside and outside organizations. I am joining Brain+Trust Partners with Scott Monty, Tim Hayden, Chris Barger and Angus Nelson. This team has an unbelievable amount of "real" world experience with some of the largest brands on the planet, advising top leaders. We do not dwell in theory like so many consultancies, but instead we utilize our years of experience with brands similar to your own. Brain+Trust Partners is an executive consultancy helping busy leaders manage an evolving marketplace with common sense and strategic guidance. Learn more at https://braintrust.partners.