to commit hundreds of millions of dollars of capital in a matter of
minutes. On merger deals, elaborate financial analyses and defini-
tive recommendations need to be supplied to clients overnight.
Successful financial service firms have sophisticated models for
assessing risks, and they have processes in place to take enormous
financial risks in very short order. Lines of accountability are drawn
clearly for these types of decisions.
For internal organizational decisions, however, the process and
outcome are often quite different. Many of these firms have a
highly collaborative culture that demands broad consensus, some-
times approaching unanimity, on organizational matters. Decisions
as simple as hiring relatively junior staff, changing responsibilities
of key people, or writing a memo announcing a new hire can take
many weeks and involve dozens of people. This laborious decision-
making process militates against the swift adoption of best practices
or new ideas. Particularly in organizations in which authority is rel-
atively decentralized and overall financial results have generally
been healthy, the momentum of the status quo can be difficult to
break.
In addition to these organizational factors, individuals working
in these firms are not always inclined toward the swift exchange of
new ideas. For one thing, many of these talented professionals do
in fact possess highly differentiated technical abilities. The skills of
the mergers specialist are quite distinct from those of the govern-
ment bond salesperson and the financial engineer who structures
new derivative products. Even professionals who have acquired
broad management responsibilities often continue to identify
themselves with their professional skills and their client relation-
ships rather than their management roles. These firms often
describe their cultures as “producer-leader” or “player-coach,” in
which revenue production and client services are the primary bases
for reward and recognition. The leaders of these businesses tend to
retain highly specific technical roles and expertise, and they often
look skeptically on ideas from anyone who is unfamiliar with the
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