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Alaina Love
Leadership author

Alaina Love

Alaina Love is co-author, with Marc Cugnon, of The Purpose Linked Organization and co-founder of Purpose Linked Consulting.

Fire the leaders

Q: Goldman Sachs promises to put customers' interests first. At the same time, Goldman was able to avoid serious financial trouble by hedging positions in ways that placed bets against clients. Do Goldman's leaders need a new business strategy, or do they need to just do a better job at explaining their business to regulators and the public?

Goldman Sachs needs to perform a deep examination of the foundation of its entire business platform -- much more than a strategy review or marketing campaign to better position itself with regulators and the public.

What we've witnessed with this company is a failure in leadership at the most fundamental level--the individual values that drive decisions about how customers are treated, the integrity (or lack thereof) that leaders demonstrate with all stakeholders, and the willingness among leaders to accept accountability for their actions. Goldman Sachs might be better positioned for the future by examining its current leadership and asking, "Are these the right people to have driving the bus?"

If we were to compare Goldman Sachs to another business giant with a recently scorched public image, we would do well to look to Toyota. While Toyota made huge errors in judgment around early disclosure of vehicle brake problems, their CEO made significant efforts to reach out to the public, genuinely apologize for the company's mistake, and took FULL RESPONSIBILITY for Toyota's failure to earn the public trust it had previously enjoyed. In subsequent weeks, the company took great strides to correct vehicle problems and has managed, as a result, to retain more customer loyalty than its competitors would have believed possible.

The significant difference between Toyota and Goldman Sachs rests in the public perception that Toyota's failures were serious, but unintentional, therefore much more forgivable. By contrast, Goldman Sachs is viewed as having intentionally deceived its clients, without company leaders owning up to their decisions. At the basis of Toyota's actions following the recall was a fundamental valuing of the customer --something we see in severe short supply among Goldman Sachs leaders.

Beyond taking a page from the Toyota playbook, Goldman Sachs might well benefit from a new leadership team--one with a value system anchored in integrity, accountability and above all, service to the customer. In this way, they would be worthy of retaining current clients and attracting new ones.

Note: Marc Cugnon contributed to this commentary.

By Alaina Love

 |  April 27, 2010; 6:28 AM ET
Category:  Economic crisis Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Have you listened to these execs respond to committee questions today? They are clueless and arrogant. Maybe worse, they don't give a crap about the customers they abused. I vote for firing the bunch! What happened to ethical leadership??

Posted by: Mreed53 | April 27, 2010 9:48 PM
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Another more fundamental point--to me as a consumer--is that Toyota produces very useful, excellent quality, highly reliable products that I have used for years.

Goldman Sachs is one of the many financial institutions that produces cash profits for itself without any apparent productive purpose to anyone outside the financial industry.

Posted by: johnsojl1975 | April 27, 2010 1:23 PM
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This article is crisp and to the point. The individuals who need to be held responsible for Goldman Sachs' abuse of power and breach of client trust are its leaders. If these are the folks driving the bus, as an investor, I want off at the next stop!

Posted by: LoriD1 | April 27, 2010 10:44 AM
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