One guest speaker, Nick Leeson, the derivatives trader who caused the collapse of Barings Bank, knew from Day One that hiding his unauthorized trades was wrong, but he couldn’t face his mounting losses, he now says about his actions two decades ago.
Another speaker, Andy Fastow, former chief financial officer of Enron Corp., before its spectacular, scandal-plagued demise, accepted the praise and acclaim he received at the time for jury-rigged financial moves. But he ignored his gut instinct that he, Enron and the financial professions surrounding the company were abetting deception and ultimately fraud, he says today.
And Monica Lewinsky also speaks of regret about her affair with former President Bill Clinton. But her message to audiences is about the damage that public and media sensationalism can do, describing herself as having been “patient zero” of cyber-bullying. She implores people to speak about others’ mistakes with compassion.
The Ivey Business School at Western University in London, Ont., has recently been inviting guest speakers to talk to students about failures as much as successes, including some speakers who found themselves on the wrong end of mass attention.
All are, in a sense, reclaiming their story. Ms. Lewinsky has particularly characterized her public re-emergence as taking control of her narrative, after having avoided public attention for years. And all the speakers talk about lessons learned personally and lessons for all to share.
“It really talks about the importance of compassion, a word that’s often lacking in the vocabulary of business executives. We all need compassion, empathy and understanding – and courage,” said Gerard Seijts, a professor of organizational behaviour and executive director of Ivey’s Ian O. Ihnatowycz Institute for Leadership, which organized the talks.
“We all make mistakes. Some of us pay a steeper price than others. But how do you recover? And I think the presentation that she [Ms. Lewinsky] gave to the Ivey students was a great presentation because she talked about that. And so that’s why we invite these individuals,” Dr. Seijts said.
He insists on the use of more empathetic language (at one point he spoke of challenges faced by his speakers, not failures) to get a better understanding of their experiences and mistakes, just as we should in turn expect nothing less than that kind of language toward us from public figures and business leaders.
“I don’t think Andy Fastow woke up one day and said, ‘Let me think how I can screw the Enron shareholders,’” Dr. Seijts said. “This is important to understand. I am not interested in people that do not take accountability for what they did, because if you don’t take accountability, typically you blame other people. If you read the interviews with Nick Leeson and Andy Fastow, you’ll see that at some point they said, ‘My God, I messed up,’ and there’s nobody else to blame but me.”
(Dr. Seijts also conducted extensive interviews with the speakers, which can be found here, in conjunction with their paid talks.)
Mr. Fastow, who spent time in jail for fraud, explained that, at the time, he didn’t believe he was committing a crime, yet he emphasizes that he doesn’t use that as an excuse.
“Before we go further,” he told Dr. Seijts, “let me say that what I did was absolutely wrong. Sitting here today, I believe that I was guilty of committing fraud, and I’m very sorry for that. I’m very sorry for my actions. So I’m not trying to make excuses when I say I thought I was doing something good. I’m simply telling you what I was thinking at the time, not trying to justify my actions.”
Yet Mr. Fastow detailed an environment at Enron in which what was later found to be criminal fraud was at the time praised as working around the rules.
“The media portrayed us as a bunch of sinister guys sitting in a dimly lit room trying to think of ways to rip people off,” he told Dr. Seijts. “It wasn’t that way. When we did these creative deals, they weren’t hidden. We had parties to celebrate them. We got awards for them. Magazines wrote articles that extolled the virtues of them. I’m not sure that it’s fair to give myself the benefit of the doubt, but I like to think that I wouldn’t have done what I did if it had dawned on me that my actions were potentially criminal. It just never did.”
The mea culpa comes in the interview, Dr. Seijts feels, when Mr. Fastow explained that the company he knew began to have little resemblance to the company as portrayed in its regulatory financial reports.
“Anyone of us can be sucked into these dysfunctional spirals, so to speak. And let me be very clear, this has to with Andy [Fastow] as well. He was really reinforced in his behaviours by the board,” Dr. Seijts said. “And I think that is important to understand. All of us are the product of external factors, too. If people tell you, ‘Fastow, you’re a genius,’ then you keep doing what you’re doing because it gets reinforced.”
Or in the case of Mr. Leeson and Barings Bank, it appears to have been reinforced by a lack of oversight and clear, cross-company communication. Mr. Leeson now says he should have been more closely watched, but the culture of the bank was to assume the best, so long as profits were made.
“Look at my case at Barings. I was an outlier on pretty much every metric you can imagine. I had the largest amount of the bank’s capital at my disposal. I had the biggest volume of trades. I reported the largest profits. My activity and results should have generated risk management concerns, but that didn’t happen because senior people wanted to believe in me,” Mr. Leeson said in his interview.
Yet he blames himself for not having sought help and reporting his losses, which led to Barings’s collapse and him serving time in a Singapore prison. “I was trying to correct the situation. But my motivation wasn’t about shareholder value or protecting other employees. It was a case of trying to survive,” he said.
As with Enron, a focus on immediate gains and a fear of failure can become a cause for disaster, a clear message that was expressed by the guest speakers. But to point a finger and blame them without understanding and trying to learn from them isn’t the point of the talk, Dr. Seijts indicated.
“For me, on a personal level, it shows the conflict between short-term results and the values that we want to hold,” said Kathryn Tang, an MBA student at Ivey who attended the talk by Mr. Leeson. (He spoke to the students by video conference.) Ms. Tang was only a child when Barings collapsed and learned about Mr. Leeson for the first time at the talk.
“We’re often motivated to achieve short-term results, and we have incentives tied to that. But if you think about what legacy you want to leave behind, and what your long-term goals are, that can be a great way to assess whether your decisions are in line with that,” Ms. Tang said.
Dr. Seijts noted that compassion and humanity, traits that inevitably bring more open communication, are nevertheless far down the list of what’s typically perceived as the best attributes for business leaders. Drive, integrity, judgment usually top the list instead. And the problem is that compassion and candour are usually mistaken as being soft.
“Candour should never be confused with permission to be mean-spirited. It can’t,” Dr. Seijts said. “If you’d like to build trust in an organization, build good relationships, improve a person’s performance … and get him or her from a C to a B, or from a B to an A, engaging in candid conversations requires compassion, understanding and empathy.”
And that was the heart of Ms. Lewinsky’s talk. She spoke of not only ignoring public bullying, but counteracting it actively. People are all too quick to find fault or place blame on others, or to ridicule them.
“We need a cultural revolution when it comes to empathy and compassion in our society,” she told Dr. Seijts. “To succeed, more people need to click with compassion. Algorithms for the Net are created by what we click. And when content providers earn advertising dollars from clickbait, they are encouraged to serve up more articles rooted in shame and public exposure. So people need to understand that every time they click on gossip, or an article celebrating a public shaming, they are feeding the beast.”
Yet it’s through compassion and empathy, and by giving them a forum, that we can learn from mistakes made, she and Dr. Seijts say.Report Typo/Error