Love them or hate them, there is something to be learned from Goldman Sachs. An investment firm doesn’t weather a recession just by chance or pure luck. They had to be doing something right.
That “something right” is agility. Goldman Sachs’ “black box” of profits is constantly changing. Very few people even inside the company understand how it is that they make money (side note: CFO of Goldman Sachs would be one hard job!). This is a good thing, because it makes them agile. They have a culture where the way they make money is constantly changing, and they’re ok with that.
In 2006, well before the mortgage crisis, the culture pushed their leaders to start making bets against the mortgage market when they saw prices going down. Contrast that with other firms:
At other firms the mortgage traders tried to protect their fiefdoms, arguing that declines were temporary. They held or even grew their positions—and refused to admit they were losing money. Doubts and warnings seldom made it to top executives, and even when they did, they were ignored in the desire to keep the good times rolling. “There’s people’s hopes and prayers, and then there’s the reality of the market. You can’t confuse the two,” says Cohn today.
Agility comes not only from being able to recognize when your business model is in jeopardy, but to be willing to admit that your “fiefdom” is over and it’s time to evolve. Most people stay with what they know, it’s easier and more comfortable.