Discussion Board Forum 2 ThreadTopic: EnvironmentThinkabout two environments you have experienced.The first environment is one that did not confront the brutal facts, where the people (and the truth)

Discussion Board Forum 1

Wells Fargo was used by James Collins (2001) as an example of a bank whose leader used the hedgehog concept to bring the bank from doing extremely poorly to the top of the industry.  In the early 1980s Wells Fargo was near the bottom of the banking industry, however within three years of Carl Reichardt taking over Wells Fargo stock nearly tripled (Diane Cardwell, 08/01/2017).  This amazing success has been attributed to Mr. Reichardt taking over and his laser focus on what Wells Fargo can do better than anyone else.  However, “five ‘whistleblowers’ contacted the agency [OSHA] between 2009 and 2014 about the opening of unauthorized accounts and credit cards were allegedly discharged by the bank for their actions (Cavico & Mujtaba, Spring 2017), and this change in paradigm occurred within 15 years of the retirement of Carl Reichardt who choreographed the meteoric rise of Wells Fargo.  So, in about the same time it took to get Wells Fargo to the top of the banking industry, John Stumpf, the CEO who replaced Mr. Reichardt, had continued to help Wells Fargo stock to increase, unfortunately he had changed the atmosphere and paradigm and is now under investigation by the Financial Services Committee of the U.S. House of Representatives.  The atmosphere had changed from one of making the business a success to one of making as much money as possible for the stock holders and management staff.  This course of events does not negate James Collins’ working theory, furthermore it seems to support Collins theory regarding having the proper leadership to manage a great company.  The CEOs that followed Stumpf were not even capable individuals on Collins’ Level 5 Hierarchy table, and, sadly, they have taken this company from being one of the best in the industry doing things the correct way, to a company that is now under investigation for fraud and had changed the workplace to a “boiler room atmosphere” and “excruciating high pressure.”  The paradigm shift seemed to be from a customer service oriented mindset to a mindset of customers equal money for me and my bank, and this paradigm shift became so pervasive it was included in the training.  Craig Henry puts it this way in his article, “For Wells Fargo, as for any megabank, “the customer” is not a person – it’s a dataset, with means, medians, correlations, and metrics, like “cost of acquisition” and “churn rate” and “marginal profitability of product X” (2016).”  This mindset turns people in to dollar signs and makes it easier for them to be victimized.

References

Cardwell, Diane (08/01/2017). Carl E. Reichardt, Leader of Wells Fargo in the 1980s and ‘90s, Dies at 86. The New York Times. Page A19.

Cavico, Frank J. & Mujtaba, Bahaudin G. (Spring 2017). Wells Fargo's Fake Accounts Scandal and its Legal and Ethical Implications for Management. S.A.M. Advanced Management Journal, Corpus Christi, Pages 2 - 4.

Collins, James C. (2001). Good to great. New York City: HarperCollins Publishers Inc.

Henry, Craig (2016) "Leadership and strategy in the news",  Strategy & Leadership , Vol. 44 Issue: 6, pp.46-50.