Management Learnings with Jamie Dimon I JPMorganChase

Summary

Highlights

• Jamie Dimon encourages asking proactive questions to avoid future regrets. 🤔
• Dimon advocates for a 10% efficiency target across JPMorgan Chase. 🌟
• The dangers of complacency and bad management are illustrated through historical business failures. 📉
• Dimon emphasizes the importance of transparency and accountability in financial reports. 🔍
• Promoting a culture of honest feedback and continuous learning is key to success! 🧠
• Dimon shares personal stories of managerial takeovers and rebuilding companies. 💼

Key Takeaways

• Destroy complacency and embrace innovation – staying still is not an option! 🚀
• Take ownership of efficiency targets, and apply proactive management practices. 🔧
• Acknowledge past mistakes, learn from them, and prevent future errors. 📚
• Ensure transparency in financial reporting and project assessments. 📊
• Good old-fashioned cost-cutting and smart budgeting rock! 💸

Overview

Chapters

• 00:00 - 03:00: Introduction and purpose of the meeting The chapter titled 'Introduction and purpose of the meeting' begins with the speaker welcoming everyone to the meeting. They express that they have a lot to convey and have made efforts to organize their thoughts in a coherent and logical manner. The speaker invites questions or concerns during their talk, as there may not be much time for a Q&A session at the end. The speaker also mentions having time the following day to discuss strategy, company matters, geopolitics, and other related topics.
• 03:00 - 08:00: Company success and individual responsibility The chapter focuses on the company's success and the importance of individual responsibility in maintaining its high standards. The speaker expresses amazement at the company's performance, emphasizing the quality of its staff, the respect from clients, and global demand for its services. The success is attributed to employees' actions and the manner in which they conduct themselves. The need to remain innovative, ambitious, and disciplined while avoiding complacency, arrogance, and bureaucracy is stressed.
• 08:00 - 15:00: Efficiency and discipline in business operations The chapter emphasizes the importance of reinstilling basic disciplines in business operations to enhance efficiency. It suggests that even with a workforce of 100 people, efficiency and effective operations should be achievable. The speaker stresses that every individual is impacted and should take responsibility, rather than dismissing issues as unrelated to their specific unit. The focus is on collective responsibility and operational discipline.
• 15:00 - 21:00: Risks of complacency and dishonesty in business The chapter emphasizes the importance of individual accountability in managing a large company valued at $700 billion with 320,000 employees worldwide. It stresses that employees possess more knowledge than they realize through their interactions and management roles. Furthermore, the chapter introduces a 10% efficiency target as a discipline measure, framed as a fundamental business practice, distinct from advanced technologies like AI. The underlying message is the risk of becoming complacent or dishonest in business, highlighting that maintaining efficiency and responsibility is crucial for ongoing success.
• 21:00 - 26:00: Importance of proper accounting and analysis The chapter begins with a discussion not directly related to AI, focusing instead on the theme of reducing unnecessary tasks and responsibilities in various units. The speaker highlights that performing fewer tasks can be beneficial, emphasizing efficiency rather than speed. The conversation is more reflective based on the speaker's observations from their career, aiming to stress the importance of eliminating non-essential activities within organizations.
• 26:00 - 33:00: Role of competition and innovation The chapter discusses the impact of competition and innovation on various companies over the past 20 to 30 years. It lists examples of companies that have either thrived or failed. For instance, Sears and Kmart are no longer viable, whereas Walmart has succeeded. Similarly, digital equipment companies have disappeared, while Kroger's has taken over the best supermarket in the world. Blackberry has faded, but Dell and Apple have flourished, with Amazon also doing well. Nia has almost vanished as well. The chapter emphasizes the relentless nature of competition and innovation, which can lead to either the success or the downfall of companies.
• 33:00 - 39:00: Recognizing and correcting mistakes This chapter discusses the importance of recognizing and correcting mistakes in the financial services industry. It cites several examples of significant financial institutions, including Travelers, Citi, Bear Stearns, Lehman Brothers, Bank One, and the Savings and Loan (SNL) industry, that faced failures or crises due to various mistakes, particularly related to interest rate mismatches and over-leverage. These cases highlight the critical need for vigilance and correction of errors in managing financial operations to prevent large-scale financial disasters.
• 39:00 - 45:00: Corporate culture and leadership principles The chapter on 'Corporate Culture and Leadership Principles' discusses the downfall of several major companies in the mortgage business due to various internal and external factors. Key reasons cited include complacency, bureaucracy, arrogance, dishonesty, failure to set standards, poor leadership, and flawed incentive structures. The chapter provides specific examples to illustrate how these elements contributed to the companies' demise and highlights the importance of effective corporate culture and leadership in navigating challenges and ensuring long-term success.
• 45:00 - 51:00: Client and employee relations Client and employee relations are vital, as neglecting them can harm or 'kill' a company. The speaker emphasizes the need for caution and shares examples to illustrate this. In today's fast-paced and complex world, quick adaptation and better coordination are crucial. The speaker is passionate about proper accounting as part of these relations.
• 51:00 - 56:00: Continuous growth and innovation The chapter titled 'Continuous growth and innovation' focuses on how relying solely on accounting and regulatory rules can sometimes lead one astray. It stresses replacing a rote understanding of numbers with a deep analysis and comprehension. The message emphasizes the need to truly understand, analyze, and test financial numbers rather than being confined by forecasts and budgets, encouraging a proactive approach to continuous growth and innovation.
• 56:00 - 61:00: Effective communication and management practices The chapter titled 'Effective communication and management practices' emphasizes the importance of focusing on budget transparency and aiming not just for peer-level performance but aspiring to match the best in the industry. The speaker criticizes the practice of comparing oneself to the average of peers and stresses the necessity of aiming higher. The significance of distinguishing between fixed and variable expenses is also highlighted, with Jeremy mentioning the complexities involved in this aspect.

Management Learnings with Jamie Dimon I JPMorganChase Transcription

• 00:00 - 00:30 [Music] [Applause] Welcome everybody. So, I have a lot to say and I try to actually organize it thoughtfully and intelligently. And while I'm doing this, if people have dying questions or issues or something like that, feel free to ask. I don't I probably won't have much time at the end to do Q&A, I'd be happy to do that. Uh and obviously I have some time tomorrow to talk about strategy, the company, geopolitics and all those things. I just
• 00:30 - 01:00 want to start with we have like what a what a company. I don't know about you guys when I see this company in action it just blows me away and the quality of the people the respect of our clients uh how much they want us in countries around the world uh it's extraordinary. It's all based upon the things that you do and how you do it uh and things like that. How do we make sure we're going to do it and stay innovative and ambitious and disciplined while killing complacency, arrogance, bureaucracy? Um, and so we're
• 01:00 - 01:30 going to do a bunch of things. None of this is out of anger. It's just out of thought about kind of reinstilling some basic disciplines. You know, if you have 100 people, just can you live with 100 people and make that work and and we should be able to um we're asking people everyone uh oh, this is very important. Everyone in this room, I'm talking to you personally. When I give these examples, don't say that's something else. That's not my unit. That doesn't affect me. It does. I'm going to tell
• 01:30 - 02:00 you why. Because all of you, you know, you're responsible for this company that's worth $700 billion. You know, 320,000 people, all the clients we've seen around the world, you individually are responsible. And you know more than you think. I mean, you travel around and you talk to people and you you you have manage memes. You know more than you think. So um I we're asking people to do a 10% efficiency target. Again it's a discipline and what basically is think of is what you can and this is just basic business. This is not AI. I'm
• 02:00 - 02:30 going to talk about AI in a second. This is just can you do less. So what what are your units doing that you can do less? You don't need to be doing it all or things like that. I apologize if I'm being specific that it's you I'm talking about. Okay. I'm not I just I got to get off my chest about what we need to do and some of the things I've seen recently and over my career I said speed kills but I mean slow speed okay I don't mean fast speed and I
• 02:30 - 03:00 wrote down just examples okay of winners and losers and this is just over the last 20 or 30 years Sears and Kmart they're gone Walmart done well digital equipment gone the best supermarket market in the world disappeared, taken over by Kroger's, whatever. Uh, Blackberry disappeared, Dell did well, Apple obviously has done well, Amazon's done well, Nia basically disappeared. And, you know, and I go on and on with these examples. It's even worse in
• 03:00 - 03:30 financial services mostly because you can manipulate the numbers and overlever and stuff like that. But travelers blew up. City blew up twice. Bear Sterns failed. Leman failed. Bank one I'm here because you know bank one screwed up a bunch of businesses and stuff like that. The SNL business. The whole business got wiped out. The whole thing savings loans do not exist anymore. And you know what it was? Interest rate mismatch. WAMU interest rate mismatch. Silicon Valley Bank interest
• 03:30 - 04:00 rate mismatch. The whole mortgage business disappeared. 100% of the brokers and uh stuff like that disappeared. KDER disappeared. Drexel disappeared. And these were if you look at these things, it's complacency, it's bureaucracy, it's arrogance is slow to adjust. It a lot of it dishonest numbers. I'm going to give you some very specific examples. failure to set standards, bad people, bad comp schemes, disincentives, bad incentives, um politics, you know, and these things
• 04:00 - 04:30 are like all the the cancer that kills companies. And you know, we all have to be very cautious about when that takes place. And I'm going to give you examples about why I think it happens and how we have to combat it. Uh now, and the things it's even more important today because things are faster and more complex. I mean, the world is just faster and more complex. That means we got to move quicker, coordinate better, and do those things. I'm a fanatic about proper accounting. Don't get me wrong. I'm
• 04:30 - 05:00 going to give you again specific examples where the accounting will lead you the wrong answer. Regulatory rules will lead you the wrong answer. Regulatory capital lead you the wrong answer. And yet, we fall into this little echo chamber. So, instead of know your numbers, I'm going to change the get your numbers right. Understand them. analyze them, work them, test them, and don't be wrote about them. You got to have the budget in the thing. You can't always compare yourself to forecast because then you're always very
• 05:00 - 05:30 close. Okay? And it's just an you got to show the budget. You got to show the budget. Okay? And uh and then the other one which I hate like really hate is comparing yourself to peer average. I mean really really is that is that what we're going to do? You should always compare yourself to the best where are they and where are we? Fixed and variable expenses matter. Uh Jeremy mentioned it in the complexity of actually making
• 05:30 - 06:00 decisions. This is where wrote matters. You can't just say fully allocated or fully marginal. You have to like think about what matters in that thing. But marginal profitability is absolutely critical. You know like when we when we look at and you Jeremy gave an example about you know anything we do you know the next hundred million dollars of revenues while the business may have a 14% return and this could be almost anything we do uh the next 100% is a margin of 80%. and therefore marginal ROE and that's how you deploy capital and so you got to we have to always
• 06:00 - 06:30 understand that uh rigorous review of allocated expenses uh I'm going to give you example mostly about JP Mor here they are real expenses you know and and but you have the right to question them you have to question them zerobased budgeting I I don't like asking people to do it it's like too hard but you got to think that way like if I start from ground I have 100 people doing this thing, what do I do differently? And so, uh, a P&L is not an assessment of a business. You got to
• 06:30 - 07:00 do the full assessment. Customer metrics, turnover, apps, technology, you whatever. It's whatever is important is what I'm talking about. We talk about numbers. It's not the P&L. In fact, the P&L could be the most deceptive thing of all and telling you and giving the wrong answer and and proper project reporting. Again, whenever you have a project and this is on it, you have to it could be technology, it could be anything else. What we what did we say we started it and where are we today and uh like I
• 07:00 - 07:30 remember getting to JP Morgan and one after another the every project was like on course but from the last forecast and but I I said no show me where what it is from the beginning and every single one was a year or two late and that's just an honest assessment. not to blame yourselves or get mad about it or and also the project morphed without any discussion and I think that's just a bad management thing. So uh external reporting actually matters.
• 07:30 - 08:00 Okay. So I'm always quite careful what we report externally is real. A lot of companies it's not real. And what happens inside of companies is people start running that way. And you've never seen me spin uh analysts. And if I spin analysts, you're going to spin us. That's it. You know the I I want to honestly show how we compare to other people. Constant investment. You know the the notion you go stop starting investments is a bad idea. constant transformation technology and conversions um and you can't have stop
• 08:00 - 08:30 start strategies almost anywhere um proper assumptions you know what do you do when your spread on deposits is zero but you're opening branches you know do you what do you do that's why I always talk about through the cycle think real carefully about the assumptions that go into these things because sometimes they make you do stupid stuff and sometimes they stop you from doing good stuff when you do numbers it's to make decisions Therefore, the so what uh risk of contra accounts any contra
• 08:30 - 09:00 accounts I'm going give you some examples balance sheet contra accounts revenue contra accounts offbalance sheet crap it is a absolute uh mine and pit of stuff that'll you will kill you and you know that's what happened with bunch of these companies I'm going to mention so here are examples okay expenses that could be great investments okay the fact it's called an expense means nothing to me in In fact, in a lot of the business, they capitalize it. You build a plant, you capitalize it. You don't start
• 09:00 - 09:30 expensing it until it's producing. Okay? We build a branch, we don't capitalize it. We have a negative cash flow for a couple years and then hopefully by the fifth year, it's making a million dollars a year for eternity or so far. Bankers, same thing. Okay? And that's that's private bankers, investment bankers, uh, Chase wealth managers. Those investments pay off over time. JP expense allocations. I got a JP1. This is true, by the way,
• 09:30 - 10:00 because the company was dominated by the investment bank. Everything was skewed towards the investment bank. Everything. Cheap funding, investment bank. They even took things like HR costs. They lumped them. And so HR costs included pension, medical, executive comp, expat, all these departments. They added it together and they charged it out on headcount. Really expat was 100% for the
• 10:00 - 10:30 investment bank. Executive comp was 100% for the investment bank. the subsidy of the trading floors. We were subsidizing the investment bank $2 billion a year which I immediately fixed not to punish anyone because it caused huge misallocation of capital. The big loser in all that was the consumer bank and I'm still quite sensitive about we did the same thing with I'll give you a little example capacity in the computer center was charged out to everybody
• 10:30 - 11:00 whereas the extra capacity which is quite expensive was necessary and required for these businesses but not for those businesses. This is not a waste of time to get this right. And so when you all see your allocated expense you may spend no time on it but you shouldn't be paying for capacity. we need for payment systems that should be paid for by payment systems and all this does over time is cause huge misallocation and uh analyze sales comp and my got to the
• 11:00 - 11:30 company this by this is always true analyze I mean it always goes bad it always morphs don't assume it's okay people see things they get paid for things they shouldn't get paid for they don't mention it uh and I'll just give you one example but I I have would have 50 when I got to the company we paid the Treasury Salesforce based upon estimated uh revenues going forward. That was it. Almost no adjustments later on. And I and and I I
• 11:30 - 12:00 it's staggering branches. Uh well, I can give you a lot of examples about branches. Bank one hadn't opened a branch in 5 years. Chase hadn't opened a branch in five years. They never refurbished their branches. But at least Bank One, by the time we did the merger, we're making a million plus profit a branch a year. 2,300 branches, Chase was making zero. Partially because of of the allocations I mentioned, partially because no one seemed to care about them, stuff like that. Uh, but we should always analyze these. I these branches have been hugely profitable. And when we
• 12:00 - 12:30 don't, this goes back to accounting again. We don't give a branch credit for a credit cards. When they create a Sapphire account, that's worth 700. I think they create a million accounts a year in the branches. That's $700 million of value. I'm going to give a couple of quick examples here. And you know, we do these NPVs about why we should close a branch and they're we should do them. We should be disciplined. I think for the most part NPVs might work, but they don't always work. And you just you got to use your common sense sometimes. Banksville branch, we're going to close it. It's kind of small. They show me and I get
• 12:30 - 13:00 now I'm getting 100 complaints lit. Literally, there's a campaign. Every small business there, there's 200 or 300 consumers. Banksville is six miles. They said it's six miles to the closest branch. The biggest competitors were were us and other branches in Greenwich. It's a six mile drive from the next closest branch. And I looked at that was making 500 600,000 profit. I said, if you close that branch, you know what's going to happen? What happened the day we closed it? Who's going to open in the same
• 13:00 - 13:30 spot? Yeah. Or or that good Connecticut bank. And by Does a little lady want to drive six miles in the winter on those windy roads? And is the branch more profitable than it kind of looks? And to me, that wasn't the MPV. It was the pawn blocking the the queen. While we're cutting cost ways waste cutting, I also did something. I opened the partners' room. And a lot of people told me, and this is just how I think about what you do and what you don't do.
• 13:30 - 14:00 Do the right thing anyway, whether it looks good or it looks bad. The whole operating committee said, don't do it. a partners' room is going to cost a million and a half dollars a year, etc., etc. And I was, "Yeah, but we don't know each other, you know, and if we don't do it, it'll be years before we know each other." And, you know, I call is a good expense. It's a judgment call, you know. You can argue. I know a lot of you enjoy it. Um, do the right thing and explain it. They don't do that thing because you
• 14:00 - 14:30 think it'll look bad for you or hurt morale a little bit. You saw Chick-fil-A, there's a great article in the paper how they're trying to they're using satellites and stuff like that and drones to and now they got down to 13 seconds of sandwich through the through the drive-through line. That's what you got to be thinking. How do you make it better better all the time? Full and constant assessment. The way you do this stuff a lot I've been talking here. Always look, always learn.
• 14:30 - 15:00 It's the only way. Look at competition. Go to other companies. go to their branches, go to go on the road trips, uh take people out, take each other, you know, when you go out, take management teams to dinner. When you see clients, you want to, you know, it's a when they tell us that we're making a mistake. It's a gift. And by the way, very often they tell you that's a mistake, but it's not your area. And some people just tend to ignore it. No, no, write it down and then send it to the person. Uh always acknowledge your mistakes. You'll learn a lot having wine at the bar with
• 15:00 - 15:30 people. Uh and then you it's okay to be a fast follower like we are in our own echo chamber sometimes and that's not bad that just happens you know and this is the way you get out of the echo chamber hit the road go to the branch talk to small businesses um constantly assess constantly [Music] engage you have the great controls constantly review financial
• 15:30 - 16:00 operational detail Well, you know, that's that's that and always always it's you can't that's a discipline. That's like exercising. I bought a I had a we had a printing there's commercial credit printing press and uh to print financial reports or stuff like that and they said we got to buy a new one. It cost $2 million a Xerox 2000 or 2,000 whatever it was. I went in and said no no I went to the tech people and said just we don't we don't need to print all our stuff. Get rid of some. They came back very proudly and got rid of
• 16:00 - 16:30 8%. I was like, "Okay, well, again, my mother could have done that." Uh, and then but we get then we got it. We need it again. And I did it. So, I literally got in a room that we were small company at the time. I got every report. There were, you know, hundred and I put on top the names of the people getting it and I had you all come in say, "Do you read this report? What's in it?" And I cut it 50%. immediately. Now then later on they come back to me and say we have to do it.
• 16:30 - 17:00 We're we're bigger and stuff like that. So I bought one of these machines for two million bucks. We just bought Primica. I'm down in their printing plant and the guy's showing me his plant and I say, "Great." And they see one of the machines. They say, "Hey, I just bought one of those." He said, "How much did you pay for?" He said, "2 million." I said, "How much you pay?" How much did he pay? 50,000. You know why? He bought it from a bankrupt company. It was still in the box. That's
• 17:00 - 17:30 all. And let's let's do that a little bit every now and then. You know, like uh as it turns out, some of this is a true story. Some of those reports were being printed and shipped to people in Dallas. We had a company called Golf Insurance and they were being shipped to a person that died a year earlier. And then I asked, "What are they what are they doing with it?" And all that stuff was being put into a warehouse. And that's dumb. And and you
• 17:30 - 18:00 CFOs, you're going to find some of this furniture that's been sitting in a warehouse for 10 years. Just give it away. Use your common sense. Close down the warehouse. Like um audit whitewashing. We don't do this here. Never did. But a bank one every order report was like how great we were. I was like what? We suck. How's it possible? Like they said, well, we don't want to document anything for the regulators and lawyers. And I said, no, I want an honest assessment because you're better off being a great company
• 18:00 - 18:30 which will reduce your exposure than hiding your weaknesses, you know. And so, you know, the audit report should be tough and teach us all the time. kill bureaucracy all the time and relentlessly. It comes in a lot of forms. Weed that garden. It's a mindset. Home Depot. When you walk into Home Depot and you walk into their global galactic headquarters, the sign above
• 18:30 - 19:00 says store support center. It reminds people every day they are there because of the store. And we have to remember that all of us particularly staff we are there because there's a client in a branch or a investment bank or in front of a client and that is an important mindset and then you can use things like war rooms and all these things uh review customer complaints very often. I always look at customer complaints and sometimes I read them and I know the policy and I call up someone in this room I say I agree with
• 19:00 - 19:30 the customer. We could have should have would have and you got to change your mindset. ATMs. Uh when I got to JP Morgan, this happened periodically. My wife called me. She was in Walgreens. The ATM didn't work. I tell the people run the ATM thing at Bank One. The guy calls me. I said, "No, it's working." My wife calls me weekly and says, "It's not working." He calls I called him up. He said, "No, it's working." So I said, "Will you do me a favor? Get in your car and drive out there." And he drives out
• 19:30 - 20:00 there and it's not working. It's squiggly. Now, as it turns out, we have an outside vendor tracking this stuff. And I said, you know, I I fire the vendor and I want to be paid back the last six months. Now, we track it ourselves. That stuff happens all the time. That black car story, you all know the black car story. Never happened at JP Morgan. It did happen when we took over Shears. And I was going outside one day and there was, you know, literally after I said 50 black cars, they had given away those
• 20:00 - 20:30 books to everybody. people were taken would wait until 7 o'clock to go home. They're supposed to just take it to the closest train station. Uh uh they would pick up their their dinner money. Uh no one paid attention to it. There was one woman who took it to Glen Cove or something and back every she came in early in the morning, went back. Uh her boss knew about it and I said to the boss, I said, "You know, I can get her own car and drive her for a third what that cost literally." And I did do it. I I took
• 20:30 - 21:00 away the books. I did stuff. Changed some a bunch of rules and stuff like that. So branches should have a a branch administration group where nothing gets sent to the branch that doesn't go through this group because if they're getting stuff from HR, risk, legal, compliant, trading, audit, finance, options, equity, that they're overwhelmed. There should be a group that says no, no. And then they organize in a way that makes sense because I used to go to Smith Barney and they all complain. You know, I complain they say well I said I told you this. They said you did not. I said, "I we sent you a
• 21:00 - 21:30 memo. We give you this." And one of the branch man came and saw me. He said, he took a FedEx box, a big one, dropped it in front of me and said, "Yeah, I get that every week from you guys. Where where in it is it?" So we just changed a little thing in common sense a little booklet called I think we called it since we last met or you must read this that had a summary page and the stuff they have to read and that whenever we go out they forgot that part and uh so it's just important just
• 21:30 - 22:00 little things we had 500 coaches at JP Morgan when I first came in you know the operating committee was you know I was going through all these things and this came up I said 500 coaches and I kept on bringing it up and someone in the operating committee said you know Jamie are you going to do this every meeting. You're going to micromanage every single decision. And of course, I said, "No, I'm I'm not going to micromanage every single decision. I I I'm sorry. You know, it's your decision." I came in that Monday. I said, "I changed my mind. I'm going to micromanage this one.
• 22:00 - 22:30 I want all coaches out by the end of the week, and I'm not doing it to save money." Whose job is it to coach? We had outsource management. I mean, seriously. And and I also said to the operating committee, at at the end of one year, any one of you could bring back a coach. You you personally have to know about and think it's the right thing to do. You know, I in my whole career, I've never seen it work. Like when we're trying to save someone, this doesn't mean we shouldn't
• 22:30 - 23:00 try. In my whole career, I've never seen it. Maybe there's one example where it actually worked. Kill meetings. You got to kill meetings. Meetings got to start on time. They got to end on time. Someone's got to run it. I mean, I go to a lot of meetings and no one knows who's running it. We we we're too nice. We collaborate too much. There should be a purpose to to a meeting. There should always be a follow-up list. An example of bureaucracy is always the meeting after the meeting. Whereas, you know, generally with me, if you can't say it with in front of my partners, don't bother. Come say it to me. I'm not your
• 23:00 - 23:30 messenger. Lay it on the table. It's okay. Sometimes, obviously, there's something that's different you want to talk about privately, but usually it's a go-around. It's a rope a doe. It's an end run. you know, usually don't allow that type of [Music] stuff. Mistakes I made. This is going to be short, but but they always I always say
• 23:30 - 24:00 there's an anatomy of mistakes. Didn't have the right people in the room. Didn't work it hard enough. uh didn't have a decision-making process that made sense, didn't get the right inputs, made assumptions that I made so many the London whale, you know, which I'm sure when I die, no matter what I do, it's going to say Jamie, you know, his his, you know, resume blotted by the London whale. Uh, but the mistake wasn't complexity of the derivatives, folks. It
• 24:00 - 24:30 was it didn't go through the regular risk committee. And I would never I didn't know that, you know, but I had I had signs looking back and it should go through a risk committee. It didn't go through the risk committee exactly precisely because it was risky and they want to play it close to their vest. This goes back to hoarding information, you know, which is a disease. Okay, cloud. I always fought cloud. This goes a long time ago because I said, "Cloud is outsourcing. I like doing this stuff ourselves. I still do like it." And and
• 24:30 - 25:00 this is a mistake I made at one point. I said, "You know what? We're going to take the operating committee out to Silicon Valley. This goes back to why it's important to get on the road. When I went to see Tencent and Pingan and Alibaba, it's amazing what you learn. And we flew out there and we sat down with cloud and Amazon and stuff like that. And flying back, I said, I made a huge mistake. We're going cloud right away. And and it just opens up your eyes. And you got to be obviously willing to change your mind. I remember when I got to bank one, I I was a mistake. One of my bigger ones. I've
• 25:00 - 25:30 been there for not quite a year and I'm in Louisville and uh you know our business had been shrinking. We had open branches, customer sat sucked. Uh we had seven deposit systems. I was trying to fix all that but I was in a branch and I realized that the branch across the street hours ours were 9 to5 and ours were 10 to four. I said, "Whoa, that's not so good." And I called up. They said, "Well, we're different. You know, we're not that that kind of bank." I said, "Do me a favor. Find out let's find out for all of our branches. We had two thou a little over 2,000. what our
• 25:30 - 26:00 hours are versus the average competent, not the best in town. And they said, "Well, how are we gonna do that?" I said, "Well, email the branch managers and tell them to tell you." And so we colay this. Our average branch open two hours less a day. I went home. It was a Friday. I went home embarrassed. I came in on Monday. It just so happened the whole branch system was there. And here's what I said to him. I apologize. I thought I was a pretty good CEO. I made a mistake. I should have recognized this much sooner said on the other
• 26:00 - 26:30 hand none of you told me like what's wrong with you two like serious not a salesperson not a branch manager not a regional manager not a district never came up and then I said we have to change and someone said well you know morale is already bad and uh and they went on and on about morale because we had to change the work hours you know the time for the people when the cash gets sent in the settlement the financial and I said, "But we got to change that. We're here for customers, you know." He said, "Morale sucks
• 26:30 - 27:00 because we suck. Morale will get better when we're [Music] better. What the hell is culture?" I struggle with this one a little bit because, and I think it's all the things I'm speaking about here, by the way. I don't think you can put it in one little thing. Uh, but there are good people and bad people. And you know that I think we're almost all good people. They're people you don't trust and people mean different things sometimes. You don't
• 27:00 - 27:30 trust them because they lie, they shave the truth, they're not particularly honest, or you don't trust them because you don't trust their judgment. Those are very different things. But uh what are their motives in life? I mean, you know, and this goes back to what's the role of our bank. I I think it's to lift up society, to help people and create culture by doing, not saying. Recognition is important. I was never particularly good at as most of you know. Uh but but it's an amazing way. Yeah, I know they're laughing. Yeah, this is I was at an O I
• 27:30 - 28:00 was at a town hall one day and someone says, "What do you do to show recognition to your direct reports?" And a couple of my direct reports were in the room and they burst out laughing. But I told them and I meant it that they do know and I learned lessons in this. I learned the lesson by watching Ted Lasso and David Novak that recognition is a form of humility and acknowledgement they did something that you didn't that they taught you something. And I so I do think it's very important that we get it right. Uh and I did make biscuits for my
• 28:00 - 28:30 had Judy make biscuits for my operating committee and but then I also came in the next day and I realized I gave you biscuits and they all took them and said thank you. They're supposed to give business to the boss. And I already mentioned fire bad clients. Uh I've done it before corporate clients and then you know this wealthy guy had come into a branch yelling and screaming. So they so the branch people said he sent me a note. He complained. He's philanthropic. I knew him. He uh it happened a second time and the third time I actually
• 28:30 - 29:00 called up the branch manager. I said what what does he do? She and he told me what she what the guy does and it was disgusting. I couldn't even say it here. And you know, it's just one of those people that likes to beat up and yell at people because they're a big powerful thing. I called him up and said, you know, so and so uh I want you to take all your business out of the bay. He said, 'You can't do that. He said, damn Australia can do it. And by the way, and you're not going to treat my people that way. Don't allow it. And and and it doesn't matter anywhere because you know, and any client, okay, if you don't do business with a client, like life will go on. Hire back your guards. I've told this
• 29:00 - 29:30 story about we outsourced all our guards in it was in the United States and you know and a union guy came to see me yelling at me and I the the bureaucracy didn't want me to see him. I see everybody. He ran the SEIU a tough union and he said you outsource your guards to save money and he said but the same people working the same job making the same salary. He said, "You're saving money because the benefits programs, you know, which were worth $30,000 to a family, they cut to 15 and then they saved you $7,500. They kept $7,500." And I called
• 29:30 - 30:00 up the person who did it, who was very smart and very senior. I said, "I want them all back on our payroll. I want them grandfather pension plans. JP Morgan does not need to make our profit off the backs of our guards." leading the team, regular business views, like regular war rooms, snapshots, bureaucracy busting, that type of thing. Attack the problem, all dead cats on the table. I mean, our biggest mistakes are when people kind of
• 30:00 - 30:30 think it's a problem, but they don't bring it up on the table in the right room. Loyalty is earned, and it's also earned by getting the full input, you know, and and that you've had a chance to have your input. You may, you know, sometimes we we all get things we don't want exactly right, but but you earn it. And so after you've had a chance of input, after you've had a chance to put the dead cats on the table, then you should get on board. But not before that, and I hate things I hear like stay in your lane. Absolutely do not stay in
• 30:30 - 31:00 your lane. That is a bureaucratic, stupid comment. You're not a good partner. You won't let stuff go on each one. If if if so and that to me, you know, I say right off the bat like what do you mean? What do they do? Maybe they're right. You know, as opposed to these blanket statements that are bad. And and you know, you got to work on this one. There's nothing wrong with disagreement, by the way. Ever. Disagreement is a good thing. Make it fun. You know, that's our job to have
• 31:00 - 31:30 fun in life and make everything we do fun. Invite mom when you go on the road and you're gonna have management teams or stuff like that and invite mom and dad. When I went to Kenya, I had Pauline's mother and uh uh Peter's mother and their families there. I mean, what a gift to us to see what those moms have accomplished with those kids. And and moms and dads love to see us. And then also when you go out, take the management teams to dinner with spouse.
• 31:30 - 32:00 They love to see the spouse. I mean, it's a kick and you learn a lot about each other. Why it's hard to get good growth and innovate? Test and learning is nothing nothing that you shouldn't be testing learning. uh you can kill innovation with too much resource, too little resource or bureaucracy, including NPV, you know, and you got to really think through what
• 32:00 - 32:30 are you trying to accomplish in some of these things. I'm going to give examples. Conversions, you know, both JP Morgan and Bank want to stop all the conversions because they're costly, they take time, they divert resources. Meanwhile, you you're dying of slow death. You got seven loan systems and five deposit systems and 26 general ledgers. you just do them and then you but what happens is you get better at it over time and so transformation is a constant thing so um don't try to make it look better than it
• 32:30 - 33:00 is and that happens all the time in companies allocate this way make it look bad I'm going give you some specific examples and always do the good the bad the ugly that will make you better doing just the good makes you worse doing the good the bad the ugly makes you get better versus the competition there are good expenses, good expenses and bad expenses, good revenues and bad revenues. I I hate the concept of cutting costs. The concept should always be cutting [Music]
• 33:00 - 33:30 waste management tricks and tools. Thorough reviews with or without you in the room. Have brainstorming sessions with wine. Have fun. Write memos yourself. Don't don't always let other people write it. Emails when we ask questions of someone and even if I ask Teresa to do it and she asked Derek Waldron to do it who asked somebody else to do it, that memo should come directly back to me
• 33:30 - 34:00 from that person, not back up the chain. And if I call that person directly, it comes directly to me. They should copy their bosses. The other thing is slow, bureaucratic, and the but the really important thing is makes that person's job more important. You're enabling them. You're telling them the job is more important. Okay, definitely celebrate, but emphasize the negatives. Have a follow-up list of your own. No management pabum. Like when you write stuff that comes out or try to get rid of the freaking jargon, you know, speak
• 34:00 - 34:30 speak to like you're speaking to someone to explain something to them and don't waste people's time. Work smart. Most people they waste so much time like double read emails, triple read them, you know, uh uh take care of yourself. If you don't take care of yourself, it doesn't work. Here's one I really we got to change 100%. You know, a lot of you have been meetings with me for the last 20 years. I don't think you've ever ever ever ever ever ever ever seen me not do the pre-eread and not get 100% of my
• 34:30 - 35:00 attention. And I and and people are going to meetings all the time and they're getting notifications and texts and reading email. You got to stop and you got to stop it everywhere. It's disrespectful. It it's people I didn't know that. Yeah. Well, of course you don't know because you weren't paying attention. And uh and another thing, don't be lazy about this one. Write a press release about a new product, a new service, and do the FAQs as an exercise because it makes you answer a lot of questions. And people simply don't they want to have a quick verbal thing. No, when you write it down, it's amazing. It
• 35:00 - 35:30 focuses the mind quite a bit about how you explain what you're doing to people. Push the thought as low as you can. Take the other side of the argument. Be a skeptic, but not a cynic. And always answer the question, what would you do if you're queen? Queen or king for a day? That and that's the big one. What would you do? What you gonna do? Okay, I'll end where I started. I hope this is productive. At least I feel better. [Applause]
• 35:30 - 36:00 [Music]