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A História Secreta do Goldman Sachs
A História Secreta do Goldman Sachs explica os processos que levaram esta instituição a alterar a sua cultura de colocar «os clientes em primeiro lugar», à medida que deixava de ser uma pequena empresa para se tornar numa organização de grandes dimensões cotada na bolsa. Mandis avalia principalmente aquilo que fez o Goldman Sachs ser tão bem-sucedido. Ao combinar uma análise intuitiva com uma narrativa envolvente, o autor escreveu uma história bem informada, que oferece perspetivas inestimáveis sobre a história do banco e um esboço biográfico dos seus líderes de topo.
Unknown Binding
First published January 1, 2013
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Displaying 1 - 15 of 15 reviews
June 9, 2017
Nice insider view of GS' culture and how it's changed
August 23, 2018
Good scholarly level read on the evolution of investment banking, but there seems to be a pro-Goldman spin on every historical event when the title persuaded you to buy the book thinking that it was going to be an expose on the players.
March 12, 2018
Love the insight into the history of this great firm and a detailed breakdown of how incremental changes in a culture and cause a drift over many years and have something completely different emerge after that period,
As well as how a shift from a “long term greedy” mindset to one of short termism was caused by moving the company public. (Partnerships who shared in the p/l of the company led to self regulation —> IPO lead to need to satisfy shareholders)
As well as how a shift from a “long term greedy” mindset to one of short termism was caused by moving the company public. (Partnerships who shared in the p/l of the company led to self regulation —> IPO lead to need to satisfy shareholders)
This entire review has been hidden because of spoilers.
Want to read
December 27, 2017Recommended by my MBA 'Designing a Good Life' Professor, Nicholas Epley
April 23, 2023
The author examines how Goldman Sachs changed from a firm that principally provided advice to its clients and regularly placed client’s interests ahead of its own, at least short-term, interests to a firm that principally makes markets and invests its own capital and focuses on fulfilling its legal obligations while maximizing returns to its shareholders.
To analyze this change, the author uses a concept from sociology called ‘organizational drift’, which seems to describe a process in which an organization’s purpose gradually changes over time, without most members of that organization realizing that has happened, hence the “drift”. He convincingly notes that from within the organization many things remain the same: employees use the same words, such as “putting the client’s interest first,” the people are often the same, but the behaviors that are encouraged and rewarded has changed, the purpose has changed. Several rewarding longitudinal studies show how behavior at Goldman changed over time. In the most striking, Goldman employees changed what they meant by “putting the client’s interests first” from doing what financially benefited the client, regardless of impact to doing what was legally required for the client, while acting as their mature counterparty. To prove this point, the author mines correspondence and interviews from partners at various points in Goldman’s history, noting strikingly how similar these cohorts sound and yet how different they think.
So how does the author suggest this happened? As with the best sociologists, he begins by challenging a simple cause effect relationship that most of his readers will already have in their heads. Specifically, that Goldman’s culture eroded when it changed from a closely-held private partnership to a widely-held public company. In the place of this simple explanation, the author substitutes a complex bundle of forces that together served to change Goldman’s culture. In particular, he points out that (1) the firm’s external environment changed from advisory services, where alignment with a client’s interest is a smart long term strategy, to market-making services and investing services, where that relationship is less clear; (2) the firm’s need to grow both quickly and internationally challenged its ability to socialize new employees based upon old norms; (3) a specific experience with near bankruptcy in 1994 and how partners preserved their financials over the firm in that instance dramatically affected the average employee’s perception of culture; and many others which are impossible to fully recount.
Perhaps the most interesting part of the book is not the dynamic the author sought to describe, but the history and how unfamiliar the Goldman of the 1980s appears to a professional only 30 years later. In the 1980s, partners voluntarily left most of their wealth in the capital of the firm, managed by committee, avoided ostentatious behavior or lavish displays of wealth, treated peers equally and averred a ‘star system’, and prized hard work and a particular ethic over monetary success. Modern professional services firms celebrate the opposite of almost all of those values.
If the book has a failing, it is that the author tacitly answers a question that ought to be approached head on, namely: was this change at Goldman inevitable, an output more of the environment in which they operated, or contingent, an output of that environment as well as specific personalities, decisions, and choices. The author seems to conclude the latter, that without all of the things he is describing, you don’t wind up with the degree of drift that Goldman has experienced. But this tacit conclusion side-steps two more interesting questions: (a) would any elite firm that grew as Goldman did necessarily experience this kind of organizational drift; and (b) would any elite firm that operated in the markets Goldman did, and experienced the changes that they did, necessarily experience this kind of organizational drift. These questions are hard to answer, but are the sort that actually allow leaders of professional services firms to make the core decisions upon which culture succeeds or founders, questions like: “should we grow beyond a certain point or not” and “should we expand into a new market or retain in the one in which we have developed our culture?”
Instead of taking on these, perhaps unanswerable, questions the author supplies a list of ten best practices that leaders should consider to retain their culture. I'd like the author to say more about drift generally. That's hard to do in this sort of book. But I feel it's what the world needs to know. I hope he's working on something like this.
FOUR STARS. An insightful window into corporate values and how they change as companies age, change leaders, and respond to market forces.
To analyze this change, the author uses a concept from sociology called ‘organizational drift’, which seems to describe a process in which an organization’s purpose gradually changes over time, without most members of that organization realizing that has happened, hence the “drift”. He convincingly notes that from within the organization many things remain the same: employees use the same words, such as “putting the client’s interest first,” the people are often the same, but the behaviors that are encouraged and rewarded has changed, the purpose has changed. Several rewarding longitudinal studies show how behavior at Goldman changed over time. In the most striking, Goldman employees changed what they meant by “putting the client’s interests first” from doing what financially benefited the client, regardless of impact to doing what was legally required for the client, while acting as their mature counterparty. To prove this point, the author mines correspondence and interviews from partners at various points in Goldman’s history, noting strikingly how similar these cohorts sound and yet how different they think.
So how does the author suggest this happened? As with the best sociologists, he begins by challenging a simple cause effect relationship that most of his readers will already have in their heads. Specifically, that Goldman’s culture eroded when it changed from a closely-held private partnership to a widely-held public company. In the place of this simple explanation, the author substitutes a complex bundle of forces that together served to change Goldman’s culture. In particular, he points out that (1) the firm’s external environment changed from advisory services, where alignment with a client’s interest is a smart long term strategy, to market-making services and investing services, where that relationship is less clear; (2) the firm’s need to grow both quickly and internationally challenged its ability to socialize new employees based upon old norms; (3) a specific experience with near bankruptcy in 1994 and how partners preserved their financials over the firm in that instance dramatically affected the average employee’s perception of culture; and many others which are impossible to fully recount.
Perhaps the most interesting part of the book is not the dynamic the author sought to describe, but the history and how unfamiliar the Goldman of the 1980s appears to a professional only 30 years later. In the 1980s, partners voluntarily left most of their wealth in the capital of the firm, managed by committee, avoided ostentatious behavior or lavish displays of wealth, treated peers equally and averred a ‘star system’, and prized hard work and a particular ethic over monetary success. Modern professional services firms celebrate the opposite of almost all of those values.
If the book has a failing, it is that the author tacitly answers a question that ought to be approached head on, namely: was this change at Goldman inevitable, an output more of the environment in which they operated, or contingent, an output of that environment as well as specific personalities, decisions, and choices. The author seems to conclude the latter, that without all of the things he is describing, you don’t wind up with the degree of drift that Goldman has experienced. But this tacit conclusion side-steps two more interesting questions: (a) would any elite firm that grew as Goldman did necessarily experience this kind of organizational drift; and (b) would any elite firm that operated in the markets Goldman did, and experienced the changes that they did, necessarily experience this kind of organizational drift. These questions are hard to answer, but are the sort that actually allow leaders of professional services firms to make the core decisions upon which culture succeeds or founders, questions like: “should we grow beyond a certain point or not” and “should we expand into a new market or retain in the one in which we have developed our culture?”
Instead of taking on these, perhaps unanswerable, questions the author supplies a list of ten best practices that leaders should consider to retain their culture. I'd like the author to say more about drift generally. That's hard to do in this sort of book. But I feel it's what the world needs to know. I hope he's working on something like this.
FOUR STARS. An insightful window into corporate values and how they change as companies age, change leaders, and respond to market forces.
January 25, 2025
Incentives are everything
January 31, 2014
Goldman Sachs Saga: a story from an insider
This is a fascinating story of the rise and fall of one of the most influential financial corporation of our times from an insider who witnessed it all. Goldman grew from a modest privately owned investment banking firm (focused on United States), with less them $100 million profit to a publicly traded company with $10 billion profit and equity of $100 billion. In 2006, Goldman spent $16.5 billion in compensation with an average of $622, 000 per employee; it was at the height of its earning power and prestige. But gradually the Goldman values, the business principles and the firm's culture eroded. Two years later it was widely accused in the press of unethical and criminal behavior; the press alleged that it squeezed the body of humanity to extract anything that looked like money.
The author proposes that the organizational drift that occurred after the company became a publicly traded corporation is the root cause of its downfall. The changes in business practices and policies led to Goldman's organizational drift. The daily grind of competition and the rapid growth stuck in the minds of Goldman's executives to ignore the most fundamental principle of the company. Invest stockholders money at the same level of care and caution, as if you are investing your own money. Part of the problem was the inherent difficulties of the financial system. Public trading brought new kind of ownership and financial interdependence among the partners. The elimination of capital and growth constraints made the firm to take into account the outsiders perceptions, like the analysts' estimates of earning per share (EPS) and stock values. The firm was bent on providing higher returns to its stockholders. Increased competition and complexities of banks with too many deals going around the clock made the system too complex. The barrier between legal and illegal deals became so thin that conflicts became unmanageable.
This book focuses on the Goldman's case, but the story has much broader implications, because many problems the firm faced is very similar to any other firm playing the game. But the executives did not pay attention to the signs that shows that it is losing touch with original principles and its values. These signs include; leading market share, appeal to stockholders, brand name, and attractiveness as an employer. The firm did not wake up and made things right, but it merely responded to business pressures and its financial environment.
Goldman did not do too badly at the end, because at the height of the mortgage crisis, it still managed to come back with vengeance. In 2008, the firm had a return on its equity of 4.9% versus -5.0% for its peers, and 22.5% versus -1.8% in 2009. Lehman Brothers, Bear Stearns, Merrill Lynch, Washington Mutual and Bernie Madoff were not lucky enough to beat the crisis.
There are several books about the success and failures of Goldman Sachs and this one is interesting in that the author was an insider, and knew the executives and their business philosophy personally.
This is a fascinating story of the rise and fall of one of the most influential financial corporation of our times from an insider who witnessed it all. Goldman grew from a modest privately owned investment banking firm (focused on United States), with less them $100 million profit to a publicly traded company with $10 billion profit and equity of $100 billion. In 2006, Goldman spent $16.5 billion in compensation with an average of $622, 000 per employee; it was at the height of its earning power and prestige. But gradually the Goldman values, the business principles and the firm's culture eroded. Two years later it was widely accused in the press of unethical and criminal behavior; the press alleged that it squeezed the body of humanity to extract anything that looked like money.
The author proposes that the organizational drift that occurred after the company became a publicly traded corporation is the root cause of its downfall. The changes in business practices and policies led to Goldman's organizational drift. The daily grind of competition and the rapid growth stuck in the minds of Goldman's executives to ignore the most fundamental principle of the company. Invest stockholders money at the same level of care and caution, as if you are investing your own money. Part of the problem was the inherent difficulties of the financial system. Public trading brought new kind of ownership and financial interdependence among the partners. The elimination of capital and growth constraints made the firm to take into account the outsiders perceptions, like the analysts' estimates of earning per share (EPS) and stock values. The firm was bent on providing higher returns to its stockholders. Increased competition and complexities of banks with too many deals going around the clock made the system too complex. The barrier between legal and illegal deals became so thin that conflicts became unmanageable.
This book focuses on the Goldman's case, but the story has much broader implications, because many problems the firm faced is very similar to any other firm playing the game. But the executives did not pay attention to the signs that shows that it is losing touch with original principles and its values. These signs include; leading market share, appeal to stockholders, brand name, and attractiveness as an employer. The firm did not wake up and made things right, but it merely responded to business pressures and its financial environment.
Goldman did not do too badly at the end, because at the height of the mortgage crisis, it still managed to come back with vengeance. In 2008, the firm had a return on its equity of 4.9% versus -5.0% for its peers, and 22.5% versus -1.8% in 2009. Lehman Brothers, Bear Stearns, Merrill Lynch, Washington Mutual and Bernie Madoff were not lucky enough to beat the crisis.
There are several books about the success and failures of Goldman Sachs and this one is interesting in that the author was an insider, and knew the executives and their business philosophy personally.
August 27, 2016
"Dark Knight feeling, die and be a hero/ Or live long enough to see yourself become a villain." - Jay-Z
"In the passion and depth of their struggle, the very art that had raised them to such Olympian heights... was lost. Their techniques vanished." - Duel of the Iron Mic
This book, the best insider's perspective on Goldman's history out there, really brings home the ways that large organizations in the capitalist world mirror the continual (and amoral) pressure on every species to evolve in the biological world. As we live in the present and are mostly blind to the future, every new adaptation or abandonment of an out-of-favor survival strategy can leave us stranded when a sudden or rapid shift occurs in the ecosystem. As the financial sector exploded between 1980 and 2008, the species Goldmanus sachhus had to choose between either extinction (bankruptcy or hostile takeover by Morgan Stanley) or a reorganization gradually overriding the company culture, and reputation with customers, that had worked so well.
Mandis' description of what Goldman once was was striking, as I have only known the company through books and news reports about the skullduggery it participated in to not only precipitate but also survive 2008 financial crisis more profitable than ever. The old Goldman sounds like a place I would want to work at, even as this would mean a commitment of my adult life to the company's prerogatives. Goldman harnessed the masculine virtues of courage, strength, mastery, honor, and teamwork to transform a dull and stressful hustle into a glorious quest towards Partner status in the firm. Personal culpability for financial losses, brought about by placing one's prodigious net worth into the firms long-term equity, also appears to be the best possible method to prevent or buffer against Black Swan events that periodically rattle Wall Street.
Alas, Goldman thought it needed to grow rapidly and adopt a short-term hedge fund mentality to survive. Without the TARP bailout, it wouldn't be standing today, but I don't think they'll use their second chance at life to roll back the clock. Perhaps new competitors will revive honorable finance in the future (one can dream).
"In the passion and depth of their struggle, the very art that had raised them to such Olympian heights... was lost. Their techniques vanished." - Duel of the Iron Mic
This book, the best insider's perspective on Goldman's history out there, really brings home the ways that large organizations in the capitalist world mirror the continual (and amoral) pressure on every species to evolve in the biological world. As we live in the present and are mostly blind to the future, every new adaptation or abandonment of an out-of-favor survival strategy can leave us stranded when a sudden or rapid shift occurs in the ecosystem. As the financial sector exploded between 1980 and 2008, the species Goldmanus sachhus had to choose between either extinction (bankruptcy or hostile takeover by Morgan Stanley) or a reorganization gradually overriding the company culture, and reputation with customers, that had worked so well.
Mandis' description of what Goldman once was was striking, as I have only known the company through books and news reports about the skullduggery it participated in to not only precipitate but also survive 2008 financial crisis more profitable than ever. The old Goldman sounds like a place I would want to work at, even as this would mean a commitment of my adult life to the company's prerogatives. Goldman harnessed the masculine virtues of courage, strength, mastery, honor, and teamwork to transform a dull and stressful hustle into a glorious quest towards Partner status in the firm. Personal culpability for financial losses, brought about by placing one's prodigious net worth into the firms long-term equity, also appears to be the best possible method to prevent or buffer against Black Swan events that periodically rattle Wall Street.
Alas, Goldman thought it needed to grow rapidly and adopt a short-term hedge fund mentality to survive. Without the TARP bailout, it wouldn't be standing today, but I don't think they'll use their second chance at life to roll back the clock. Perhaps new competitors will revive honorable finance in the future (one can dream).
January 17, 2021
Title: #WhatHappenedToGoldmanSachs by #StephenMandis
Subject: #Business #Culture
Year: 2013
An exploration of the evolution of #goldmanSachs from a partnership that "put the client first", to an LLP and ultimately a mega public-listed corporation that hangs its hat on the legal side of ethical behaviour rather than observing its historical higher ethical standpoint.
The book considers the changes that led to this cultural shift, arguing that there are many facets: technological change, regulatory liberalisations, and its #IPO.
Before:
"...the business principles were intended to keep everyone focused... staying grounded in the clear understanding that clients were the reason for Goldman's... existence"
"Paulson [CEO] asked questions that he felt should be on Bryan's [the client's] mind, challenging us... I wondered, which one is the client -- Bryan or Paulson?
After:
"As a public company, Goldman has a fiduciary responsibility to shareholders... [if] it was in the #ShareholdersInterests to de-risk [mortgage exposure] immediately, it had a duty to do so. But to de-risk, Goldman sold its risk to clients"
The book concludes with lessons to potentially apply to a whole host of entities to better align risk/remuneration more closely with investors and the public at large.
4*
Subject: #Business #Culture
Year: 2013
An exploration of the evolution of #goldmanSachs from a partnership that "put the client first", to an LLP and ultimately a mega public-listed corporation that hangs its hat on the legal side of ethical behaviour rather than observing its historical higher ethical standpoint.
The book considers the changes that led to this cultural shift, arguing that there are many facets: technological change, regulatory liberalisations, and its #IPO.
Before:
"...the business principles were intended to keep everyone focused... staying grounded in the clear understanding that clients were the reason for Goldman's... existence"
"Paulson [CEO] asked questions that he felt should be on Bryan's [the client's] mind, challenging us... I wondered, which one is the client -- Bryan or Paulson?
After:
"As a public company, Goldman has a fiduciary responsibility to shareholders... [if] it was in the #ShareholdersInterests to de-risk [mortgage exposure] immediately, it had a duty to do so. But to de-risk, Goldman sold its risk to clients"
The book concludes with lessons to potentially apply to a whole host of entities to better align risk/remuneration more closely with investors and the public at large.
4*
August 6, 2014
Was a better read than I expected it to be. Mandis walks through the organisational dynamics at Goldman Sachs, providing a sociological commentary on its workings as an outsider, and based on his own experiences at the firm as an ex-employee. Succinctly, the intended moral of the analysis is general and applies to any sort of large institution with multiple stakeholders.
The take away is that organisational dysfunction often begins with small infractions in institutional norms. And these infractions in due course come to be rationalised away by pointing to mitigating circumstances, often articulated by looser, or more tendentious, reinterpretations of formative institutional norms. As this process escalates, norms are subverted to the point where organisational deviance comes to be normalised.
At this point the organisation becomes incapable of moderating its own actions because the correlation between espoused institutional norms and allocated responsibilities and privileges of members cease to constrained by, and coordinated with, each other.
The take away is that organisational dysfunction often begins with small infractions in institutional norms. And these infractions in due course come to be rationalised away by pointing to mitigating circumstances, often articulated by looser, or more tendentious, reinterpretations of formative institutional norms. As this process escalates, norms are subverted to the point where organisational deviance comes to be normalised.
At this point the organisation becomes incapable of moderating its own actions because the correlation between espoused institutional norms and allocated responsibilities and privileges of members cease to constrained by, and coordinated with, each other.
Read
August 5, 2016Steven G. Mandis, AB’92
Author
From our pages (Nov–Dec/13): "A Goldman Sachs employee from 1992 to 2004 and then a client after cofounding his own global alternative asset management firm, Steven G. Mandis combines personal experience, interviews, and analysis of SEC and congressional filings to inform his account of the company’s changing culture. Assessing the values that made Goldman Sachs successful, Mandis analyzes 'why and how the firm changed from an ethical standard to a legal one as it grew to be a leading global corporation.'"
Author
From our pages (Nov–Dec/13): "A Goldman Sachs employee from 1992 to 2004 and then a client after cofounding his own global alternative asset management firm, Steven G. Mandis combines personal experience, interviews, and analysis of SEC and congressional filings to inform his account of the company’s changing culture. Assessing the values that made Goldman Sachs successful, Mandis analyzes 'why and how the firm changed from an ethical standard to a legal one as it grew to be a leading global corporation.'"
March 1, 2016
Steven Mandis manages to put what happened to Goldman Sachs into a bigger picture. The organisational drift experienced cannot be traced to one event (IPO) or one CEO, but is more complex. Having worked at GS for a year, I recognized many of his observations and appreciated the elaborations of history, anecdotes and organisational theory.
November 11, 2013
Great history of the company. I learned a lot about the company as it grew, but not sure of the issues that caused the shift. I feel like Mandis might hold a few punches, but over all good lessons to think about if you're starting a company or growing one.
May 3, 2014
organizational drift…. a bit didactic yet wholly reminiscent of healthcare "growth"
idealism is lost to capitalism
idealism is lost to capitalism
December 10, 2014
too boring, didn't finish
Displaying 1 - 15 of 15 reviews