Posts Tagged ‘october 2013’

By Tim Fernholz @timfernholz October 11, 2013

JP Morgan devoted $9.3 billion to legal expenses last quarter, driving its net loss of $380 million.  Its legal troubles took up 39% of its total revenue in the same period, by far the company’s largest single expense.

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That’s right: The largest bank in the United States spends more money fighting and paying off legal and regulatory challenges than it does paying its staff, buying securities or paying rent on its 5,600 Chase retail bank branches.

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What does your largest expense say about your business? Ideally, the biggest cost should get at the heart of what the firm does. Goldman Sachs’ largest expense was compensation and benefits for its (in)famous talent. Apple’s largest expense in its most recent quarterly report was on sales, largely new stores and employees. General Motors’ largest expense is building cars.

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For the first time, the bank revealed its total expenditures on legal costs. Since 2010, JP Morgan has devoted $31 billion to legal problems, spending $8 billion on settlements and reserving $23 billion for future costs. That’s almost half of its net earnings ($57.5 billion) in the same period, keeping in mind some of those reserves can be returned to stockholders if settlements and legal fees turn out to be less than expected. The exhaustive list of all the civil and criminal investigations JP Morgan is dealing with—from Libor to the London Whale to the Madoff ponzi scheme—could lead to the largest bank fine in history, some $11 billion. That would be on top of the the $3.7 billion the company has already paid this year. Settlement talks are ongoing.

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The bank avoided reporting losses of $932 million by saving $542 million less this quarter to cover the costs of future defaulted loans. This reflects an improving US economy—fewer people are defaulting on loans—but it also reflects a scramble at the bank to cover the costs of its near-constant run-ins with regulators and prosecutors. Those are costs its normal businesses just can’t cover. The financial industry has been more than happy to overlook JP Morgan’s law-breaking under Jamie Dimon as long as it has been profitable, but it may not take too many quarters of losses to change that tune.

Sourcehttp://qz.com/134534/jp-morgan-is-spending-more-on-fines-and-lawyers-than-on-employee-salaries/

There are times when you want other people to act or think a certain way – namely, the way you think and act. There’s an art to persuasion that begins with a few simple rules. The first comes from Benjamin Franklin: “A man convinced against his will is of the same opinion still.” This would seem like a basic truth, but it gets ignored all the time. Think back on the times when someone persuaded you to go along with something that you didn’t really believe in. Years can pass, and still you will be skeptical or resentful about being persuaded against your will.

There is really only one secret to changing other people’s minds, but it’s a big one: Follow practical psychology. If you heed this advice, you will get better at persuading and influencing people over the years. On the other hand, if you ignore or sidestep psychology, you will find yourself with less and less influence as time passes. Here are five ways to put practical psychology to work that you may have overlooked or not known about. Each way comes with a tactic you definitely shouldn’t try, since it’s proven not to work.

1. Be sincere and truthful. Don’t be manipulative.

2. Appeal to what someone else already believes. Don’t impose your own belief system.

3. Be aware of the other person’s blind spots. Don’t assume they are open-minded.

4. In general, persuade through reason, not emotion. Don’t assume that emotions aren’t in play, however.

5. Make the other person feel right. Don’t make them feel wrong.

These are all effective ways to change someone else’s mind, but the tricky part is that if any one of them goes wrong, the others won’t be of much use. If you’re a woman applying for a job and the interviewer is dead set on hiring a man, nothing else will matter – blind spots, prejudice, and ingrained biases are among the hardest things to overcome. On the other hand, a really skillful use of practical psychology might get you the job, especially if you can make him feel right about his decision.

Let’s consider each of the five points a bit further.

1. Be sincere and truthful. Don’t be manipulative.

You can’t sell other people on something you don’t actually believe in. That’s why infomercials on late-night television do everything they can to persuade you of their honesty. Testimonials, authority figures, before and after photos, and research data are called upon to make the viewer believe that they aren’t simply watching a commercial, even though they are. We shut out commercials instinctively because we know from experience that they are manipulative and insincere. We also put up our guard when a salesman says, “I really believe in this product.” The upshot is that you shouldn’t try to be a master manipulator. It only works on weak-willed people, and in the end they are fickle allies. Rely on your listener’s natural ability to detect sincerity.

2. Appeal to what someone else already believes. Don’t impose your own belief system.

People identify with their beliefs. If you’ve ever slammed the door when someone tries to offer you a religious pamphlet, or had the door slammed in your face when you went canvassing for a political party, the truth of this point will be obvious. In a different world beliefs would be flexible and open to change, but that world isn’t at hand. So you need to know what someone else really, truly believes. With that knowledge at hand, you can align yourself with their beliefs. Without that knowledge, you are throwing darts at a brick wall. If you try instead to impose your own beliefs, the other person will feel that you are making him wrong, and immediate shutdown follows.

3. Be aware of the other person’s blind spots. Don’t assume they are open-minded.

A blind spot is a fixed opinion that is so strong, the person shuts out any input to the contrary. It’s the supreme example of rigid thinking. If you are self-aware, you know that you have your own blind spots – there are certain things you simply can’t stand or that bring out your most stubborn reactions. There are also positive blind spots, as when a mother feels that her beloved child can do no wrong. No one announces their blind spots, so you have to feel them out. Is the other person balking, contradicting you, trying to change the subject, crossing his arms over his chest? Look for sure signs of resistance, and you will generally be hitting close to another person’s blind spots. It seems discouraging that almost no one has an open mind, but it’s a fact of practical psychology that must be considered. Your task is to avoid sensitive topics and to appeal to the part of your listener that wants to agree with you.

4. In general, persuade through reason, not emotion. Don’t assume that emotions aren’t in play, however.

One of the most confusing aspects of persuasion has to do with being reasonable. Everyone thinks they are, and decision-making is supposed to be rational. Yet psychological research has shown time and again that emotions cannot be separated from the choices we make. Therefore, should you appeal to someone else’s emotions? Unless you have a personal relationship, the answer is generally no. You risk insulting their intelligence or coming off as being manipulative. To be persuasive, you must argue rationally while always monitoring the emotional atmosphere. (It’s worth noting too that competitive personalities regard a show of emotion as a sign of weakness – with them, you must muster all the rational reasons you can.) Some people can be persuaded by a show of emotion, but if you look a bit deeper, they either wanted to be persuaded or agreed with you in the first place – think of the cheers at political rallies for a speech that would be greeted coldly if it was delivered to the other political party.

5. Make the other person feel right. Don’t make them feel wrong.

This point might win the prize for what gets ignored most often. Anytime you bully somebody, lord it over them, use your position of authority, or act superior, you are making that person feel wrong. We all feel wrong when we are judged against. We feel right when we are accepted, understood, appreciated, and approved of. (I’ve met at least one hugely successful executive who built his entire career on making other people feel that they were the most important person in the room.) If you make someone else feel accepted, you have established a genuine bond, at which point they will lower their defenses. If you push someone away instead by making them feel wrong, their defenses will turn twice as strong.
These five points are really just elaborations on Ben Franklin’s aphorism, but they are worth learning and testing out if you want to be successful at getting others to change their minds.

Social Networks and The Global Brain | The RABBIT HOLE with Deepak Chopra

Courtesy of YouTube/The Chopra Well

Aspiration is the greatest ally anyone can have in their rise to success. It gives “you” a reason to move forward despite obstacles and setbacks. But why put “you” in quotation marks? Because there is more than one you to consider. Human beings have divided natures. As pointed out by Plato two millennia ago when he compared the soul to a chariot being pulled upward by a white horse and downward by a black horse. Depending on which horse you encourage, your personal fate is in your hands.

Setting aside a loaded word like soul, everyone has a choice to write their own story. In fact, every decision you make represents a stroke of the pen, so to speak, leading the main character – “you” – to the next stage of the narrative. “You” therefore is a creation. No one has a fixed identity, one bestowed at birth or in early childhood. Each person is open to revision as their story unfolds.

When you step back and ask “Who am I?” the author is looking at his creation. The process of building a self is a creative act. Even if you blame the outside world for your problems, even if you bemoan your bad luck or wish you had a missing X factor to improve your lot (more money, better parents, an Ivy League diploma), these thoughts also become part of your story. Mysteriously, the self is self-created. No one is exempt from this truth.

Which leads us back to aspirations. The “you” that has the greatest chance for success is driven by higher aspirations. The “you” that has no aspirations is very likely to fall short. Look at the difference between them:

Aspirational “You”

– is curious, open-minded, and eager for new experiences

– finds motivation from within

– wants to be self-sufficient

– speaks his own truth

– has inspiring role models

– feels attached to a higher purpose

“You” without aspirations

– looks out for number one and therefore feels insecure

– fears loss and is greedy for gain

– measures itself by external rewards (money, possessions, status, power)

– is reluctant to trust

– takes a defensive and self-protective stance

– has no higher values except self-interest

Even though I’ve described the aspirational “you” as more desirable than the “you” without aspirations, there’s a great deal of social pressure to think the opposite. In a “greed is good” ethos, the value of self-interest gets promoted in two ways. First, it’s supposedly the stance of winners, defined as overachieving, ruthless competitors. Second, if you don’t defend your self-interest, nobody else will. Does anyone want to be idealistic, soft, compliant, and non-competitive?

If you answer no, you are letting externals define your attitude, because there is nothing softabout having aspirations (consult the biographies of Mahatma Gandhi and Dr. Martin Luther King), and keeping true to your aspirations is the opposite of being compliant. Defining the game as an either-or between winning and losing betrays the complexity of the life stories we all write every day. Moments of winning catch the spotlight. Outside the spotlight are years and decades of challenges, the main challenge being how to build a self that stands for who “you” really are.

In my own experience – and as a teacher of leadership skills – the most successful people are aspirational. They define their success in inner terms. They refuse to be bad actors in both senses of the word – bad at acting the roles assigned to them and bad in their personal behavior. In a society propelled by advertising, mass media, competition, and dynamic change, the temptation to run with the pack is strong, and the pack is always running for external rewards. And the pack gives you an easy identity as “one of us.” For all that, your life story has only one author, and its main character only one source. A “you” without aspirations will never be worthy of the possibilities that are hidden within.

Wellbeing and Visionary Leadership: Deepak Chopra in Mexico

Courtesy of YouTube/The Chopra Well

As the days drag on, the shutdown has deepened public disgust with leaders of our government.

I share the feeling – there’s no doubt that most of this current Congress has got to go – but I also feel something that I don’t think many share, unfortunately, and that’s a sense of optimism.

Last week, I had the chance to talk about the government shutdown on LinkedIn Today with CBS’s Jill Schlesinger andUniversity of Michigan Professor Jeff DeGraff. It was a great conversation.

Here’s what we need to remember: Yes, this Congress is in charge right now but they don’t have the monopoly on leadership.

Right now, there are states and municipalities that are getting it done. (Look at Mayors Rahm Emanuel of Chicago and Mitch Landrieu of New Orleans or Louisiana Gov. Bobby Jindal). They’ve recognized that this is a time where we’re confronting some very thorny problems, none of which has a clean solution. Instead, they’re compromising, innovating, moving forward as best they can with common-sense strategies.

This is the next generation of leadership. They’re earning their chops now for future greatness. A mayor who will become a congresswoman. A state congressman on track for a Senate run. A governor eyeing the presidency.

They’re not hampered or hamstrung by the problem that’s tying so much of Washington up in knots.

They’re willing to be disruptors.

When I talk to people in DC, I’m struck by the slavish adherence to incrementalism. An inch in the right direction is heralded as magnificent progress, even if it’s evidence of massive dysfunction to the rest of the country. Here in Silicon Valley, my colleagues and I see an area that’s ripe for disruption, for exploring big, creative, smart ideas that really could generate momentum. It needs us, though, to believe it can happen and to work for it, whether it’s voting for the right leaders, lobbying for our passions, writing letters and blogs, etc.

The shutdown will end – as Dr. DeGraff pointed out, there will be some kind of face-saving deal.

In the meantime, look to Nov. 5 and remember that we need daring disruption sooner, not later, even at the local level.

What ideas do you wish our leaders would implement?