August 23, 2008

The wolf in sheep’s clothing

Joe Nocera, in today’s New York Times, nailed two key enablers of the current economic crisis:

“Whenever the mortgage finance giants, Fannie Mae and Freddie Mac, find themselves in a tough spot — and boy, are they in a tough spot now! — they always seem to find a way to blame their problems on “the mission.” “We exist to expand affordable housing,” says Fannie Mae on its Web site …”

He makes a convincing argument about how this noble mission provided fig-leaf cover for a bigger-is-better approach to growth, one aimed at pumping up (alas, only in the short run) their stock prices (and the value of the stock options and executive bonuses they drove). A path to growth that, in the end, crippled both organizations and the mission they espouse.

The courses I teach on management always start with a discussion of mission - what it is, how it can be used and abused. This article will make for a great case study to discuss in class.


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