Teodoro Cocca: «Credit Suisse – Essential Lessons For All Bankers»: The turning point for many business downfalls is determined at the moment of their greatest success, as business strategy literature shows. Teodoro Cocca writes in his… teodorococca
The turning point for many business downfalls is determined at the moment of their greatest success, as business strategy literature shows. Teodoro Cocca writes in his article for finews.first that every bank manager can draw fundamental lessons from the dramatic fall of the once high-flying Credit Suisse.
The ever-lurking danger of overestimating oneself teaches all bankers that current success is by no means a reason not to constantly question one's strategy. Paradoxically, the greater the current success, the greater the danger of strategic blindness. As the literature on business strategy shows, the turning point for many business downfalls is determined at the moment of greatest success.
While true in an operational sense, it implicitly shifts the cause of error downwards rather than upwards in the hierarchy because it ignores the strategic dimension whether intentional or not. When a bank takes on individual risk positions dangerously related to the amount of equity, the question is whether the bank is in the right business areas, which is a strategic question.
But when it comes to adding shareholder value, it is usually very quiet. Investment banking seems to be an important and highly respected business segment on its own, but hardly for the other banking units. However, it is part of modern management practice to ask in-depth questions about synergy effects between different units and, if necessary, measure them.
«The current situation with Credit Suisse can be relentlessly described as what it is today: a restructuring case»
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