Written in May 2009
The recent financial collapse in 2008 was one of the worst financial disasters in American history. Billions of dollars were lost and the economy was ruined. Several lessons have been learned and can be learned on how to make sure such collapses never happen again.
The main characteristics that led to the financial meltdown were a lack of oversight, organizational hubris, and a lack of strategic renewal. Some companies such as Bear Stearns featured managers that had no idea of what employees were doing and were too absorbed in making money. There was no diagnosis in what needed to be upgraded, what changes were needed coming down the line, and a management concerned with keeping their positions. There was no strategic renewal, no shared diagnosis, and no change since it seemed that the good times were going to last forever. By the time the need for effective change was diagnosed at these organizations it was too late for these organizations.
The financial collapse of 2008 was one of the dark moments in American business. The collapse showed the need for companies to always be aware of future collapses and downturns despite the good economic period a company might be going through. The failure of being unaware can be catastrophic not just for the company but also the American economy.