What is the Dimon Principle?
I suggested recently that a "humbling" was at hand for JPMorgan Chase CEO Jamie Dimon, who is facing calls that he step down as a board member at the New York Federal Reserve Bank.
A MarketWatch columnist has formulated what he calls the "Dimon Principle." He describes it this way: "After the bank emerged virtually unscathed from the 2008 financial crisis, it would have taken saint-like restraint on the part of CEO Jamie Dimon to not downplay luck's role in that success and not overestimate his own genius. Fast forward through his, and his bank's, overconfidence over several years, and we shouldn't at all be surprised by the multi-billion-dollar trading loss that now tarnishes his, and its, reputation. Let's call this overconfidence followed by a fall, for want of a better title, the Dimon Principle."
But in the end, the columnist, suggests what's really important is how someone--an executive or adviser--responds to the adversity.
At some point, "we may want to even prefer such an adviser — since his recent subpar performance is more likely to lead him to have a healthy dose of humility and make him less likely, relative to an adviser who is coming off an unbroken string of successes, to do something stupid."
This principle has played out on an even more dramatic scale with Goldman Sachs and its CEO Lloyd Blankfein. After the proper penance is paid, customers and investors seem willing to forgive.
- here's the article
Jamie Dimon loses his luster