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June 14, 2005
Dear Morgan Stanley: It’s all about culture
You don’t even have to read between the lines of today’s coverage of the departure of Morgan Stanley’s CEO to discover why Philip J. Purcell finally bowed to pressure to resign: Culture issues clearly became too powerful to resist.
Mr. Purcell’s downfall is a valuable cautionary tale for all those senior leaders who believe the following: Culture doesn’t matter. Communication isn’t important. Simply tell people what needs to change—give them the facts—and they’ll do it. After all, if you have power, you don’t need persuasion.
Not so, Mr. Purcell. Think again, all you leaders who struggle with large, complex organizations that won’t bend to your will. If engaging employees is important, you simply can’t rely on authority to make it happen. You need to pull out all the stops to get people on board. You need to convince employees, and win their trust and respect. In short, you need to communicate like you’ve never communicated before.
Mr. Purcell clearly didn’t do so. Today in the media, Mr. Purcell was criticized for being “a strategist, not a manager.” Mr. Purcell was the mastermind behind the 1997 merger of Dean Witter, the retail brokerage firm that he led, with Morgan Stanley, the prestigious investment bank. He had a vision of an integrated full-service financial services firm that would serve every facet of the market.
But he was never able to reconcile the different factions within the firm, and pundits offering 20-20 hindsight took Mr. Purcell to task for not working hard enough to gain consensus. “He spent too much time conceptualizing, too much time ensuring his position and not enough time with his management people and his clients,” Richard X. Bove, an analyst at Punk, Ziegel & Company, was quoted as saying in today’s New York Times.
“In the end,” reported The Times, “Mr. Purcell’s greatest shortcoming appears to be failing to integrate two difference cultures.” As a Wall Street lawyer commented, Mr. Purcell “never really melded the company where there’s an us versus them mentality; it was us against us.”
As the former Morgan Stanley CEO painfully learned, culture is not an afterthought. It’s a powerful force that can help organizations succeed, or get CEOs fired. Senior leaders ignore culture—and the communication that helps create a strong, healthy culture—at their peril.
Posted by Alison Davis at June 14, 2005 03:07 PM