In the old days, it was called PR. Now it is the narrative. A big theme in business culture in recent years has been the rise of corporate narrative – the push by companies to shape the story of their business and culture for internal and external audiences. It is a corporate recognition of the old Gabriel Garcia Márquez line that: “What matters in life is not what happens to you but what you remember and how you remember it.”
It was telling that Lloyd Blankfein, apparently a history book buff, was moved to explicitly address the narrative issue in seeking to justify Goldman Sachs bumper 2009 profits: “In a year that proved to have no shortage of story lines, I believe very strongly that performance is the ultimate narrative,” the bank’s chief executive reportedly told staff in a voicemail last month. Well, as a narrative for Goldman staffers, I can understand the appeal of the pitch. It certainly beats an alternative of a “vampire squid” manipulating governments and markets to deliver huge bonuses to its staff at time of deep economic pain for those unlucky not to be employed by Wall Street.
The trouble for Mr Blankfein and Goldman is that shifting the negative narrative will be hard to do. The inquest into its actions during the credit crisis is far from over as The New York Times piece on Sunday on its controversional relationship with AIG indicated. And Goldman is still paying the price for a crucial decision last year. When Goldman announced its first-quarter results last year and the first signs of a mounting bonus pool just months after the world’s financial system pulled back from the precipice of complete disaster, it was declaration that the bank intended to ride out the inevitable storm of public anger. Given that Goldman survived the credit crisis thanks to indirect and possibly direct government support, it was a decision of breathtaking hubris.
The disconnect with public anger, still barely dimmed by half-hearted atonements since, was striking, particularly from a firm that has made much of the public service and charity of its staff in the past. It also signalled a confidence that any political fallout could be ridden out, that the bank could control the narrative even if the first-quarter of this year proved a little tricky.
The Obama bank reform plan is the price of that misjudgement. Goldman, of course, is not alone in making it. The banking industry as a whole risked a regulatory and policy backlash to push through bonuses. But Goldman being Goldman has made the running on the pay issue. For Mr Blankfein, in particular, that presents a problem. How can you change the narrative, if a central protagonist remains a lightning rod for criticism?
Related reading:
Could Goldman Sachs with one bound be free? John Gapper, FT
The Lewis PR plan for Goldman FT Alphaville
Blankfein’s seven figure bonus Felix Salmon
Lloyd Blankfein asked Ken Feinberg what he thought about his bonus Dealbreaker
