JPMorgan Chasing Learning
24/08/2012 - "JPMorgan Chasing Learning" by Donal Carroll


JPMorgan Chasing Learning   

Why would we need to learn?? Many organisations may not say this in public but inwardly, manifest it through their learning model (or whatever they call this). This ‘model’ is commonly individually focussed yet collectively reactive, and its limited capacity emerges when something untoward occurs which, on reflection, seems inevitable. The mantra is something like ‘We’re professionals –who saw this coming?’ And then this ‘learning’ is called on to solve it. But in that form, can it??

JPMorgan Chase, the largest US bank, ‘discovered’ $2bn losses as a result of high risk trader activities. The effects so far: $13bn wiped off company value, the sacking of senior staff, ratings downgraded, and politically, a sharp refocusing on the need for stronger external regulating.

The response of CEO, Jamie Dimon: ‘Errors, sloppiness… I was dead wrong to dismiss concerns about our trading… We made a terrible, egregious mistake…(G 14/5) Bank execs were completely wrong in public statements when challenged… We got defensive, started justifying everything we did… the strategy was flawed, poorly reviewed, monitored and executed’ (FT Alpha)…we need to ‘admit our mistakes, learn from them and fix them’ (FT 17/5) 

What a heavy load this learning has to carry. To ensure it actually can safeguard against similar mistakes won’t it need to be strong enough to ask a range of questions including: if this –now admitted- mistake was one, rather than, say, the result of ordinary business; what was the role of current learning in it, and does this need transforming; what was its relationship to other key organisational structures, its management and business models and do these also need changing? All these need addressing to enable the organisation to reach its next stage of development that is, to be confidently self-correcting (leading itself better at all levels) as dangers emerge. Seems Herculean –and different from their current model, and those of many other organisations? Does your company ask learning to do this? Should it?

In a new work Managing Value in Organisations: New Learning, Management and Business Model** we say yes, but a learning model not an isolated HR respray,  but one radically aligned with new management and business models and with a radical role.       

What is then, a ‘learning model’?**Every organisation has one (however by default) –it is the choices made about how organisational thinking is mobilised. Paradoxically, the more implicit it is the weaker, and, as with JPMC, the more instrumental in their ‘mistakes’.

JPMC’s learning model can be identified by seeing what and how staff learn there. What they learn is transmitted and reinforced by their management model, for instance,  gaining approval by ‘taking risky bets or speculating’; this is in service to their business model, for instance, ‘accruing high rewards from this’. (Source FT Alpha) Through both these models, ‘what we usually do’, over time, becomes unconscious: a task-focussed, habit-fuelled immediacy, yet somehow thought-extracted.

 However, when –let’s call them ‘significant mistakes’ occur, and this is unlikely to have been JPMC’s first – reaching its next stage of development means overcoming them. An explicit learning model is needed which confronts and transforms current learning.

Let’s look at what needs challenging. The chief investment officer hired London staff to generate profits, over time, using riskier instruments and scrapping traditional limits eg exiting positions if losses exceeded $20 million. Highly effective, the team amassed a portfolio of around $200 billion and £5 billion profits (2010), more than 25% of Morgan’s net income. (FT) These activities are a key pipeline fuelling vast salaries, eg the chief investment officer’s $14m and Dimon’s $23m in 2011. In other words, this is less rogue activity and more an inherent part of their strategy. 

How can a puny learning challenge this? It can’t. At least not the old, traditional model of individual pursuit, wait-to-be-told, boxed into subjects, comfortable, with staff as passive consumers. But a new learning model can – where staff produce learning and with a stronger, changed role, where it is expected to lead thinking, and interrogate daily practice and overall purpose. This new learning model needs to be radical in role and design:   

  • Radical in role: it is the midwife for change whose role is to challenge and lead management and business models, and organisational thinking. To fuel an all-staff obligation to challenge, it must be strong enough to confront formal power and question practices whether they result in holes below the waterline, general ineffectiveness or disengagement

  • Radical in design: where the focus in learning moves from individual to collective learning; the source of learning from traditional to emergent learning; and the type of learning from superficial to deep learning; and overall, designed to develop resilient learning.**  

However there is one other key element: ‘significant mistakes’ require significant learning, which the new learning model must be based on. This:  

  • ‘involves a certain amount of pain connected with giving up certain previous learning… learning which involves a change in self-organisation… turbulence within individual and system’ (Knud Illeris (2004) The Three Dimensions of Learning)**    

Anything else is insignificant learning. However, it is also likely that both the management model needs to change (to seek greater agility) and the business model (to seeking greater renewal and growth) with the learning model used to produce these changes.

This might sound costly but consider the cost of not doing it. Without an explicit learning model, the management model becomes the learning model servicing business as usual.  With JPMorgan Chase, is there a significant learning response –one that builds a new learning model?

If the midwife for change is more management, expect, over time, more of the same.

** The 3 new models, management, business and learning, are developed and explored more fully in Managing Value in Organisations: New Learning, Management and Business Models  Management innovation writing, it claims that to reach their next stage faster, organisations need to reinvent all three together, with the learning model as midwife for these changes. The book is tests this 1 idea in 5 organisations over 1 year through 2 journeys.

See also:


Visitors' Comments on this Post

24/08/2012 Comment posted by Claudia
Organisations need a paradigm shift to start thinking about learning in the way you describe it, i.e. from individual to collective, traditional to emergent etc. And it needs strong leadership to make this shift.

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