Giving thanks, seasons ending, new beginnings…

As I write the final newsletter of 2007, it is difficult not to share one spectacular, astronomical, and environmental event that I was given the opportunity to witness yesterday. But this is a business letter, so I intend to keep this short and stay focused on message. Last night’s winter spectacular was an event roughly coinciding with the Winter Solstice, which normally falls between December 20-23, in the Northern hemisphere.

And I’ll put this discussion in perspective to a great but challenging year in search. My informal survey of peers concludes that 2007 was a financially successful one, for most of the search consultants and other recruiting firms of which I am familiar. It was also a year peppered with new challenges. The Financial Services arena is continually changing, driven by demographics as well as widely varying financial performances.

We struggle to assess and understand the impact of the emerging damages and the new opportunities brought on by the mortgage, credit, and housing malaise. This is within a backdrop of the globalization of all things, business and financial.

So back to my event: It was oddly, 70 degrees at Pismo Beach yesterday evening. I proceeded to the beach after deciding that a mid-holiday run would go a long way to compensate for the season’s ample caloric intake. I found myself plodding along in running shoes and shorts. The extreme low tide was creating a flat mirrored tidal zone, maybe a quarter mile wide, that was picking up reflections of the orange and green and blue deepening in the sky. As the sun touched the water, a vertical beam of subtle white light was thrown up from it, and the orange sun slowly disappeared under the line of the horizon. I casually took note of “another beautiful California Sunset”, and continued huffing and puffing South.

I looked to the left, not expecting to see anything unusual, maybe sand dunes in the dusk, but I was shocked to see the brilliant, bright white orb of moon, which was peeking up above some cypress trees. This simultaneous sunset and moonrise seemed to take everyone else on the beach aback. Everyone stopped what they were doing, to look, all around, at a dramatically illuminated landscape that could have been a science fiction painting.

Everyone paused looking at the silver cast of the ocean, at the extremely low state of the tide, the mildness of the air, and the eerie light. This was indeed something special, something that would be here and gone in minutes. I thought: what a memorable end of the year, a dramatic punctuation point to the beginning of another. And with the lunar and solar, this is the type of alignment and balance of things we might strive for in our lives, too.

So I apologize for the indulgence of diverting the observations of a newsletter to the musings of running on the beach, tying in the fact that it is familiar for the driven professionals we work with to often turn to physical exertion to clear our minds.

The banking industry has been jarred by significant quarterly losses and management changeover this year. We have seen the arena reverberating with change; while much of 2007 has delivered jaw-dropping financial news, both human capital and business segments within banks have dramatically turned over and changed too. Severe credit conditions have pushed fundamental changes at many financial institutions, and all financial institutions must be looking to adjust to the new reality of tighter credit standards and a higher standard of risk management. Consumers and the public are not sure what to think.

Some firms, like Goldman Sachs, show us that wise management and best practices and well-executed strategies can insulate an organization from conditions that others consider general malaise. Most impressive are Goldman’s recent financial disclosures, which highlight that the firm distributed an average of $661,000 in compensation to it’s 30,000+ people. What a fantastic and inspiring example of wealth creation! I can’t emphasize how important that really is. It is an industrial morale-builder, when it is easy to assume that management mistakes prevail, and in some examples, at an unimaginable scale, with billions being washed away from balance sheets every month.

High profile infusions of capital have made their way into our largest and most dominant financial services firms, from international sources. This is historically a very common practice, going back to the founding of the United States of America, but editorial darts are thrown and controversy surrounds this activity.

Significant leaders, household names as it were, have been dumped, while new faces and players have been given the baton to ostensibly resuscitate and recover these far flung and complex businesses, and to regain profitability. The most fascinating quality about bank business structures discovered since I entered the financial services business in 1981, is that most of the businesses within complex financial organizations are “scalable”, and in extreme situations, these components can be limbs of a structure that can be cut off. Whole divisions and businesses can be shut, cut, downsized, or sold- and on we go, to the road to recovery.

If what we are witnessing within The Banks and Brokerage firms now is a significant pruning of overgrown business segments, we should expect a significant harvest of improved conditions in 2008. Many analysts are quite bullish for next year. The damage has been so great in scale, that lessons should be learned for years, related to the fundamental mistakes or structures that were at fault.

Now, leadership by not only executives, but middle managers and tacticians and engineers has to be strong, transparent, and well informed. Bank watchers and analysts and consultants who serve these financial organizations have witnessed enough major changes in capital and profitability, that all of the moving parts must be examined again, and aligned to work well. Great leaders are great fixers. It is time for inspired leadership and nimble decision-making and most of all, newly evolving business models, to work well in a world with fewer intellectual boundaries. It is imperative to correct problems created when governments, policies, guarantees, creative financing, overheated asset values, and cheap money, make for a toxic economic stew.

• Tis the season of giving. The Salvation Army has had several notable donations into their kettles.
  -A $3000 donation in Pennsylvania was followed up with a $3100 donation outside a local supermarket.
  -West Virginia, someone slipped a $1000 dollar bill into the kettle.
  -A platinum coin, worth an estimated $1000 was dropped into a kettle in Florida.


• A city in China has been dubbed a major Grinch after banning Christmas trees in shopping malls, restaurants, and other public places because they pose a fire hazard. Bahumbug!


• A man in Santa Barbara has found a new job during the holidays. His business that promotes Santa Barbara attractions at 1-800-SANTABARBARA, has led him to answer his phone with a, "Ho Ho Ho" instead. A similar number, 1-800-SANTACLAUS, is used by kids to reach the jolly old fellow. The numbers are similar, and have been mistaken enough that John Dickson rounded up over 100 volunteers to help take the calls from children around the world.

Friendship

A friendship founded on business is a good deal better than a business founded on friendship.
–John D. Rockefeller

Challenges

A happy life consists not in the absence, but in the mastery of hardships.
–Helen Keller

Success

The three great essentials to achieve anything worth while are, first, hard work; second, stick-to-itiveness; third, common sense.
–Thomas Edison

Wealth

The real source of wealth and capital in this new era is not material things.. it is the human mind, the human spirit, the human imagination, and our faith in the future.
–Steve Forbes