Change triggers

Change Management:New book few sample pages-free read

Lehman Story -Financial services industry -USA

World witnessed  the unexpected resilience and recovery  of Lehman Brothers only to anguish over 

the collapse . Lehman's culture was one of  conservative management yet  it could rapidly adapt and 

change when crisis hit them .The same  agile leadership and culture could not ensure survival when 

confronted with another challenge to resurrect . The difference in both situations was  that in the 

second time the crisis was  driven by greed of the leadership  that was hidden and not visible . The 

organization which displayed extraordinary agility to adapt had demonstrated another ugly side that 

not only destroyed them but killed many allies who trusted them and were totally unprepared for the 

sudden change of events and challenges.

Three floors of World Trade Center in Manhattan, Newyork were in the pride possessions of 

Lehman brothers. They would never have anticipated  that their prestigious possession would 

crumble and come down one day and would later become an object of ridicule .

When the jet planes  rammed into the world trade towers, few employees were among those who 

lost life. The biggest financial center got destroyed and was rendered useless so also the office of 

Lehman. Lehman management had to think and act quickly to keep the business going  . The task   

included relocating  over 6,500 employees. The crisis upset everything upside down   for 

the employees who were used to operating from plush air conditioned offices and high power 

trading floors .They had to move to  makeshift offices in rented office space at Sheraton Hotel. 

Many employees had no option but  to  work from home which they never had done before. 

Business recovery had to be rapid and quick hence the trading operations were moved to a 

makeshift offices in Jersey City, New Jersey. Makeshift trading floor were set up  in a hotel in less 

than forty-eight hours after the collapse . When stock markets reopened on September 17, 2001, 

Lehman's sales and trading capabilities were operational in full swing. 

This demonstrated adaptive capability to dramatic changes even when the situation was thrust upon 

them  suddenly by external uncontrollable factors.

An employee said "My friends from Stanford, who always knew me as the least technical person in 

the world, couldn’t imagine myself fixing computer issues. I did this for about a month, until I got 

assigned to a M&A. deal, which kept me, working 24/7 for seven months” This is a fine example of 

collective responsibility in dealing with crisis in pure HR language this is the evidence of engaged 

employees who are loyal and committed.

Yet, the same company on September 15, 2008 had to take most painful and tragic step of filing 

bankruptcy which was driven mainly  by  internal forces of misdeeds. The epicenter of the main 

financial earthquake at New York City in the USA spread the shock waves and caused the financial 

tsunami and the impact was felt simultaneously all over the world. The Lehman collapse triggered a 

lot of change in the financial services sector in the USA in particular and broadly all over the world 

compelling Government and regulatory authorities to bring sweeping changes to protect investors’ 

interest. 

With infliction of  the biggest  loss to the investors and loss of trust in markets around the world 

Lehman could never have  recovered. When  collapse  was imminent , Lehman had accumulated 

debt of $619 billion, rendering the bankruptcy the largest of its kind in the history of Wall Street. 

Lehman was the fourth-largest U.S. investment bank at the time of its collapse and this collapse also 

was the largest victim, of the U.S. subprime mortgage. This   crisis like a tornado swept through 

entire global financial markets and the event greatly intensified the 2008 crisis. It contributed to the 

erosion of about $10 trillion in market capitalization from global equity markets making it the 

biggest ever decline of the time. The organization which came out of one disaster successfully was 

the center of another crisis all over the world. While successfully coping with one external crisis, it 

was unable to come out of another internal crisis. Surprisingly the engaged and loyal 

employees of one time did not feel it legitimate to stand with the top management that engineered 

this downfall.

....Lesson from this event have been learnt . The outcome for the institutions was in the form of 

changes in regulatory and compliance standards.