Jamie Dimon is considered one of the best 21st-century business leaders. He became the CEO of JPMorgan Chase in 2005 meaning he was at the helm of one of the largest banks in the world during the Great Recession. Before becoming the CEO of JPM, he was the CEO of Bank One, which was the 4th largest bank in the US at the time.
JPMorgan fared better than most during the Great Recession and was able to make it through with their “fortress balance sheet.” Now, JPM is the largest bank in the US by assets and has continuously grown profits and revenues. Their stock has returned over 600% since Dimon took his position, with dividends reinvested.
I read through his last 5 annual shareholder letters and these were my top takeaways:
Value is generated from all parts of the organization
It’s exciting for leaders to talk about a new product or acquisition that will create value for decades to come. Despite those being shiny new things business leaders can point to, value comes from all points of the organization.
“This progress is a function of continually making important investments, in good times and not so good times, to build our capabilities — people, systems and products. These investments drive the future prospects of our company and position it to grow and prosper for decades.” Jamie Dimon, 2016.
There is no doubt that customer-facing investments generate tremendous value and create enthusiasm across the company and with customers. From HR, to sales, to accounting, to product, all of these functions play a role in making the whole greater than the sum of its parts.
It’s also necessary to have continuous investment, “in good times and not so good times” as Dimon writes, to make sure the company of the future will prosper. There should be a continuous cycle of generating cash to reinvest in the business for future returns.
Investment doesn’t need to be in dollars either. Investing in the people isn’t something that is easily measurable. It’s something that every company says they do, but there is a meaningful difference when it comes organically from the employees and not something written on a corporate website.
Document risks and problems
Carl Richards writes, “Risk…is what’s left over AFTER you think you’ve thought of everything.” Throughout all of his letters, Dimon documents what he thinks are the biggest risks and challenges. Operating on a global scale means there are risks coming from all directions, especially in the financial industry. Laws and regulations change and JPMorgan needs to keep up.
For example, JPM needed a plan for Brexit years in advance. They couldn’t excuse themselves from impending regulatory changes. They needed to make sure all of their systems could operate post Brexit.
Just like Carl Richards said, risk is what’s leftover after you think you thought of everything. COVID-19 is the perfect example of this. Just like every other company and person in the world, JPM needed to adhere to the new rules of the pandemic. People still needed to send money, make trades, take out loans, etc.
That being said, Dimon just spends a large amount of real estate commenting on public policy and what challenges lay ahead. It’s important to prepare for potential outcomes, all while having a healthy respect that not everything can be predicted.
“We cannot fix problems if we don’t acknowledge them.” Jamie Dimon, 2016.
Organic growth isn’t always welcomed
From a shareholders perspective, growth is what gets the company from point A to B. We want to be part of this timeline and reap the benefits of a growing company. This is from an outsider’s perspective, and employees might sometimes feel differently.
“It [organic growth] is hard work. In fact, institutionally, there is often a lot of resistance to it. It’s easier not to add expenses, even when they are good for the business. And growing any sales force is usually met by some opposition from — guess who? — the existing sales force. Sometimes people are afraid the change will take away from their compensation pool or their client base.” Jamie Dimon, 2017.
It’s very easy to say that everyone wants company growth, but sometimes that growth seems to have a negative impact on the people who are supposed to execute it. Does a sales manager really want to take on new inexperienced sales reps which would increase their cost and decrease their overall team’s performance? Growth requires investment that might not be seen for years to come. The best leaders are able to identify the correct growth areas and have patience to see the return.
Reputations are earned by how you deal with mistakes
Benjamin Franklin wrote, “It takes many good deeds to build a good reputation, and only one bad one to lose it.” This applies to people and companies with many of resonating with this quote based on first hand experience.
Dimon has a similar on what a reputation means to a business in his 2020 letter, “To a good company, its reputation is everything. That reputation is earned day in and day out with every interaction with customers and communities. This is not to say that companies (and people) do not make mistakes – of course they do. Often a reputation is earned by how you deal with those mistakes.”
How does your company respond when things aren’t going well? It’s easy to interact with customers and clients when things are working as they should, but how about when they are not? Every company has to deal with inevitable mistakes, but the best of them prove their superiority during those times.
Decisions require different timelines
Not all decisions are created equally, meaning they deserve differing amounts of attention. It’s a special skill for executives to truly identify the high priority issues. Everything that is brought to them is of high importance to the person who is bringing the decision to them, otherwise they could have handled it on their own.
“In business, some decisions should be made carefully – for instance, putting the right people in the right job. But others, such as making pricing decisions, dealing with customer problems and handling reputational issues, must be done quickly, for these problems do not age well.” Jamie Dimon, 2020.
Some problems can be solved over months, but others need to be decided immediately. Figuring out what deserves immediate attention vs those that require more analysis is just the first step of a top executive. The next and most important thing is to make the correct decision when the time comes.
Peace and Love.