I am teaching the brand management elective at London Business School this week.
A healthy proportion of my class is made up of MBA students who have opted almost exclusively for finance modules as preparation for careers in investment banking. Many choose brand management as their only non-finance course because branding is an area of almost total ignorance for them.
This may sound odd to marketers, many of whom may not understand exactly what investment banks do. Meanwhile, bankers peer into the world of brand equity with the same glazed look of bewilderment with which we peer back at them.
There is, however, common ground. In fact, one investment bank provides us with a remarkable example of differentiation and corporate branding - Goldman Sachs. It may not be a brand that marketers discuss often, but, for my students, it is the ultimate corporate brand, and the one that most aspire to work for.
To understand the attraction and status of Goldman Sachs, we must travel back to a rain-splashed Manhattan office last Wednesday afternoon, when 400 executives from Bear Stearns listened intently to James Dimon, chairman of JP Morgan, outlining his terms for the 'merger' of the two banks. Bear Stearns, one of the most prestigious Wall Street institutions, was to be taken over for less than the value of its buildings.
Desperate to ease the tension in the room, Dimon stated that every major bank, including his own, had lost billions in the sub-prime mortgage crisis. 'No one on Wall Street could have anticipated this,' he said.
But at Goldman Sachs, they could and did. Like its rivals, the bank had become dependent on sub-prime mortgages through investing in consolidated loans and offering them to clients. However, it was not about to lose money.
Since the 70s, Goldman Sachs has been built on 14 business principles that guide every aspect of its operations. These stress the 'unusual effort' Goldman Sachs puts into recruiting the very best people in the business, the 'pioneering' nature of the firm, and a recognition 'that the world of finance will not stand still, and that complacency can lead to extinction'.
It was this aversion to complacency, and the foresight of two exceptional bankers, that enabled Goldman's to dodge a bullet that would decimate many of its competitors.
In 2006, while other investment banks were blinded by greed and ignorance of the changing status of the sub-prime mortgage market, Michael Swenson and Josh Birnbaum saw trouble ahead and recommended that Goldman Sachs 'short' the marketplace. …