Lehman Brothers and Shearson – The Importance of Corporate Culture

I was reading an argument earlier about how Europe needs a “Lehman Brothers moment” to scare the member nations into swift action.   It reminded me of one of my favorite passages from Barbarians at the Gate that discussed the merger of Lehman Brothers and Shearson.

I don’t think I’ve ever mentioned it on the blog.  There are a lot of lessons about corporate culture in it:

Lehman was sterling silver cigarette boxes, fresh flowers, Impressionist paintings, and dusty bottles of Petrus and Haut-Brion in the wine cellar. Shearson was empty pizza boxes, half-empty cartons of Chinese noodles, and coffee in a Styrofoam cup.  “Shearson taking over Lehman,” an old Lehman partisan quipped, “is like McDonald’s taking over ’21’.”  Much like its chairman, the combined firm of Shearson Lehman came to be marked by a peculiar blend of elegance and streetwise chutzpah: brass knuckles in a velvet globe.

So many companies, families, and even nations rise or fall because of the culture.  The culture is more important than even the abilities, talents, and resources of the individual members, employees, or citizens.  Great cultures transform people into better men who produce, invent, build, and grow.  Corrupt cultures transform people into liars, deadbeats, victims, and helpless proletariat subject to the whims of bureaucracy.

Trying to merge cultures that aren’t complimentary is nearly impossible.  One of the cultures will succumb.  Rarely, a new, third culture will emerge, taking the best of each predecessor.  The United States owes much of its success as a melting pot to that phenomenon.