Failed Leadership Caused the Financial Crisis

We need to do more than fix the crisis; we need to fix the mindset that got us into it.

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We cannot solve problems of this magnitude simply by replacing today's leaders with people who think and act just like them. We need new leadership and a new mindset for leaders of America's great financial institutions. Their new leaders should have five characteristics in common:

1. They should be authentic leaders, focused on serving their clients and all the institution's constituents, rather than charismatic leaders seeking money, fame, and power for themselves.

2. They should place the interests of their institutions and society as a whole above their own interests.

3. They should have the integrity to tell the whole truth, admit their mistakes, and acknowledge their shortcomings. Authentic leadership is not about being perfect. It is having the courage to admit when you're wrong and to get on with solving problems, rather than covering them up.

4. They need to adapt quickly to new realities, changing themselves as well as their institutions, rather than going into denial when things don't go as intended.

5. They need the resilience to bounce back after devastating losses. Resilience enables leaders to restore trust by empowering people to create new solutions that build great institutions for the future.

Some of these leaders have already emerged on Wall Street. The short list includes JPMorgan's Jamie Dimon, Wells Fargo's Dick Kovacevich, Goldman's Lloyd Blankfein, and Morgan Stanley's John Mack. Their firms participated in the same markets as did the failed firms, and used similar financial instruments.

What's the difference? They kept their clients' interests paramount, took a more prudent approach to risk and leverage, kept their accounting conservative and transparent, and focused on long-term sustainability.

This short list is insufficient. What's required is a new generation of authentic leaders to step up to leading America's financial institutions. These new leaders must be committed to shifting away from short termism to focus on long-term results for their clients and their firms and to ensure sound, enduring capital markets for our country.

Only then can the financial community regain vitally needed trust and confidence of the American people. And only then can we be assured that we won't be back in a similar mess in a few years.

Bill George, author of True North, is professor of management practice at Harvard Business School . The former chair and CEO of Medtronic, he serves on the boards of ExxonMobil, Goldman Sachs, and Novartis.