Is Goldman Sachs Losing its Luster?

According to a recent Financial Times article by Tom Braithwaite, Goldman Sachs may be losing its “brilliance premium” of years past. But why? Over a period of ten years Goldman’s stock has outperformed it’s biggest US competitors. This year it’s stock has performed the worst among this same group of US competitors. But how?

A recent interview on HBR.org prompted me to cross reference this article from the Financial Times. Harvard Business Review recently interviewed author Steven Mandis who wrote the book, ‘What Happened to Goldman Sachs: An Insider’s Story of Organizational Drift and Its Unintended Consequences.’ In the interview, Mandis discusses many reasons for this perceived “drift” of the organization, one that used to possess a unique culture that formed the basis of its very success. But Mandis discusses a drift from the founding culture of the organization, which allowed Goldman to fall victim to external pressures, which is slowly breaking it apart. As Mandis says in the interview,

“There’s regulatory pressure, organizational pressure, technological pressures, and competitive pressures that are all sort of currents, undercurrents within the firm, that are causing a drift to happen.”

Has Goldman gone into a slow drift, as Mandis says? Tom Braithwaite of the Financial Times seems to have utilized yet another way to describe this perceived drift, as a loss of the “brilliance premium.” What is your opinion on this topic?

(Sources: Financial Times article: http://www.ft.com/intl/cms/s/0/ffef6d4a-c954-11e3-99cc-00144feabdc0.html?siteedition=intl#axzz2zj2Sxerb

Harvard Business Review interview: http://blogs.hbr.org/2013/10/how-goldman-sachs-drifted/ )

Posted by Corey Curwick Dutton