Whilst the financial meltdown of 2008 may seem a while ago now, it is currently in the spotlight again as a U.S government inquiry is underway to understand what went wrong and who was responsible.
As Dick Fuld, former boss of Lehman Brothers testified I was struck by how the most basic factor had influenced the decisions that were made. The basic fact was key decision makers in the midst of the crisis were tired. As we know, to be tired is the most costly of states to be in – we never make our best decisions when we’re tired.
This was highlighted in an astounding admission by one of the U.S government’s team responsible for making decisions as to the fate of some of the largest financial institutions in America (including Lehman Brothers). Read on…
But as the former chief executive defended his stewardship of Lehman, a disagreement broke out about the Fed’s actions. Thomas Baxter, vice-president of the Fed’s New York branch, insisted that the central bank had, in fact, offered liquidity to Lehman on the fateful day before the bank’s collapse, but he admitted that confusion had abounded that day among exhausted banking chiefs and regulators.
“If I could take you back in time to Sunday September 14 , and you could be with us, having been up for several days, you might understand better why there could have been a lack of clarity in terms of communications,” Baxter told the commission. (Emphasis is mine) Source: Guardian.co.uk, Wed 1st Sept 2010
As Mr Baxter admits, they were not simply tired. They were exhausted, under pressure and they had to make big decisions extremely quickly.
It reminded me of a letter I wrote to the editor of a leading financial newspaper back in October 2008 when the aftershocks of the crisis were still being felt. I was responding specifically to a comment by the editor where he highlighted that the fatigue that was being experienced by individuals in the securities industry had the potential to make things worse.
Here is my letter:
It was refreshing to read your comment of last week, ‘The exhaustion of dealing with Armageddon’. Your point that the fatigue experienced by individuals in the securities industry has the potential to exacerbate the current state of turmoil is not to be underestimated. It is right to be asking the question ‘Are the people making the big decisions in the best condition to be determining the course of action for decades to come?’
Fatigue and stress are major obstructions to effective decision-making. When someone is tired and worked up, they are not operating at their full mental potential. And full mental potential is what is needed from everyone in this moment.
Rest is the basis for all our activity. Accumulation of fatigue in our system is extremely costly – mistakes get made, we overreact or fail to respond and we miss opportunities. Our ability to perceive, assimilate and process data is seriously compromised when we are exhausted.
In the Second World War, fighter pilots were required to undergo tripartite performance testing. When at the controls of a fighting machine worth millions, defending home and country, these men needed to make decisions i) quickly, ii) accurately and iii) whilst under pressure. It is quite possible for someone to make accurate decisions if they have all the time in the world and the downside is limited. Likewise decisions can be made quickly if accuracy is not paramount. However when the stakes are high and the landscape is changing rapidly we need all three at once. Today, those in the command centres and on the front line of this worldwide financial crisis also need superior tripartite performance – the ability to make fast, accurate decisions while under extreme stress.
And this will not be a short campaign. The requirement to operate at full mental potential for a sustained period of time creates significant demands that cannot be met simply by ‘a decent night’s sleep.’ In fact when you’re over-tired and the financial future of the free world seems to rest on your shoulders, it can be hard to settle down the mind and body and rest deeply. Often, when sleep is most needed it is the most difficult to come by, leaving people with no choice but to resort to pills, drinks and stimulants to cope – which actually increases the problem over time.
Fortunately, there is a time-tested and well-researched solution that is getting the attention of leaders and decision makers around the world. Scientific studies from major research institutions show that a few minutes of meditation each day delivers 2-5 times deeper rest than sleep. The meditator comes out of that state of deep rest having dissolved stress and accumulated a stockpile of energy in order to deal with the demands of the day. Concentration improves, accuracy goes up, anxiety levels go down and the ability to take in more information increases dramatically. All these qualities lead to an upgrade in fully conscious decision-making.
This is why we are seeing senior executives from investment banks, law firms, fund management companies and hedge funds using meditation as a tool to maintain their level of high performance and increase their competitive edge. Harvard Business School and INSEAD have identified meditation as one of the most effective business tools for twenty-first century executives.
If serious times require serious leaders to make serious decisions, then without a doubt those leaders must be fully awake. This is going to take more than a decent night’s sleep.
Director, London Meditation Centre and New York Meditation Center