Le Monde of March 13 published an article that the profits of the top 40 companies quoted on the stock exchange in France, dropped in 2008 with 39 %. Illustration of a real and deep crisis, isn't it ? However, just by observing the table one can see that only 2 out of the top 20 make a loss (Alcatel-Lucent and Dexia), but all the others make still profits above the 5 %. A number of them are still in the double digits: Axa 10 %, BNP Paribas 11 %, Essilor 14 % just to name a few. I personnally would say these are still reasonable returns, no ? For crisis reasons, of course, in order to claim public support, or in order to prepare a few more social plans, the message is important.
I recall a previous crisis, the one around e-business. In those days, companies where highly worried (the same companies as today, of course), not that there was no profit anymore (since there was), not that the profit went down, since it didn't (growth as a first derivative ?) but that the growth of that growth slowed down (a second derivative). The speed of profit growth was in those days the holy grail. What is most devastating for a crisis: profits of "only" between 5 and 15% or the 14 billions of profit of Total (and its consecutive social plan) ? See my post on this.
In the Timesonline of March 1, Philip Delves Broughton contributes an article on what they teach you at Harvard Business School (he is an alumnus). He refers to (Harvard) MBAs as masters of the apocalypse. He argues that if in any other profession (lawyers or medical docters) anything would have happened only half of the impact of the financial crisis, we would have all adapted our educational system and its content. In management we don't. It is only an unhappy moment, caused by the unethical behavior of a few. We should moralize capitalism (Sarkozy), that is enough. Interesting reading for business school faculty and management.
But isn't it true that managers, traders, etc only do their job the way we (business schools) trained them to do ? Isn't it true that in general, traders only do what they are rewarded for, hence what we all seem to see as important ? And isn't it true that they do that, as if nothing else existed in the company ? A trader deals with trading, a sales person with sales, a manager with profit and shareholder value ? But who deals with the business, the stakeholders, the markets (no, I don't mean the sales) ? Shouldn't we have a second look (a critical look) into why and how a highly function oriented management, supported by a highly functionally oriented management education, causes that despite everybody is doing the things right, nobody is bothering with doing the right things ?