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After Morgan had installed the Edison lighting plant in his redecorated house on Madison Avenue, in the autumn of 1883, he held a big reception for four hundred guests. One of them, Darius Ogden Mills, the famous gold mine operator and stock market plunger, was so impressed with all those brilliant new lights that on the following morning he walked into the office of Drexel, Morgan & Company and ordered the purchase of a thousand Edison shares. “Pierpont heard of this at once,” and before Mills could go out the door, caught him and asked him what he knew about the Edison light. “I know all about it,” answered Mills. “All right, we will take your order,” said Pierpont, “and any other orders of the same kind, but I am going to put a condition on my partners with respect to such orders... that for every share of Edison stock they buy for you they buy one for me.”458 This incident has been cited as showing Morgan’s enthusiasm for the Edison venture. What it suggests rather is that Morgan was serving notice that he would allow no one else to take control over this promising industry; and he was a most determined and formidable man. By the end of 1883, the meetings of the directors of the Edison Electric Light and of its two non-manufacturing subsidiaries, the Edison Illuminating of New York and Isolated Lighting, were regularly held in Morgan’s office.
Making the call is making progress When you put off decisions, they pile up. And piles end up ignored, dealt with in haste, or thrown out. As a result, the individual problems in those piles stay unresolved. Whenever you can, swap “Let’s think about it” for “Let’s decide on it.” Commit to making decisions. Don’t wait for the perfect solution. Decide and move forward. You want to get into the rhythm of making choices. When you get in that flow of making decision after decision, you build momentum and boost morale. Decisions are progress. Each one you make is a brick in your foundation. You can’t build on top of “We’ll decide later,” but you can build on top of “Done.” The problem comes when you postpone decisions in the hope that a perfect answer will come to you later. It won’t. You’re as likely to make a great call today as you are tomorrow. An example from our world: For a long time, we avoided creating an affiliate program for our products because the “perfect” solution seemed way too complicated: We’d have to automate payments, mail out checks, figure out foreign tax laws for overseas affiliates, etc. The breakthrough came when we asked, “What can we easily do right now that’s good enough?”
Rework
Jason Fried and David Heinemeier Hansson
There was even the unwritten but well-understood goal of getting the share price of Finova to $60. Compensation packages were tied to achievement of that share price. Now, it is a basic principle of Accounting 101 that bad loans and their write-downs get in the way of loan-portfolio growth. Finova employees who knew the extraordinary numbers goals and that their compensation packages were tied to those goals soon discovered that the downside to this principle of portfolio growth could be no bonuses at all. The result was that Finova divisions were carrying loans that should have been written down, and in some cases, Finova capitalized expenses related to repossessed property so that the portfolio value would go up despite the clear uncollectibility of the loan. A bad loan is not an asset, but in this world of promises of continued double-digit growth, employees do rationalize. For example, Finova had one loan to finance a time-share RV golf resort in Arkansas. The loan of $800,000 for this tempting Garden of Eden, complete with wheels and sewerage hookups, was made in 1992. By 1995 the loan was in default and the property was worth only $500,000. However, no one wanted to take the hit to the portfolio, so the loan was carried as an asset and then some as the managers capitalized expenses for the golf course and its restaurant. By the time this accounting impropriety was uncovered, the loan was being carried as a $5.5 million asset. As one of the managers I interviewed said, “All of Arkansas isn’t worth $5.5 million.” By 1999 the auditors began to ask questions, and there were other loans, of significantly higher amounts, that had questions, baggage, and problems. Ernst & Young refused to certify the company’s financial statements until it wrote down a $70 million loan to a California computer manufacturer that had gone bad months and possibly years earlier. Shareholder lawsuits filed against the company alleged that the write-down was postponed because bonus and compensation packages that were tied to the share
The Seven Signs of Ethical Collapse
Marianne M. Jennings
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