Richard Kovacevich, chairman of Wells Fargo, watched other banks and mortgage brokers make sub-prime loans to borrowers, but he and his lieutenants deliberately steered clear of the riskiest sort.
They didn’t avoid making any missteps. But Kovacevich stayed away from the worst practices, causing his bank to lose market share in the short term that would have generated big loan fees.
“We talked about what others were doing,” but decided “it’s economically unsound,” he says.
Managing risk has always been part of Kovacevich’s decision-making style, regardless of the competition. For example, he has resisted following other banks that have cut costs through massive layoffs. “When you do that, you just end up with low employee morale and customer dissatisfaction,” he says.
— Adapted from “Company Leaders Must Stop Spinning and Start Thinking,” Carol Hymowitz, Career Journal.