Wells & Fidelity: Dealing with Culture Problems

May 07, 2018

One of my favorite mental models about problem-solving strategy comes from Marcus Aurelius in Meditations. The main takeaway is this:

When you encounter a problem, it might be in one of two possible states:

  1. Nascent: hard to detect, but easy to solve. You might have to really look beneath the surface to find the problem, but once you do, it might be relatively easy to solve with a small change or course-correction.
  2. Developed: easy to detect, but much harder to solve. The problem is obvious and its symptoms ubiquitous. People know there is a problem, but it might take a lot of deliberate action to fix it.

I found a great example of this contrast in today's Wall Street Journal, manifested in how Wells Fargo and Fidelity are dealing with culture problems in their respective organizations.

Wells Fargo: Easy to Detect, Difficult to Solve

Wells Fargo has had one of the worst ethics scandals faced by a major bank in recent memory. Their relentless drive to hit ambitious sales and revenue targets was so myopic and singularly-focused that ethics and honesty were thrown to the wayside and became collateral damage of a high-striving culture that was laser-focused on “making the quota.” The resulting scrutiny and investigation have been so severe that their CEO recently resigned, and to this day, the bank is still under numerous state & federal investigations.

In one attempt for redemption, Wells took out a huge two-page ad in today’s WSJ, extolling some of its virtues and showing how they’re attempting to make things right. The ad was almost made to look like it was a regular part of the newspaper (except it was in a different sans-serif font).Wells Fargo’s two-page ad in today’s WSJ. 7 articles and one big picture.

Wells Fargo's two-page ad in today's WSJ. 7 articles and one big picture.

Wells Fargo’s two-page ad in today’s WSJ. 7 articles and one big picture.

Fidelity: Difficult to Detect, Easy to Solve

Similar to Wells, Fidelity also recently dealt with a culture problem, but dealt with it much earlier on while it was hard to detect but easy to solve.

Certain Fidelity employees were personally profiting from corporate discount programs intended for purchasing new computer equipment. These employees made purchases that were ostensibly for work purposes, returned the purchased goods (presumably at full price), and personally pocketed the difference. This loophole enabled employees to make a few hundred dollars in personal profit.

While this is a dishonest thing to do, I think it’s a far less severe infraction than opening fake bank accounts, which is a form of identity theft that directly impacted customer credit scores.

It’s unclear how long Fidelity knew about this problem before taking action, but they solved the problem early and swiftly, not giving it a chance to foment into a full-blown culture crisis like what has happened at Wells. Fidelity took a strong stance on the situation, potentially more harshly than was needed, but ultimately took care of the problem while it was nascent, hard to detect, but easy to solve.

Fidelity, also in today's WSJ.

Fidelity, also in today’s WSJ.


The proverb says that a journey of 1,000 miles starts with a single step, but I think the same applies to negative things like lies, fraud, mistrust, and toxic company cultures.

The unwinding of a 166-year culture of trust & loyalty begins with one person telling a lie, which turns into “everybody does it, so why shouldn’t I?”, which then turns into a place where we do the right thing but can lie “just for this quarter’s earnings,” and next thing you know you’re taking out two-page apology ads in the WSJ while being investigated by the Justice Department.

It might be unpopular to take action when problems are still small, but in this case, being too early is probably better than being too late.