Ken Marlin is not the first person to find fault with the way that Wall Street conducts itself. But, while most other critics regard regulation as the way to curb the excesses of bankers, he prefers to see the answer in changing behavior rather than imposing more rules. This might seem odd for a man who – as well as spending time before assuming his present role of banker as an executive in various different types of business – defines himself as a U.S. Marine, a member of that most formidable of armed services. After all, Marines – even more than other branches of the military – are known for taking a robust approach to matters.
However, nobody should think that there is anything soft about what Marlin advocates. As he says, it is not always easy. But he believes that the model he has developed from the principles he learned in the Marine Corps and that he has already applied to non-Wall Street businesses he has run is “fully conducive to and compatible with the very normal desire by bankers (and many others) to make lots of money over the longer term.” Moreover, Marlin suggests that the approach might just help bring to an end the current distrust and lack of understanding that exists between bankers and much of the rest of society. This is because there should be more confidence among both the bankers and their clients that transactions and other strategic decisions are being made for the right reasons and in the right way. In the preface to his book, The Marine Corps Way To Win On Wall Street (St Martin’s Press), he asserts that building a firm around the 11 principles he has applied in business is “the best way I know” to help align the priorities and sensibilities of Wall Street and Main Street.
So what are the 11 principles?
1. Take the long view. In the Marines, writes Marlin, short-term thinking leads to shortsighted results. “It’s all about understanding what is in your long-term best interest as well as in the long-term best interest of those around you.” Short-term thinking can have serious consequences, he adds. But it does not have to persist. It is possible to make long-term thinking part of your personal habits and your company’s culture. “It’s also the foundation of trust between banker and client: executive and shareholder; politician and constituent. It’s important.”
2. Take a stand. This has two connotations. The first is about being decisive – decisiveness is one of 14 leadership traits that all Marines are taught. They have to work with the data they have, make a clear, firm decision and accept responsibility for the results. The second connotation is about doing the right thing – “including taking a stand as an adviser – even when it’s not what the client wants to hear”.
3. Be the expert (or use one). Marines, Marlin points out, are required to be “technically and tactically proficient” – experts on multiple dimensions. Most bankers, he says, have decent financial modelling skills, can read a balance sheet and can manage parts of a transaction, with some possessing good interpersonal skills. “But it can’t end there. The Marine Corps philosophy is that each individual must build on the common base to become a domain expert in a clearly defined field – and being a good pilot or artilleryman is not specific enough, just as being a good generalist manager, banker or politician is not good enough to be an expert. To win in combat, Marines must be experts at their jobs in the specific combat environment at hand.” Similarly, he suggests, the success of the likes of Google, Apple and Airbnb is at least in part down to the “true domain expertise” that allows their leaders quickly to assess a situation and know what to do, what not to do and when and how to do the right thing.
4. Know the enemy. It is essential to understand the history, culture and motivations of the parties on the other side, whether it is a conflict or a negotiating table, says Marlin. Many people agree with this notion in principle, he adds. But they tend not to spend long enough on it – which is why companies enter ill-judged mergers and governments find themselves in conflicts to which there is no easy solution. Taking the time to understand the adversary may, in some circumstances, lead to conflict being avoided altogether. But even if it does not the better understanding gained can increase the chances of a successful outcome.
5. Know what the objective is worth. Marlin says that most valuation techniques taught on MBA programs and adopted by bankers are fairly simplistic quantitative measures and can be naive – which is how corporations end up overpaying for other businesses. Experience has taught him that valuing companies or valuing strategic political moves is much more accurate if based around the approach taken by Marines when evaluating territory. They have a “clear-eyed understanding of the interrelationships among four critical factors”: the importance of the objective to the wider mission, the appropriateness and necessities of the timing involved; the affordability of the price required to achieve the objective and the risk/reward trade-offs.
6. Know yourself. Bankers and business leaders, like Marines, need to understand their unit’s strengths, weaknesses, capabilities and constraints and to understand how the other side is likely to perceive them. This not only helps them understand where they may have negotiating leverage, it also – critically – helps them formulate strategic objectives and the tactics required to achieve them.
7. Control the timing. With strategic actions, control rather than surprise is often crucial. Marlin points out that Saddam Hussein could hardly have been surprised by the US-led coalition’s assault on him in the first Gulf War. The build-up took five months and was widely reported. But the coalition controlled the timing of the attack – and that made the difference. By contrast, in 1973, the Syrian and Egyptian armies surprised the Israelis with an attack on Yom Kippur, but still lost the war. The important thing, says Marlin, is not the surprise as such but moving with conviction once you have the resources in place to succeed. “For too many corporate executives, the timing of major strategic moves is purely reactive – when an acquisition opportunity is presented or when a suitor has approached you. For too many bankers, the best time to enter into a deal is whenever they have someone to pay fees.”
8. Negotiate from the high ground. This has two meanings. The first refers to what a Marine would recognize as the physical place you want to be – since it’s usually easier to defend and a better place from which to launch assaults. But there is also the sense of doing the right thing. This is about values such as honor, courage, commitment, competence, loyalty and teamwork.
9. Seek foreign entanglements. Marlin insists that being competitive requires thinking broadly and resisting isolationism. Consequently, an understanding of how to achieve successful cross-border transactions is crucial.
10. Trust and verify. A variation on the “trust but verify” adage that Ronald Reagan popularized, this is essentially an entreaty for bankers and executives to be serious about due diligence and to verify critical assumptions before taking irreversible steps.
11. Be disciplined. “Marines like winning. We don’t like drama,” writes Marlin. “As a result, we try to remove as many variables as possible before heading into action – and that takes discipline.” It involves taking the long view, establishing long-term strategic objectives and planning using a rigorous approach – and then acting in accordance with the plan. But he stresses that, while Marines are associated with discipline, they do not have a monopoly on it. Certain corporations have established reputations for a disciplined approach to business. “It’s not always easy, but it is a critical practice to achieve long-term success, and it can be taught.” Discipline, adds Marlin, is not about blind obedience to orders or about doing tough things in tough circumstances. It is about “doing the right things the right way – every time.” Now, there’s a challenge to not just bankers, but corporate executives and politicians, too.
This article was written by Roger Trapp from Forbes and was legally licensed through the NewsCred publisher network.