Jamie Dimon’s Deal & Risk Strategies

Bloomberg Markets‘ Lisa Kassenaar and Elizabeth Hester profile Jamie Dimon the CEO who spearheaded JP Morgan Chase‘s acquisition of investment bank Bear Stearns.

Dimon compares the managerial bias for action and velocity of a pre-deal team to the 101st Airborne Division of the US Army — reminiscent of John Boyd‘s influence on business strategists with his ‘observe-orient-decide-act’ loop used in air combat.  This bias and velocity is crucial for: (1) strategic execution and rollout of high-growth strategy; (2) anticipatory responses to hedging and catastrophic risk; and (3) negotiation in surprise events such as the Bear Stearns collapse.

Dimon focuses on costs in structuring a deal, leveraging strengths and triaging this with risk management and growth strategies that are quickly scalable.  Dimon claims this is why JP Morgan Chase did not venture into the securitisation markets for collateralised debt obligations, subprime mortgages and exotic options.  Instead, his ‘fortress balance sheet’ is ‘defined by efficiency, stable sources of revenue and risk management that protects assets’.  Equally, the risk dimension of ‘risk-return’ is central to banking, securitisation and the leverage of future cashflows.

Kassenaar & Hester’s interviewees suggest Dimon has an ‘information filter’ that oscillates between ‘details’ and ‘the big picture’ to keep track of deals.  In particular, Dimon uses one sheet of paper with ‘things I owe people’ and ‘things people owe me’ rather than a Blackberry.

Dimon’s career management insights: (1) take time off after termination to create a new space; (2) make a financial commitment via an equity stake as a signal to others in your 90-day period to transition-in.