The Value of Knowledge Makes Headline News

Information has its greatest value when it is most available to, and accessible by, people for immediate use in understanding their world. I not only believe this, I put this insight to work in my consulting and teaching.

To implement this, I often use stories from the headlines to illustrate my key points. There are so many examples illustrating the KVC in the news that I am confident that I can pick up a Wall Street Journal at random and find a real-world illustration of a key point.

I call this technique a “flash case” — since it has the teaching value of a standard business school case — but it has the key advantages that (1) it can be developed quickly and (2) it evolves over time as the actual events play out.

The Deutsche Bank Case

For example, I recently used the warning letters from the NY Federal Reserve Bank to Deutsche Bank (DB) about deficiencies their capital requirements reporting process. Yes, all that detailed, boring, low-level stuff — that can gut the fortunes of enterprises heretofore thought unassailable.

Deutsche Bank logoGraduate students in my audience at Columbia University were able to identify each aspect of the knowledge-value relationship in the case. Much of the discussion focused on this pivotal issue: was this a technology shortfall, or rather a systemic problem in corporate culture originating at the top? More the latter than the former was the class consensus — a view that has been largely borne out by subsequent events.

Around the same time as the capital reporting issues, DB was involved in the LIBOR-rigging scandal, in which several huge banks were found to have essentially fabricated data used to set key rates in the world financial markets. In April 2015 the bank was fined $2.5 billion by US and British authorities for its role in the scandal — more than any other single institution.

These and related issues led to a top-management shakeup at the bank in June 2015. DB’s stock currently sells for 1/3 of what it sold for at the beginning of 2014, and the cost of insuring the bank’s debt has risen significantly — a clear signal that the once-dominant institution is now considered a risky asset.

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