I guess the time when I decided that I would be joining the B-school for my higher degree, something unusual happened in the markets, and although it was not shocking to see the giants falling from sky but it was almost like an incident which was waiting for a date of its occurrence.

Anyone, who was reading the trends of the US Financial Markets especially after it was formally accepted that ’sub-prime crisis’ is a huge crisis, people knew that the ripple has just started, and its influence would be determined only in times to come. It was clear that Financial Institutions would be the first ones to declare themselves bankrupt, and the market would go hay-wire. Everything happened, and even now the ripple has not stopped to demolish the established giants (or the institutions which are assumed to be giants).

Now, while I am sitting in the class-room and getting an opportunity to see things being discussed and analysed in front of me, I have a very basic question to ask - What kind of managers did all such companies had? and what kind of regulators were these who waited till so long before taking any action, and let the crisis to happen.

It goes beyond the logic of a normal human-being that the industry is not ready to shift its assumptions even when times are changing, and with time everything else is changing, but we don’t want to shift the basis of our assumptions! Like in the case of sub-prime crisis, the basic assumption was that - The prices of houses will keep rising in future, and hence this could serve as a basis for giving away loans. Ok, I accept that on a micro level this assumption is very well suited and works really well, but does this assumption works well in a setting of a developed nation like USA?

Had this assumption been made for a country like India, then the assumption will have a longer life-span. But in the case of  USA this assumption should have only a limited life-span. And why I say limited is because we are already aware that US presidents have had an aspirational target of providing homes to every US citizen. US presidents were so obsessed with this housing dream that they almost made it compulsory for banks to lend the loan amounts to everyone. First, the dream is flawed in itself, and second, does this not make our assumption about hosing prices baseless? If everyone needs a home, and the loans for buying a home is almost bribed to you, does it mean that we are in a proper supply-demand scenario? Think about it!

The last point which I wish to bring into discussion here is - Why do we always need to guided by the Bottom-Lines? And why do the Managers fear to ask the tough question?

The worst consequences of just caring about your Bottom-Line are evident to us in the form of a series of failed Financial Institutions. The only reason they have failed, is because they did not operate with the long-term in their mind, they just wanted to escape quarter after quarter with some positive figures. And now you have the results of such a ‘Quarterly Performance’  .

Finally, I am not able to digest the fact that - No One in the industry could see what was about to come. There were people in the industry who could very well see what was happening, and could have easily pointed out the flaw in the processes. But then why did they chose to remain silent? Why couldn’t they ask the tough questions and raise the trigger against those greedy CEOs? And this is what is most hurting to know.

And with all above thoughts, I believe I am in the most perfect time to study at a B-school, because topics like Ethics and Responsibility have become most important things then they ever were. Asking tough questions sounds much more logical thing to do rather than enjoying the momentary false pleasures of success! and I believe all those of you who are studying at a B-school right now are luckier souls, because these lesson are well grasped only when the industry is going through a crisis.