Alumni Profile: Steven Mandis
M.A. ’10, Museum Anthropology
M.Phil. ’13, Sociology
You spent 12 years at Goldman Sachs, left Goldman in 2004 to co-found a multi-billion dollar asset management firm, then served as senior adviser to McKinsey & Company and worked at Citigroup. After 16 years on Wall Street, what motivated you to enroll in Columbia as a student in 2008?
What drew me back to academia was the desire to satisfy my intellectual curiosity, to ask questions and think about how to answer them. This emphasis on education came from my parents, who are Greek immigrants. They would say, “People can take a lot of things away from you in life, but no one can take away your education.”
I started looking into classes at Columbia’s School of Continuing Education to figure out what I was interested in and to prove myself as a student, after being away for so many years. I ended up taking classes in anthropology and sociology. I was interested in museums and their organizational culture, and was able to apply my course work to the Museum Anthropology program. I even interned at the Met in their Greek and Roman department for part of a class. Eventually, I was accepted into the Sociology Ph.D. program, where I have an M.Phil. so far.
What motivated you to enter a doctoral program at GSAS?
At first I wasn’t sure whether to apply to the Business School or GSAS, but ultimately, I decided on GSAS because I already had a business background, and I thought GSAS would give me a broader perspective. When I told my friends I wanted to study sociology and anthropology, they said, “What?!” The teachers also wondered how seriously I would take classes. But in the end I finished with a 4.0 GPA!
How did you settle upon Goldman Sachs as the subject of your dissertation?
I took a class in economic sociology and wrote a paper related to Wall Street. Afterward, my professor, David Stark, pointed out that many sociologists don’t have my level of expertise in the banking industry, and that I could make an original contribution to the field in that area. At the same time, because of the financial crisis, people were starting to raise questions about Wall Street and Goldman Sachs’ culture. When I saw other Goldman alumni, we’d talk about whether the culture had changed. Everyone had an opinion, but I realized no one had a framework or had researched it in an academic way.
Your dissertation examines the “organizational drift” of Goldman Sachs—its movement away from its founding principles over time. Can you summarize your application of sociological theory to explain this evolution?
I drew from the framework of Diane Vaughan, a sociology professor at Columbia who studied the Challenger space shuttle disaster. The official investigation into Challenger concluded that parts of the rocket called “O-rings” were the problem—they were off by a tiny fraction, and that’s why the shuttle blew up. Case closed. However, Vaughan went back and asked, “Why were the O-rings off in the first place?” She concluded that a variety of pressures had caused the scientists to take incremental risks, and that these risks had added up to an organizational failure. That’s why the shuttle exploded.
Similarly, in my dissertation, I look at the various organizational, competitive, and regulatory pressures at Goldman Sachs over time to explain its evolution, adding an emphasis of technological pressure to the framework that Vaughan established. And I use the idea of “organizational drift” to describe the company’s incremental departure from its founding principles. People don’t notice organizational drift, because it happens so slowly that they can’t see it. Vaughan discussed a similar idea in her work.
Another question I ask in the dissertation is, “Why did Goldman Sachs do better than its peers in the credit crisis?” To answer this, I drew upon Professor David Stark’s theory of dissonance. The partners at Goldman are known to argue with one another about the business—that cultural element has existed since 1979—but these disagreements can also lead to discovery and innovation. This “culture of dissonance” actually enabled them to better survive the crisis. It exists in a changed or residual form at Goldman today—but it is still recognizable, and some point to it as evidence that the company hasn’t changed. This is another way people become blind to organizational drift.
In October, you published a book called What Happened to Goldman Sachs: An Insider’s Story of Organizational Drift and Its Unintentional Consequences. How did your dissertation turn into this book?
At some point, I came in contact with a literary agent, Susan Rabiner, who specializes in academic topics that have the potential to cross over to mass audiences. I met with her about my dissertation, and she said, “This is not a book about Goldman Sachs. It’s a book about organizations, and it would appeal to leaders of organizations. The best publisher to approach would be the Harvard Business Review Press.” By that time I had 600 pages’ worth of text and notes, and hundreds of pages of footnotes and appendices. My editor at the Harvard Business Review Press, Tim Sullivan, totally understood the message and approach. He helped me focus and turn it into a story that both leaders of organizations and academics could enjoy. It was very hard to write a book that satisfies both.
How close is the book to your dissertation?
My dissertation review committee is in the process of deciding how to proceed. My hope is that it is relatively close.
Was it difficult to examine your former employer through an academic lens, without letting your memories and emotional connections influence you?
Yes, it was difficult. That’s why I looked at a variety of external sources like government filings, Congressional testimonies, and court transcripts. And my teachers and classmates were very good at pushing my research and conclusions. My hypothesis going in was that the company’s IPO was responsible for the change in culture, but I disproved that during the course of my research—I disproved my own bias. Also, I don’t get into whether Goldman Sachs is “better” or “worse” today. But I truly believe that without my inside knowledge, it would be almost impossible to make the discoveries that I did. You need to understand how Wall Street and Goldman work—they have their own rituals, language, nuances, and complexities.
What did you think of Greg Smith’s now infamous op-ed in the New York Times, “Why I Am Leaving Goldman Sachs,” from March 2012?
I was in the middle of research at the time. I found it interesting because Smith made a statement essentially blaming the CEO and President for the change in Goldman’s culture, and that the change was for the worse, while I was asking a question with a hypothesis that the IPO was responsible, which happened before Smith’s time there. I am very focused on the framework in answering my questions of why and how the change happens—and I stay away from whether it is for better or worse.
Do you see any other large, well-known companies in which a similar organizational drift is happening?
I think organizational drift tends to happen, especially as a company gets larger. It’s the law of large numbers—as a company gets larger, it’s harder to find opportunities to grow. So the pressures to drift become greater.
What has been the reaction to your book so far?
The positive reviews from the media and academics have been really humbling. Also, I’ve received emails from partners at Goldman—many I didn’t know—that were quite complimentary. Other Goldman partners respect the academic process and the rigor of my analysis, but respectfully disagree with the conclusions.
How have you enjoyed Columbia so far?
I find my fellow students welcoming, helpful, and interesting. They come from all over the world. Most of them are younger than I am—it’s uncommon to run into someone my age. But I love being here because of the energy of the student body, the new ideas, the enthusiasm—it’s very refreshing.
What courses do you teach as an adjunct associate professor at Columbia Business School?
I teach strategic issues facing investment banks in the fall, and a class on the European credit crisis in the spring.
Do you think you’ll return to Wall Street?
I do not think so. Academia is my home now. However, I remain dedicated to investing in and helping new businesses. You could say my love is teaching, and my passion is giving people jobs and opportunities through new businesses. Right now, I think that’s the greatest use for me in society.
You received the 2012 Ellis Island Medal of Honor, given to children of immigrants who are dedicated to community service. What is the story behind your award?
It’s a lifetime award, but I believe I was nominated primarily for my work in Harlem, where I teach middle and high school students about financial responsibility.
— Interview conducted by Andrew Ng