Customer Reviews

Blue Blood and Mutiny: The Fight for the Soul of Morgan Stanley

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Morgan Stanley like many old-line firms lost its soul at the hands of a CEO who never understood the value of the real enterprise. Phil Purcell tried to take what worked at Dean Witter and impose it on Morgan Stanley a much different institution. In doing so he acquired all of the perks of modern chairmen-the pay, the G-Vs, the compliant board while his firm's performance was tanking.

Eight "advisory directors," retired and respected former partners, set out to rescue Morgan Stanley and restore its name and culture. Called the "Group of Eight" and sometimes the "Eight Grumpy Old Men" they take a stand for old-fashioned business values.

Blue Blood and Mutiny reads like a novel. And it delivers an important message to business-ethical behavior, hard work and understanding of business fundamentals are more important and more beneficial than the gimmick-riden pursuit of a higher bottom line. This real life story will be the textbook case study in value driven management.

This book was interesting. It was very good at describing the differences between Morgan Stanley and Dean Witter Discover. These two companies merged and with the merger, like many before it, the combination did not make a successful chemistry. They had two heir apparent leaders to choose to become CEO. This books talks about wrong choice of CEO Phil Purcell for this new merged company. I enjoyed this book as it described the family-like atmosphere on the Morgan Stanley side and how when "outside" leadership determined to lead, and Phil Purcell stacked the board with his connections and "yes" people and the whole atmosphere changed for the worse. The book covers the long time retired Morgan Stanley leaders (G8) toppling this board and CEO, to put back the better choice of John Mack for Morgan Stanley. It was a very exciting book to read all the way to the end.

The book tells the tale of the history of Morgan Stanley and the eventual coup in an easy to follow read. The language is easy to comprehend and the story flows in a clear path. There are only two issues I have with this book. You can't help but feel that there is an enormous bias towards one side, which is what a good writer should do I guess. You should also avoid reading the pictures area as it gives away a lot of information. The last few chapters drag after Purcell is ousted (not really a spoiler since you would have to know that already). All in all, if you're interested in the history of one of the great old-time firms, this book gives a very interesting and detailed account of the beginnings of the firm as well.

A great review of the history and culture of Morgan Stanley and how a merger with Dean Witter nearly destroyed the company. The history speaks for itself so the author focuses on the merger. As blue blooded as a firm can be, Morgan Stanley finds itself being run by the Chairman of Dean Witter, a retail brokerage operation. The manager, Purcell, doesn't even live in NY but rather commutes from Chicago. But, what can you do when he has stuffed the board with his friends?

Unfortunately, firms such as Morgan Stanley do not own massive producing assets. Their assets are their culture and the employees who walk in and out of the door each day. The culture quickly disintegrates and top level employees start walking out the door to not return. But who will lead the coup? Former managers step back into the mix with first a private campaign but then a very public campaign generating bad press in soap opera like drama.

Ultimately, this drama plays out and order is restored. But an interesting loss to the firm who has reappeared is Vikram Pandit, the current President of Citicorp. He is considered so talented that Citi paid a massive amount of money to buy his fund and roll him in to Citi. With the current credit crisis it's still early to tell if this has been a good hire but with his CFO leaving today in a power struggle it's not looking great.

Overall, a very good, detailed financial book.

Excellent book. It's been a long time since I've had a book I could not put down. Thank goodness for the G-8 and the employees who stood their ground. John Mack is a true leader and will continue to lead Morgan Stanley into a league of its own. Well worth the read.

Blue Blood and Mutiny explains how the merger between Dean Witter and Morgan Stanley played out, with Philip Purcell taking charge of the company after the merger, then being forced out by the old guard of Morgan Stanley ten years later. It was written by the former sister-in-law of a long-time Morgan Stanley managing director who participated in the coup.

When Morgan Stanley and Dean Witter merged in 1997, it invited a clash of corporate culture. The architects of the merger responded to these concerns by pointing out that Morgan Stanley had absorbed a large number of new employees in the 1980s when, and after, it went public.

While training is meant primarily to give an employee skills for his next assignment, other lessons were informally delivered. Everyone sees the manager wearing a suit jacket for any trip outside the office, but inside the four walls the attire is short and tie, sans jacket. Then one day, an off the cuff remark is made explaining that this is no accident. These lessons in corporate refinement at MS were not part of Dean Witter.

Cited as a merger of equals, the marriage of Dean Witter and MS never operated as such. John Mack expected Philip Purcell to cede control of the company after a short stint as CEO. Instead, he forced many senior MS executives out of the company. Some remaining employees felt the hand-picked replacements were solely based on their loyalty to Purcell - damn their qualifications.

There's an old Wall Street saying that goes, 'If you want risk, take the A train.' Purcell and some of his Dean Witter executives lived by this maxim by avoiding risk at all costs. The Morgan Stanley culture realized that risk could be managed, and maybe quite well by working better and smarter - thus resulting in greater profits. Not all projects were viable, but some seen as too risky by others could be profitable by managing the risk apropriately.

Managing the risk will not eliminate it entirely. Morgan Stanley suffered two large losses after the dot.com bubble bust; one in high yield bonds, the other in telecommunications. Purcell used these losses to clean house in institutional services. He forced Peter Karches out, despite record profits, and took management of high-yield bonds away from John Mack. Other managers in the company learned that hard work to manage risk was for nought, because the big loss outweighed the big picture.

Over time it caused the price of Morgan Stanley stock to stagnate. The stock took the biggest hit from the bear market caused by the internet bubble bursting, and its stock price recovered more slowly than its peers. Such perfomance would put pressure on the board of any company, but it occurred quicker and differently, at MS than elsewhere. MS alumni Scott Sipprelle bought a stake in the company for his hedge fund, then put pressure on the company to improve its performance. Other alumni got a chance to grumble about the stock price at social settings. They didn't just talk - these former employees set out to do something about it.

Eight executives from the former Morgan Stanley & Co., Incorporated led the charge to return the firm to its core values. They felt Purcell broke it, and they were going to fix it.

It isn't an even-handed account of the battle. Purcell comes across shabbily, in part due to his wish for privacy. His high salary, corporate hanger, and his lavish golden parachute painted Purcell as a symbol of corporate excess. His ouster led the stock price to soar in the spring of 2007, adding validity to the claims of the Eight Grumpy Old Men.

While the story ends there, the story for Morgan Stanley has taken another dimension. The firm posted large losses in the bear market of 2008, when the credit cruch washed over all of Wall Street in a sea of red. The value of the stock has been rather sluggish since then. The firm has its challenges, but it can say they are still around to face them.

Patricia Beard has done an excellent job chronicling this story, making it a must read for anyone involved in serving on a board of a public or private company. This is what can happen when the CEO surrounds himself with a self serving board and in this instance is disengaged from his key asset . . . his people. That it occurred to a company of such stature is further testimony that any organization is susceptible. I would also add that it's an appealing history of one the country's storied investment banks.

Well written, and engrossing.
Very clear presentation of the issues involved and makes a convincing case that "the mutineers" were right, and Purcell had to be removed as CEO.

This is a very concise historical review of a merger that involves two cultures that tried to combine choosing the wrong an inexperienced leader to make it work, Fortunately, the more astute retired individuals came to the rescue and in time the combination should work. Only time will tell.

I'm somewhat disappointed by this book, even though it's well written and well researched. Yes, I learned a lot about the world of finance and the history of Morgan Stanley, but I found this book to be repetitious, as most of it is a diatribe against Phil Purcell, the man who became CEO of Morgan Stanley after it merged with Dean Witter.

The diatribe soon gets boring, especially because Ms. Beard doesn't show a glimmer of empathy for him. Cleary, Ms. Beard is completely on the side of the mutineers.

(Yes, Purcell wasn't the right man for the top job, but he came a long way during his career, so I find it hard to believe that he was totally incompetent. What I do believe is that it is the job of an author to try to understand, to try to humanize major characters, in spite of their flaws. Ms. Beard portrays Purcell as sort of a cartoon character. If he is one, why bother devoting so much time to trivializing him?)

To me, what makes books like this good reads are interesting characters. Except for John Mack, I didn't find Ms. Beard's portrayal of any of the characters interesting. We simply don't know enough about them.

Nevertheless, if you want to know all the details of the Morgan Stanley mutiny, this book certainly has them.