Tipping Point Reflection

When I saw a Malcolm Gladwell book on our syllabus, I was not excited after reading Gladwell’s other rendition of talking in circles, “Blink,” for pre-orientation my freshman year. Similar to his other white-covered, and simple graphically designed books, Gladwell does a great job establishing his main idea and thesis in the first 10% (Kindle version – no page numbers) of the book through an abstract example, which in this case is the Hush Puppy epidemic.
However, as I kept reading, I was pleasantly surprised by The Tipping Point’s interesting connections between otherwise unrelated events. The epidemic examples reminded me a lot of the book Freakonomics. Similar to Gladwell, economist Stephen D. Levitt weaves together seemingly unrelated events, ranging from decreased in crime in Manhattan to sumo wrestlers, all under the lens of economic theory. Much like Levitt’s everyday examples, I found it easy to relate to Gladwell’s “three rules of epidemics.”
Recently in my Finance Guest Speaker-Lecture series class, a managing director from the investment banking division at Credit Suisse spoke about his company, his department, and day-to-day activities. The speakers’ words rang through my head as I read about “the law of the few.” Investment banking is divided into parts that cooperate together to provide capital for clients. The divisions - sales and trading, research, and investment-banking department, line up perfectly with Gladwell’s examples of “connectors, mavens and salesmen.”
The investment-banking department is responsible for underwriting securities, mergers and acquisitions and financing, or in Gladwell-words, “connectors.” The i-bankers’ role is meet with clients, build relationships and make successful initial public offering (IPO) deals. In order to do this, they must work with the research and sales and trading divisions, who have insight into the marketplace, who are essentially the “mavens.” Sales and trading are responsible for buying and selling securities on financial markets, which the speaker mentioned could be very exciting and fast-paced. Research, as to be expected, follows stocks to create reports for the investment bankers or “connectors” to use with clients to seal deals.
But what about the “salesmen” – where do they fit into this model? They don’t, but they do fit in with private banking and wealth planning, another division at Credit Suisse. Unlike the investment banking division, who manage corporations’ capital, private banking manages the wealth of high net-worth individuals’ personal assets. To acquire a new client, the speaker said it is imperative to approach gain the clients’ trust. This is how I connect private banking to Gladwell’s “salesman.”
The speaker discussed the correct way to build trust and meet new clients requires years of experience in dealing with financial services and high net-worth individuals’ private assets (his clients’ assets range from $10-30 million – WOAH) to have a legitimate reputation. Unlike the Credit Suisse speaker from the investment banking division, the private banking speaker was, as Gladwell would say, charismatic and hooked the audiences’ attention easily. It was almost as if each student in the classroom was a potential client because he presented his material in a persuasive and relatable manner. It’s clear the speaker would be fantastic at persuading clients to work with him if he was able to persuade a room of college students to believe his industry is the most interesting and lucrative.
Is this also where we can see the “stickiness factor” coming into play? It’s been a week since I have learned about private banking, and as a result, I am more engaged in financial news. This is because I can relate to it - the material I learned was entertaining, memorable and educational.
As I relate Gladwell’s terms to my finance presentations, I can’t help but notice all corporations are built around “the law of the few.” Generally speaking, the “connectors” are the management and marketing departments. They need to be social and well connected, and understand “weak ties” to direct people’s attention. The “mavens” are most comparable to the IT, accounting and/or financial departments, responsible for providing the “connectors” and “salesmen” with figures and information to make profits possible. The “salesmen”, obviously, represents the sales department, who need an uncanny ability to negotiate and persuade customers to buy the firms’ product.
Perhaps Gladwell’s theories applied to corporate America are proof-positive epidemics are possible. Just take the financial crisis from 2008 as an example. Given my application of Gladwell’s “law of the few” holds water, all corporations are structured the same way. Therefore, the domino effect of the financial institutions can be interpreted makes sense as an epidemic reaction. There was a “tipping point” with one firm’s failure that spread like a virus, impacting all of corporate America with ease because the corporate structure is the same at every firm.

I’m not a know-it-all, but I think the intent of The Tipping Point is to make the reader more aware of how the environment around us inter-connected. Much like the memes we discussed last week, epidemics like the financial crisis or the Hush Puppy craze, spread rapidly in accordance with the 80/20 rule. Going forward with my new found Gladwell knowledge, I’m going to pay more attention to the “how” aspect of new trends. Maybe I’ll find another epidemic.