What Happened to Goldman Sachs by Steven G. Mandis Summary

What Happened to Goldman Sachs examines how the prestigious investment bank slowly drifted away from its founding ethical principles over decades. Steven G. Mandis uses the concept of "organizational drift" to explain how Goldman Sachs shifted from prioritizing client interests to operating under legal standards rather than ethical ones. The book traces the firm's 150-year history from its 1869 founding through its 1999 IPO and 2008 transformation into a bank holding company.

Steven G. Mandis is a former Goldman Sachs employee who worked at the firm from 1992 to 2004 in mergers and acquisitions, proprietary trading, and private equity. After leaving Wall Street, he earned a Ph.D. in Sociology from Columbia University, where the book originated as his dissertation on organizational drift. Mandis witnessed striking cultural changes during his 12-year tenure and wanted to understand the forces behind Goldman's transformation from an insider's perspective.

What Happened to Goldman Sachs is essential reading for business leaders, finance professionals, and anyone interested in organizational dynamics and corporate culture. The book offers invaluable perspectives for executives managing cultural drift in their own firms. MBA students, sociologists studying institutional change, and financial history enthusiasts will find Mandis's analysis particularly insightful, as he combines sociological research with firsthand Wall Street experience.

What Happened to Goldman Sachs is widely acclaimed as a must-read for understanding business and finance. The Wall Street Journal praised it as the most deft analysis of Goldman's cultural changes, noting that "several authors have tackled the question...but none so deftly as Steven G. Mandis". Despite being a hefty 400-page tome, the book is "elegantly written" and offers rigorous sociological insights combined with engaging insider storytelling.

Organizational drift in What Happened to Goldman Sachs describes incremental cultural shifts that occur imperceptibly over time, similar to how parents don't notice their children aging day by day. Mandis explains that Goldman Sachs slowly moved away from its founding principles through countless small decisions responding to regulatory, technological, organizational, and competitive pressures. These imperceptible changes accumulated over decades, fundamentally transforming the firm's culture and increasing its probability of organizational failure.

Steven Mandis initially hypothesized that Goldman Sachs's 1999 IPO was responsible for the cultural transformation, but he disproved this theory during his research. While the IPO brought new pressures and nearly 60 percent of partners left within five years, Mandis discovered the organizational drift began much earlier. The change resulted from multiple long-term pressures—regulatory, technological, organizational, and competitive—that accumulated over Goldman's 150-year history, not from a single event like going public.

Goldman Sachs's first and most important founding principle was "our clients' interests always come first". Steven Mandis argues in What Happened to Goldman Sachs that this standard of commitment to clients has largely been lost as the firm evolved. When Goldman was a small private partnership, it could selectively turn down inappropriate clients and avoid transactions conflicting with its values, but as the firm grew rapidly, partners made increasingly less calculated and risk-averse decisions.

Steven Mandis drew from Columbia sociology professor Diane Vaughan's framework analyzing the 1986 Challenger space shuttle disaster to explain Goldman Sachs's organizational drift. Just as off-spec O-rings resulted from scientists taking incremental risks under various pressures that accumulated into catastrophic organizational failure, Goldman gradually deviated from its principles through small compromises. Mandis clarifies he's not predicting Goldman will fail, but rather that organizational drift increases the firm's probability of failure.

Steven Mandis combined multiple research methods in What Happened to Goldman Sachs, including his firsthand 12-year experience at the firm, sociological research frameworks, and extensive interviews with former clients, detractors, and current and former partners. He analyzed SEC filings, congressional records, and other regulatory documents to support his conclusions. This interdisciplinary approach—blending insider knowledge with rigorous academic sociology—emerged from his Columbia University Ph.D. dissertation.

What Happened to Goldman Sachs identifies critical organizational principles in its "Lessons Learned" section, including the importance of:

• Shared values
• Strong social networks
• Financial interdependence
• Public disclosure
• Innovative inquiry
• Maintaining a higher purpose

Mandis emphasizes the necessity of transmitting culture from one generation to the next and maintaining a long-term perspective to prevent organizational drift. Business leaders can apply these insights to recognize and manage incremental cultural changes within their own organizations.

What Happened to Goldman Sachs stands apart from typical Goldman Sachs exposés by avoiding sensationalism—it "does not conjure vampire squids" or offer "titillating and lurid" revelations. Some readers might find the 400-page sociological analysis dense compared to more accessible financial narratives. However, critics praise Mandis for providing a balanced, academic perspective rather than an inflammatory takedown, with Publishers Weekly calling it "riveting" despite its scholarly approach and substantial length.

What Happened to Goldman Sachs differs from other Goldman books by applying rigorous sociological frameworks rather than journalistic exposé tactics. Steven Mandis approaches the subject as a scholar-practitioner with insider access and academic training, not as an external critic. The Wall Street Journal specifically noted that while several authors tackled Goldman's cultural changes, "none so deftly as Steven G. Mandis". His interdisciplinary methodology combining sociology, organizational theory, and finance creates a uniquely analytical insider's history.