Citi Hits Iceberg: 52,000 Without Lifeboats

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The inevitable finally happened. The Citigroup implosion is underway–to the tune of some 52,000 job cuts scheduled with a year.

A while back I suggested on this very blog that Citigroup was a good candidate to follow CompUSA, Circuit City and Sprint to ocean’s bottom (or distressed buyout). Well, looks like Citi may be cutting in line to beat Sprint. While it’s not underwater yet, cutting 15% of employees is drastic, even accounting for shutting down entire business units. Cuts this big so weaken organizational structure that it takes the very best management teams can keep the ship afloat. And no one’s ever accused Citi of having outstanding management, especially since former CEO Sandy Weill threw Jamie Dimon, his number two, under the bus for being too competent.

Why is this happening–and sooner than expected? Obviously, a full cargo of toxic mortgages accounts for the “sooner.” But Citi has been taking on water for several years now, after hitting an unseen (by Citi) submerged object called “customer resistance.” And the ship has been visibly visibly listing for the last year or so.

Customers are so thoroughly not buying into the business proposition that bigness is a customer benefit that Citi ran into a more powerful force-its customers. Companies can no longer navigate around customers, which is exactly what Citi tried. Think about all its branding, positioning, advertising. Total absence of customer benefits–including that woeful “Citi never sleeps” campaign that tries to sound customer-focused, but is really about the company and its “bigness.” All business, no core customer value proposition, and no humanity or warmth. And above all, no customer relationships, at least not on the retail side, where these essential things called “deposits” originate.

Hey, Citi adds more proof to the pile, as if we need any more, that companies can never outgrow customers. But they sure do continue to try. Go ask GM, which appears ready to cut in front of Citi. But that’s another story, another blog.

Interested in another projection of which companies are likely to join the parade? Although certainly not next in line, I’d start watching Amex. Same profile: arrogant, weak value proposition, confuses marketing bombardment with building customer relationships, convinced it’s too big to fail. Worth watching.

3 COMMENTS

  1. Graham – what I find most depressing about Citi headed south is that the business community will attribute the fall to toxic mortgages, ignoring the reasons why Citi was already in trouble.

    Regards,
    Dick

  2. So, Citibank is to be bailed out by the US government (read, taxpayers and future generations). What’s going to happen when the creditors start reeling in their loans to the world’s most indebted nation – the US? US government indebtedness has reached $11 trillion. This is going to be a massive burden for future generations. Perhaps we can expect Bono’s followers to appeal for US debt to be written off just as they’ve done for today’s third world nations.

    Francis Buttle, PhD
    The Customer Champion

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