Can a long-vibrant
institution be kept alive – however steeped in tradition and a long history of value
to society – when it falls into terminal decay? Should it be? 

My recent travel for
the graduations of two young friends, to a city dominated by its colleges and
universities, meant a scramble for lodging – eventually solved by scrounging a comfortable
but well-worn guest room in an old alumni club.

Regular readers
familiar with my concern (see here,
here and here) for the survivability of the Big Four’s franchise
to deliver audit services to the world’s large companies – an invention of the
Victorian era and basically unevolved since – will recognize some lessons in
the death spiral of this 19^th century landmark, now fallen to seedy
and tattered gentility:

What
happens to a resource — once grand, respected and important — but now clearly
of faded glory and on its last legs?

Designed and purpose-built
as a private club by architects of world renown, this institution stood proud
witness to the Gilded Age, populated by men of stature and significance:

• Tons of
  marble, forests of hardwoods and acres of oriental carpet were assembled into brahmin
  luxury – sadly now dulled, dusty and threadbare testimony to by-gone times.

• Among
  the eccentric anachronisms in the entrance foyer are carved wooden indian
  busts, towering grandfather clocks, and the battered bronze gate on the ancient
  elevator that could have been installed by Otis himself.

• Aside
  from a bare-bones website, “information technology” consists of reservations hand-written
  on a stack of file cards.

• The
  limited “scope of services” reflects unchanged priorities – an unused billiards
  table in the bar and a tuneless grand piano in the parlor, instead of the
  demands of today’s young professionals for an exercise room, a swimming pool, and
  a media center complete with juice bar.

During my stay I
had a choice of empty rooms in which to establish a virtual working office. The
club has so little cachet that it does not even attract members to post-lunch
naps in the deep leather chairs of its reading room.

On a daily basis,
dining and meeting venues are ghostly, echoing with the footsteps of a diminished
skeleton staff. Friendly as they are, the kitchen is closed on weekends, there
is no newspaper delivery, and party leftovers go uncleared until the arrival of
the Monday crew.

The club survives
not on the custom of its elderly and steadily diminishing membership, but on
outsourced catering for wedding receptions and other rituals, for strangers
whose ethnic names and lands of distant origin would have meant instant
blackballs had their grandfathers been so foolish as to apply for membership.

The club’s
contentious struggle over the admission of women came to a formal end decades
ago – grudgingly, as shown by their then-required use of the side entrance
rather than the front door. Even today, the true degree of gender balance is
revealed in its governance: the only board committee listing more than one
woman member is Decor.

On the financial
side, the members have burdened themselves with a multi-million dollar mortgage
on their historic clubhouse – a deadly strangulation of debt that cannot trace
to the prosperity of its founding generation. This looming threat to solvency most
likely arose from the unavoidable costs of essential if long-deferred
maintenance, building code compliance, and the rapidly escalating property taxes
in its pricey neighborhood.

As for the future,
when the denial finally ends and the doors close on the club’s unsustainable
model? Institutional memory will dissipate. The handful of users will disperse
to modern alternatives with only a brief spasm of nostalgia. The archives and
artifacts will be auctioned off for trivia.

Sale of the
building will generate a one-time windfall to be fought over with the passion
of the depleted. It will be paid in by an investor looking to a newly-designed
future – a twenty-something new-media billionaire or the sovereign fund of an
oil sheik – who will overcome furious if futile neighborhood opposition and
install an amenity-laden boutique hotel.

The parallels of this
poor failing club to the exhausted state of the Big Four audit franchise are
many and clear: limited service offerings unchanged since the 19^th
century, an obsolete organizational and operating model ill-suited to current
competitive demands, and inflexible financial fragility exposed to fatal
external shocks. 

With the students in
my graduate-level course in Risk Management, I would assign this exercise in extended
metaphor as overnight homework. In the academic spirit of the graduation
ceremonies that underlay my traveler’s experience, I invite readers here to do
that for yourselves.

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