AFTERWORD
“Charley, good morning! I just wanted to say hi,” said the woman with a graying pixie haircut and a nice Florida tan. She was wearing a handsome wool suit and a big warm smile, as though we were great friends. She seemed to know me, but I was embarrassed to be drawing a blank.
Then she continued, and I knew exactly who she was: “I’m Jean Dowling, and I just wanted to thank you for your letter.”
A few years ago, I’d been so appreciative of the years of superb professional service I’d been receiving from him that I asked my Vanguard Flagship representative, Chuck Dowling, to give me his parent’s mailing address so I could write them a short letter, congratulating them on being such wonderful parents. Chuck was always upbeat, consistently professional, quick to give help, and in every instance over many years always delivered outstanding service in an exemplary manner. As I told Chuck, it was my belief that a strong service-work ethic is usually learned at home from parents, and that as managing partner of Greenwich Associates, I’d enjoyed writing complimentary notes to the parents of our newly elected partners and now wanted to write one to his parents. On the third request, he relented.
Now I was meeting Jean Dowling for the first time and had the chance to thank her in person. Then she answered my unasked question: Why was she there? “I was a member of the crew for 32 years.”
Readers may wonder where we were and why. Jean and 400 others were gathered in March 2019 to celebrate the renaming of the Majestic Building on the Vanguard campus for Jack Bogle. I was there for two fascinating days of interviews with Vanguard’s senior leadership team as part of my research for this book. I was pleased to be a part of this “family” celebration among many Vanguard veterans who, like Jean, had served as Vanguard crew for over 30 years.
Organizational excellence has been the focus of my long career as leader of a professional firm, as strategy consultant to leading financial service organizations around the world, and as a student of great business organizations. It never “just happens.” Excellence, as every Olympic athlete knows, is always intensely deliberate.
While most who aspire to excellence fall short, they know their efforts—their striving for excellence—have been important to them. Not all Olympic athletes win medals, but all great athletes know the hard work and self-discipline that took them to the Olympic Games was well worthwhile; they will enjoy being recognized for the rest of their lives as Olympians.
When I made the commitment to launch Greenwich Associates to provide a new kind of strategy consulting service based on proprietary research, I knew that in addition to an effective business model, success would depend on attracting, organizing, and retaining first-rate people committed to high professional standards. Looking for books on leadership and management of professional service organizations, I was surprised to find so few. Most were celebratory biographies of remarkable people like David Ogilvy’s Confessions of an Advertising Man or dull, potted histories of law firms. Hardly any tried to come to grips with the important “how to do it” questions I would face and need to answer in real life and in real time. While some serious magazine articles were modestly helpful, most focused on reporting current events with little explanatory history or analysis.
The only way for me to learn what I needed to know and understand was to engage in my own primary research: ask, and ask, and ask again several hundred partner-level professionals at the leading firms in each professional field, particularly the firms recognized as exemplars. Every lawyer, doctor, consultant, accountant, investment banker, or investment manager I knew or met got asked the same question: “Of all the firms in your field, which are the very best—and why?” If asked for clarification of what would define “best,” I would respond: “If you faced a major, difficult problem, the one firm you would most like to have in your corner. Or, if someone important to you were pursuing a career in your field, the one firm—other than your own—you would most like to hear had been chosen.”
The first surprise was how often the same few firms were cited. Within each field, the best firms were widely acknowledged by their peers: in consulting, McKinsey; in law, Cravath; in health care, Mayo Clinic; in finance, Goldman Sachs; in investments, Capital Group.
The second surprise—mercifully brief—came when the idea of a rigorous comparative study was first put to the leaders of the chosen firms. “That makes no sense. Other firms are not at all like ours.” True enough for a leader thinking only about the other firms in the same field. But all agreed immediately that a careful comparison of the best firm in each field to the best firms in the other fields could be useful and interesting.
The third surprise developed during the investigation of how and why each of the great firms had risen to the top of its field—and stayed at the top through at least three generations of leadership. (That criterion for inclusion in the winners’ circle of great firms was admittedly arbitrary, but it makes sense. The only challenge more daunting than rising through the ranks of the good and then the better firms to recognition as the field’s best firm was to sustain excellence over many years of changing leadership, changing environments, changing competitors, changing client needs, changing technologies, and changing laws.) Over time, every organization faces many challenges, and some of those challenges, whether originating internally or externally, can do grievous harm. Resilience—how well each does at identifying and diagnosing difficulties and deliberately overcoming them—is crucial to sustaining excellence. Because they have had to, all great firms have shown extraordinary capability at self-diagnosis and self-correction or self-renewal. The best test of superior resilience is the well-known test of time: sustaining excellence.
The fourth surprise was how few and how consistent—virtually identical—the key factors were from great firm to great firm. The specifics of their fields differ in important ways, and their own implementations differ in details. But the core commitments of the great firms are all profoundly alike:
• Mission: an inspiring sense of overarching purpose.
• Client-centered: a persistent determination to serve clients more effectively than any other firm.
• Culture: a “tribal” commitment to teamwork, the better to serve clients unusually well.
• Recruiting: a disproportionate commitment to identify and attract the most capable, committed individuals with the strongest personal need to succeed.
• Training: an unusually strong, sustained commitment to accelerate the professional and personal education of each new joiner.
• Innovation: repeatedly searching for and finding new ways to serve clients more effectively in small ways and large.
• Leadership: brings all these components together and ensures that the organization excels continuously on all the other vital dimensions.
Of course, simultaneous success on all seven key success factors has always been a lot to ask of any organization, particularly over a long time. But sustained excellence on the full range of factors across many years and for many clients is exactly what makes all the great firms true champions. For them, as Aristotle suggested long ago, happiness comes from performing along lines of excellence, and excellence is what we repeatedly do. That’s why this study of Vanguard and how it became the organization millions of investors trust with their savings is so worth pondering.
Readers may ask, “Why in that original study was Vanguard not included?” Simple answer: to be sure the success was organizational and not due to one or two great leaders, an arbitrary requirement was set of at least three different leaders over time. And when my research for What It Takes1 began, Vanguard had had only two. Now, of course, it has had four CEOs. Vanguard has proven that it has institutionalized its striving for continuing excellence on all seven dimensions.