Remarks by John C. Bogle
Founder and Former Chairman, The Vanguard Group
Park Distinguished Lecture Series,
The Samuel Curtis Johnson Graduate School of Management
Cornell University, Ithaca, NY
April 10, 2002
Given the list of outstanding business
leaders who have participated in the Park Distinguished Lecture
Series, it is with considerable humility that I appear before you
this afternoon. My message, I suspect, will be different from what
you might expect. I am aware that there are 10,912 books on Amazon.com
that have either "leader" or "leadership" in
their title, an intimidating array of advice that indicates that
there are lots of experts out there who may have more ability than
I to describe the effective leader. And I do not have for you, as
some of these books do, 21 indispensable qualities of leadership,
nor 50 leadership lessons such as Moses is purported to give us,
nor can I tell you how to be a manager in one minute, nor, for that
matter, do I know who moved your cheese.
But the more I consider the subject, the more I am
persuaded that there are few secrets of leadership beyond those
obvious qualities that our own common sense would suggest. Most
leaders are intelligent; few lack determination; most trust their
people and like to get things done; virtually all work hard; and
their strong points usually include some courage and creativity.
Doubtless 100% of leaders would say integrity is essential,
although experience shows that less than 100% meet that standard.
And surely significant levels of qualities such as self-discipline
and judgment and knowledge and education and foresight are more
the rule than the exception among leaders. But you already know
that these are the characteristics of leadership. You've read about
them time and time again; to a greater or lesser degree, you are
doubtless endowed with them; and, even at your relatively young
ages, you've already had occasion to put them into practice in your
There are two important qualities about which you
don't hear very much, however, perhaps because many leaders
don't like to write about themor even think about them.
One is the helping hands that virtually all individuals have
received in their ascent to positions of leadership from bosses,
mentors, and colleagues. The other is the sheer, unadulterated luck
that has been essential to their career success. Once the obvious
characteristics of leadership I've cited have been established in
an individual, these two factorswhich are of course, beyond
our direct controlmay be the most important of all.
If all of these qualities and circumstances are the
conditions necessary for effective leadership, however, they
are not by themselves conditions sufficient. I happen to
believe that the central quality of leadershipthe essential
quality in the character of the complete leaderis virtue:
The conformity of one's life and conduct with the principles of
morality. While it is a word that tends to embarrass us today, virtue
is the keystone that supports the arch of leadership.
The Virtuous Leader
The virtuous leader, it seems to me, is a person
who initiates and directs an endeavor in the principled pursuit
of a project of consequence. If leadership has to do with the passion
to undertake such a mission, and the ability to persuade other human
beings to go along with you, the journey ought to be exciting and
the destination worthwhile. The pursuit, then, ought to be one that
will make a positive differencelarge or smallin the
I'm not speaking solely of the entrepreneurial souls
who create new businesses and improve existing ones, nor am I speaking
of the chief executives that our society lionizes (to extremes)
today. We need leaders at all levels of business, the department
heads, the division managers, the directors of small projects, even
the supervisors of a few menial workers. For as Helen Keller reminded
us, "The world is moved along not only by the mighty shoves
of its heroes, but by the aggregate of the tiny pushes of each worker."
Make no mistake about it: For any corporation that strives to develop
the kind of character that it will enable it to build, not a higher
stock price in the short run, but a higher corporate value
in the long run, virtue is a mighty force at all levels of responsibility.
Today, more than ever, we need companies with character,
operated from the highest job levels to the humblest, by individuals
with character. Yet, "character" is not a word I see used
very often, at least in the sense of what I regard as its most important
meaning. Paraphrasing the Oxford English Dictionary, character is:
"the sum of the moral and mental qualities of an individual
or an enterprise." The OED II then includes a lovely citation
in which character is described as the intellectual and moral
texture into which all our life long we have been weaving up the
inward life that is in us.
So, how do we tie-in the attributes of virtuous leadership
with the attempt to build a company with character? Perhaps recounting
some of Vanguard's story may put a little meat on the bones of my
generalizations. While I've never been very confident of my qualifications
as a leader, truth told, I probably share with you, to a greater
or lesser extent, most of those generic attributes of leadership
that I reeled off at the outset. But I am absolutely certain that
I'm a living monument to the role of luck in shaping a career, and
equally certain that I benefited by having one of the great mentors
in all business history. And I've spent the past 28 years of my
long career trying to build a company with character.
Let's begin with the luck. Even being admitted to
Princeton University in the late summer of 1947, let alone being
given the scholarship and the student job (first as a waiter) without
which I couldn't have attendedwas a piece of remarkable luck.
While I was a determined student, I was no academic star. What is
more, I boasted few of the impressive extra-curricular achievements
and none of the athletic talents that seem to be prerequisites for
admission to Ivy League institutions today.
Once in the door, I did my best. Inch by inch, step
by step, I gradually moved my grades out of the commonplace into
an academic record of solid accomplishment. But it was an extraordinary,
even miraculous, accident of fate that made the difference. In the
late autumn of 1949as an Economics major seeking a subject
for his senior thesis and, ever the contrarian, rejecting any subject
on which any earlier thesis had been writtenI strolled
into the University library, opened up the December 1949 issue of
Fortune and, leafing through the magazine, found on page
116 an article about the mutual fund industry"Big Money
in Boston." When I read that "mutual funds may look like
pretty small change" but constituted a "rapidly expanding
and somewhat contentious industry that could be of great potential
significance to U.S. business," I knew immediately that I had
found my topic. After a year-plus of intense study, I completed
the thesis, graduated (unbelievably!) with high honors, and sent
it to several industry leaders. Princeton alumnus Walter L. Morgan,
industry pioneer and founder of Philadelphia's Wellington Fund,
liked what I had written and was later to write: "a pretty
good piece of work for a fellow in college without any practical
experience in business life. Largely as a result of this thesis,
we have added Mr. Bogle to our Wellington organization." I
started my new job right after my graduation in 1951.
I was lucky too that in those days, following the
depression years of the 1930s, few young men had entered either
the investment field or the then-tiny mutual fund industry. When
I joined Wellington Management Company, which managed Wellington
Fund, it too was tiny. I moved up rapidly; in less than a decade,
I had become Mr. Morgan's heir apparent. This great manwhom,
I was told decades later, thought of me as the son he never hadbecame
my sponsor and mentor. He held me to high values and unsparing standards
of performance, and we remained friends for a full half-century
until his death, at age 100(!), four years ago. By the early 1960s,
I was deeply involved in all aspects of the business, and, in early
1965, when I was just 36 years old, he told me that I would be his
successor. The company was in troubled straits, and Mr. Morgan asked
me to "do whatever it takes" to solve our investment management
A Merger and a Firing
In what I thought at the time was another piece of
luck, I quickly found, in Boston, a merger partner that I hoped
would provide the solution. We merged our firm with theirs in 1966.
Alas, despite the early glitter, the substance proved illusory.
The merger worked beautifully for about five years, but both I and
the aggressive investment managers whom I had too opportunistically
sought as my new partners let our fund shareholders down. In a bear
market that saw stock prices decline by a devastating 50 percent,
some of our funds did even worse. Not surprisingly, my new partners
and I had a falling out. But they had more votes on the Board, and
it was they who fired me from what I had considered
I had failed our shareholders and I had failed in
my careernot in getting fired, but in jumping on the speculative
bandwagon of aggressive investing in the first place. I can only
be embarrassed about the fact that my determination to move quickly,
my naivete, and my eagerness to ignore the clear lessons of history
led me into such an error of judgement. Life was fair, however:
I had made a big error and I paid a high price. I was heart-broken,
my career in shambles. But I wasn't defeated. I had always been
told that when a door closed (this one had slammed!) a window would
open. I decided that I would begin not only a new career, but one
that held the promise of changing the very structure under which
mutual funds operated. I would make the mutual fund industry a better
place to invest.
The Source of the Idea
Amazingly, that idea of creating a new structure
for mutual funds may well have had its genesis in my Princeton senior
thesis of a quarter-century earlier, which I had concluded with
some ideas that I thought would accelerate the industry's future
growth: Reducing sales loads and management fees, toning down excessive
claims of stock-picking ability, and focusing on management
rather than peripheral activities like marketing. I had also asserted
a higher purpose for the industry: "The prime responsibility
of mutual funds must always be to serve . . . to serve their
shareholders in the most efficient, honest, and economical way possible."
Simply put, I argued, the mutual fund industry would do better for
itself if it gave its shareholders a fair shake. That concept would
became the rock on which a new firm was founded a quarter-century
But how could that goal be accomplished? Again, with
the essence of simplicity. Why should mutual funds retain an outside
company to manage their affairsthen, and now, the modus
operandi of our industrywhen, once they reach a critical
asset mass, funds were perfectly capable of managing themselves
and saving a small fortune in fees? Our mutual funds would, uniquely,
be truly mutual. They would be run, not in the interest
of an external advisera business whose goal was to earn the
highest possible profit for itselfbut in the interest
of their own shareholder/owners, at the lowest possible cost.
Steps and Stumbles
Just as lightning had providentially struck in the
form of an article in Fortune in 1949, so it struck again
in the pages of an antique book during the summer of 1974. I happened
upon The Naval Achievements of Great Britain1789-1817,
and read for the first time the saga of the great British victory
over Napoleon's fleet at the Battle of the Nile in 1798. When I
read Lord Nelson's inspirational congratulatory dispatch to his
crew, signed on the deck of his flagship, HMS Vanguard, I
knew immediately that I had found the name for my new company. The
Vanguard Group of Investment Companies was launched on September
24, 1974. Just as during the Napoleonic wars, Nelson's fleet had
come to dominate the global seas, I hoped that, under its unique
mutual structure, our new flagship would come to dominate the mutual
Vanguard, owned by the mutual funds we managed, began
with a narrow mandate: To handle solely the administration
of the funds, a function that comprises but one of the three sides
of the triangle required for mutual fund operations. Our tiny staff
numbered only 28 members, and we were in no position to undertake
the two more critical sides of the triangleinvestment management
and share distribution. Yet I fully realized that our destiny
would be determined by what kind of funds we created, by whether
these funds could attain superior investment returns, and by howand
how effectivelythe funds were marketed. So we quickly set
out to capture the two remaining sides of the triangle.
The fact that investment management was outside of
Vanguard's mandate led me, within just four months of our start,
to an action, then unprecedented, that today seems obvious. Based
on anecdotal evidence on mutual fund performance that I accumulated
as I prepared my Princeton thesis, I had concluded that funds could
"make no claim to superiority over the market averages."
When I wrote those words in 1951, it may well have been the moment
the seed was planted that was to germinate into Vanguard's formation
of the world's first market index mutual fund. The simple solution
to the problem of market-lagging performance was all too obvious:
We would form an index fund that would simply match the stock
An Index Fund, a New Distribution Network, a Novel
Within three more months, we had formed the fund
and put together a group of Wall Street underwiters to engage in
an initial public offering. It raised a puny $11 million dollars,
but First Index Investment Trust (now named Vanguard 500 Index Fund)
had been born. If we were right about the power of indexing, it
would begin to grow. While the pace of acceptance was glacialat
the outset it was called "Bogle's Folly"today "Index
500" is the largest mutual fund in the world. And by starting
and operating the index fund, we had edged into the second
sidethe investment sideof the fund triangle.
Only a few more months had passed when we took our
second crucial step to expand our investment mandate. Just as I
had come to believe that precious few stock managers could outguess
the stock market (hence the index fund), so I had come to believe
that precious few bond managers could outguess the bond market by
accurately forecasting the direction and level of interest rates.
Yet our peers were offering "managed" funds that implicitly
promised they could do exactly that. Here was an opportunity to
depart from the crowd and form not a single tax-exempt bond fund,
but a three-tier bond fund with a long-term series;
short-term series; andyou guessed it!an intermediate-term
series. All would be available without sales loads and at minimal
cost. It's difficult, in truth, to imagine a more obvious and banally
simple idea. But it had never been done before. Almost overnight
it changed the way investors would think about bond investing. Today,
this structure is the industry standard.
Taking control of the third and final side of the
triangleshare distribution demanded an equally unconventional
approach. We would do away with our reliance on the network of broker-dealers
that were responsible for the lion's share of mutual fund industry
sales, and eliminate the very need for distribution. We would
rely, not on sellers to sell fund shares, but on buyers to
buy them. In February 1977, we took that step, marketing
the shares of Vanguard funds directly to investors and free of all
sales loads, another decision without industry precedent. And by
taking control of our marketing, we had completed the triangle and
become a full-service fund organizationall within 22 months
from the day we opened our doors.
Strategy Follows Structure
Our low-cost, mutual structure, then, played not
just a vital, but essential, role in shaping our investment strategy
and our marketing strategy alike. It established us as industry
leaders not only in index funds and bond funds, but also in the
then-burgeoning money market fund arena, where the link between
lower cost and higher yield is virtually dollar for dollar. The
(no-load) direct-distribution channel was clearly its logical, investor-friendly
correlative. Strategy follows structure. Long before the
movie Field of Dreams popularized a phrase that inspired
the creation of a baseball diamond in Iowa, our corporate strategy
was based on this now familiar tenet: If you build it, they will
come. While it took years for the financial world to recognize
the intrinsic value of the investment diamond that our new
structure represented, and of the particular brand of mutual funds
fostered by that structure, the investors finally came. And they
came by the millions.
Despite the tough early years (82 consecutive months
of capital outflows), we grew as the stock market recovered from
the depths of 1974. But by 1980 our assets had doubled, from $1.4
billion to $3 billion. Assets doubled again to $6 billion in 1983,
again to $12 billion in 1985, again to $24 billion as 1986 ended,
again to $48 billion in 1989, once again in 1992 to
nearly $100 billion, then to $200 billion by mid-1996, and doubled
yet again to $400 billion in 1998a 24-year period which
saw our assets double, with remarkable consistency, every three
years. No one thought that remarkable record could continue. It
didn't. Nonetheless, despite the tough financial markets since the
stock bubble burst in March 2000, our assets now exceed $600 billion.
Today, the 56(!) Vanguard funds following our three simple, basic
strategiesstock index funds, three-tier bond funds, and money
market funds, all structured to reflect our low-cost advantage in
the most obvious, most favorable lightare the powerful engines
that drive our growth, now constituting 75% of our asset base and
more than 100% of our net cash inflow. The majesty of simplicity,
Developing a Corporate Character
By dint of lots of luck, a wonderful mentor who taught
me much about leadership and values, a common sense structure, and
a strategy that logically followed, we had a firm ready, willing,
and able to take on, in the crucible of competition, the very mutual
fund industry whose values I had challenged in my thesis. We had
established a business strategy that was the logical consequence
of our corporate character. But there remained the question
of what kind of human character the firm would rely upon
to implement that strategy. While in retrospect this character seems
innate, even organic, naturally flowing from Vanguard's genetic
heritage of service to investors, it still had to develop on its
While it didn't occur to me when Vanguard came into
existence, we would come to resemble, albeit imperfectly and in
our own halting way, what Robert Greenleaf was describing when he
spoke about building a model institution. Greenleaf, the driving
force of what we now know as the Servant-Leadership movement, was
inspired by the idea of leading the nation's large institutions
to better performance for the public good. He spent most of his
long career with AT&T, and in August 1974as it would happen,
at the very moment Vanguard was being createdhe gave
a speech about building a model institution, identifying these four
cornerstones. Here's what Mr. Greenleaf said:
- First, An understanding of leadership and followership,
since everyone in the institution is part leader, part follower.
If an institution is to achieve as a servant, then only those
who are natural servantsthose who want to lift othersshould
be empowered to lead.
- Second, An organization structure focusing
on how power and authority are handled, including a discipline
to help individuals accomplish not only for themselves, but for
- Third, Trustees, persons in whom ultimate
trust is placed, who stand apart from the institution with more
detachment and objectivity than insiders can summon.
- And fourth, A concept of a distinguished serving
institution in which all who accept its discipline are lifted
up to nobler stature and greater effectiveness than they are likely
to achieve on their own or with a less demanding discipline.
It was not until 1998, nearly a quarter century later,
that I read Robert Greenleaf's speech. I was thunderstuck
by how each of those four powerful points echoed my vision for Vanguard.
While I cannot say that we began with an understanding of leadership
and followership, I can say that much of my career has been
spent developing similar concepts. In one of my early talks to our
tiny 28-person original staff, for example, I said, "I want
every one of us to treat everyone else here with fairness. If you
don't understand what that means, stop by my office." I constantly
stressed the values that I wanted Vanguard to exemplify, above all
the need to recognize that both our clients and our staff be treated
as "honest-to-God, down-to-earth human beings, with their own
hopes, fears, ambitions, and financial goals."
Over the years, I have come to love and respect the
term "human beings" to describe those with whom I serve
and those clients whom we at Vanguard together serve. In a talk
at Harvard Business School on how our focus on human beings enabled
us to become what HBS saluted as a "service breakthrough company,"
I challenged the students to find the term "human being"
in any book they had studied on corporate management. As far as
I know, none have met the challenge. But, it is human beings
who are at the core of both our service strategy and our corporate
In our organization structure, power and authority
would rest, not with the managers (as is the mutual fund industry
convention) but with the fund shareholders. Of necessity, to be
sure, much of the power would be delegated to the managers, but
the ultimate authority would be vested in the collective power of
those we serve. One rule set forth in modern-day business books
is, "treat your clients as if they were your owners."
It is a rule that is particularly easy for us to observe: Our clients
are our owners.
That said, it's easy for me to imagine that, especially
in our early years, Mr. Greenleaf might have looked at my leadership
style with a jaundiced eye. The going was tough, and my vision so
crystal-clear about what I wanted Vanguard to bewhat funds
we should have, how they should be managed, how to drive our costs
to rock-bottom-levelsthat I may well have been closer to benevolent
(I hope!) despot than servant-leader. But there was work to be done,
and by God, we'd get it done together.
As to trustees, our Board was comprised of truly
independent trustees from the outset. They would be able to provide
objectivity and detachment, and the ultimate trust would be placed
in them. Of our ten trustees at the outset, I alone was a Vanguard
officer. As Board Chairman, a role I filled from our inception to
1998, I'm sure I was not regarded as a shrinking violet, but I had
no doubt that it was my duty to justify to this higher authority
my every major move.
And surely our original concept echoed Mr. Greenleaf's
idea of a distinguished serving institution. Our goal was to transform
the very focus of a mutual fund business from serving two masterssomething
the apostle Matthew describes as, well, impossiblethe fund
shareholder and the owner of the funds' external manager-adviser
alike. We would be the servant of the fund shareholder alone. In
effect, our fund shareholders would become the beneficiaries of
the entrepreneurial rewards that managers traditionally arrogate
to themselves. If this concept can be said to lift a fund enterprise
to nobler stature, so be it.
Greenleaf on Leadership
Even when he talked about his dream of a model institution,
Robert Greenleaf had the characteristics of the leader very much
on his mind. He was fond of quoting Polaroid founder Edwin M. Land,
who spoke of the opportunity for greatness for the many: "Within
his own fieldlarge or small, lofty or mundanehe will
make things grow and flourish; he will grow happy helping others
in his field, and to that field he will add things that would not
have been added had he not come along." But, Greenleaf added,
greatness is not enough. "Foresight is crucial. The lead that
the leader has is his ability to foresee an event that must be dealt
with before others see it so that he can act on it in his way, the
right way, while the initiative is his. If he waits, he cannot be
Describing such leaders, Greenleaf added,
". . . The great leaders are those who have invented roles
that were uniquely important to them as individuals, that drew
heavily on their strengths and demanded little that was unnatural,
and that were right for the time and place they happened to be.
"Caring for persons, the more able and
the less able serving each other, is the basis of leadership,
the rock upon which a good society is built. In small organizations,
caring is largely person to person. But now most caring is mediated
through institutionsoften large, complex, powerful, impersonal,
not always competent, sometimes corrupt.
"To build a model institution, caring
must be the essential motive. Institutions require care, just
as do individuals. And caring is an exacting and demanding business.
It requires not only interest and compassion and concern; it demands
self-sacrifice and wisdom and tough-mindedness and discipline.
It is much more difficult to care for an institution, especially
a big one, which can look cold and impersonal and seem to have
an autonomy of its own."
While in 1986 I had not read the essay by Robert
Greenleaf from which those wonderful, inspirational words were excerpted,
I had read an earlier speech which echoed those ideasa
speech given in 1972 by Howard W. Johnson, chairman of the Massachusetts
Institute of Technology. It inspired me profoundly, and in a speech
I gave to the Vanguard staff in 1986 I quoted from it as follows:
The institution must be the object of intense human
care and cultivation. Even when it errs and stumbles, it must
be cared for, and the burden must be borne by all who work for
it, all who own it, all who are served by it, all who govern it.
Every responsible person must care, and care deeply, about the
institutions that touch his life.
That 1986 speech was but one of many times when I
spoke of the importance of caring. Again and again, I reminded our
crew (I found the word "employee" distasteful, and banned
its use at Vanguard, substituting "crewmember," a play
on the naval theme that became part of our heritage) that "only
if we truly care about our organization, our partners, our associates,
our clients, indeed our society as a whole, can we preserve, protect,
and defend our organization and the values we represent." I
re-emphasized our responsibility "to faithfully serve the honest-to-God
human beings who have trusted us to offer sound investment programs,
with clearly delineated risks, at fair prices. We must never let
I assure you that our philosophy goes far beyond high-minded
words. Talking the talk without walking the walk will not
get any leader very far. Caring for our clients has been reflected
from the day we began, with a corporate structure that puts them
in the driver's seat, providing our services on an "at cost"
basis to assure them of their fair share of whatever returns the
financial markets are generous enough to provide, a strategy that
focused on funds that leveraged that cost advantage, and complete
candor in our communications with them, describing not only the
rewards of investing but the risks and the costs. Its hard to imagine
that our standard-setting hasn't provided us with a huge competitive
advantage. Indeed one of our industry rivals was moved to publicly
state that, "Vanguard sets the standards by which we should
all measure ourselves."
Communicating the Message
Never forget that without implementation, ideaseven
common sense ideas that involve a healthy measure of virtueget
nowhere. From the outset, I was well aware that it was crucial for
our crewmembers not only to understand our mission, but to believe
in it. What is more, they had to believe that our caring would encompass
their own careers, their lives, their hopes and dreams. Among the
ways we hoped to do this was in recognizing individual achievement
through our Awards for Excellence. This program recognizes that,
in one of my favorite phrases, "Even one person can make a
difference." Begun in 1982, it provides modest financial rewards
but strong recognition from the top. (I still spend an hour with
each winner, presenting him or her with an autographed copy of one
of my books.) Another is a regular (and anonymous) survey of their
attitudes about their work at Vanguard. Another is our "Crewnet"
website, where our crewmembers can learn about almost everything
that is going on in their company, at almost every moment.
But the most tangible way we show that we care about
our crewand that we want them committed to delivering our
services at low costis the Vanguard Partnership Plan. Through
this plan, installed in 1984, each and every crewmember receives
a share of the extra earnings we deliver to our fund shareholders,
based on our cost savings and our ability to outpace the returns
delivered by our mutual fund peers. Each June, we hold a celebration
to announce the earnings, and every crewmember shares in them, based
on his or her salary grade and years of service, with a maximum
bonus equal to 30% of annual compensation. Yes, money talks.
But it tells precisely the message we want to deliver to our crew.
We work to serve our clients.
There's also another kind of talk going on
at Vanguard. Ever since we began, I've given scores of speeches
to our crew, driving home our mission, assuring crewmembers of our
concern for them, describing competitive challenges and industry
developments, and trying to give them some sense, not only of our
goals and strategies, but of the character and values of the firm,
and, for that matter, the character and values of its founder. I
revel in the opportunity to talk to our crew, to let them see who
I am, to thank them, and to encourage them to think deeply about
our company and our mission.
These speechesI hope that I don't need to tell
you that I write them myself!have covered a multitude of themes,
and perhaps just a few of their titles will make the point: A
Time to Dance (the first celebration, at the $3 billion mark).
A Course Made Good Upon God's Ocean (1983). Vanguard and
Victory (two of Lord Nelson's flagships, at $10 billion in 1985).
Tradition (1988). The Impossible Dream (the same year).
If You Build it, They Will Come (1990). Creative Destruction
(1991). Character (1993). A Company that Stands for Something
(2000). (All 42 speeches have just been published as part of my
new book, Character Counts.)
I cannot overstate how important communication is
to the leadership of any group, of any size, with any task. By fantastic
luck and with a gracious mentor, perhaps a good measure of determination
and some common sense, and what one writer described as "the
uncanny ability to recognize the obvious" (now there's
a paradoxical description!), I had been given the opportunity and
the responsibility to create, to shape, to direct, and to build
an enterprise. I was darned if I wasn't going to make the most of
it! But I realized that, however powerful were the simple investment
ideas and fundamental human values that I wanted to put into place,
I couldn't possibly do it alone. I had to bring the crew along with
me, not reluctantly, not even willingly, but enthusiastically.
The Superior Company?
Again, Robert Greenleaf's ideas provide a remarkable
echo of what I was trying to do: He talked of "the superior
company," and described it this way:
What distinguishes a superior company from
its competitors are not the dimensions that usually separate companies,
such as superior technology, more astute market analysis, better
financial base, etc.; it is unconventional thinking about
its dreamwhat this business wants to be, how its priorities
are set, and how it organizes to serve. It has a radical philosophy
The company's unconventional thinking about its
dream is (often) born of a liberating vision. Why are liberating
visions so rare? Because a powerful liberating vision is difficult
to deliver. That difficulty of delivery, however, is only
half of the answer. The other half is that so few who have the
gift for summarizing a vision, and the power to articulate it
persuasively, have the urge and the courage to try. But there
must be a place for servant-leaders with prophetic voices of great
clarity who will produce those liberating visions on which a caring,
serving society depends.
I leave to far wiserand more objectiveheads
than mine the judgment about whether or not Vanguard meets the definition
of a superior company. Of course, I hope it does. But I have no
hesitancy in saying it is the product of unconventional thinking
about what we want to be, about how we set priorities, and about
how we organize to serve our clients. While I'm sure that our competitorseven
the most successful of themlook with a sort of detached bemusement
and skepticism at our emergence as an industry leader. But we have
dared to be different, and it seems to be working just fine.
Let me closeand perhaps surprise youby
coming full circle, and listing what I hope you will remember as
my own seven secrets of effective leadership:
- Remember virtue, and be as virtuous as you can.
- Be yourself. People can spot a phony a mile away.
- Don't forget humility, and acknowledge the role
that luck and mentors have played in your success.
- Character Counts. If you want to build an enterprise,
build one with character.
- When a door slams, have faith that a window will
- Human beings are what business is all about. Communicate
that idea both in word and deed, endlessly.
- And never, never forget that the best leaders
are servants too.
Note: The opinions expressed in this article do not necessarily represent the views of Vanguard's present management.
to Speeches in the Bogle Research Center
©2006 Bogle Financial Center. All Rights Reserved.