John Marcante, CIO and Managing Director, of Vanguard, the largest mutual fund company in the world, manages an organization of thousands of IT personnel who support more than 14,000 employees. In a company where data is, essentially, the product, the IT organization must consider “continuous improvement” to be its steady state.
When I first spoke to Marcante, a few months ago, I found his approach to communication, innovation, and leadership development to be so clear, smart, and effective that I followed up to ask him for a formal interview. I’ve broken the interview into two blogs: The first is on Vanguard’s approach to leadership development. The second will address Marcante’s approach to communicating IT strategy and driving innovation.
How are you developing executives with the right blend of IT and business experience?
Three competencies: Our theory is that to be a great leader, you need three sets of competencies. First, you have to have solid technical skills and understanding – you certainly can’t get a pass on that in IT. Second, you have to understand our business and our industry. When you have that added dimension, you create fertile ground for innovation. Finally, you need leadership competencies to turn those innovative ideas into real value. Persuasion, influence, relationship management, communication – it’s a high bar, but it’s the right expectation for our leaders.
The C-Suite Must Understand Technology
I personally feel that this competency model doesn't just apply to IT professionals. All of our leaders, including the C-suite, should understand the role that technology plays for our business. Technology can be an enabler, driving top-line growth and improving our client experience, but it can also be an enabler to disruptive competitive forces. It is critical that leaders of today and of our future understand technology. At Vanguard, during any given moment, we have at least ten times the number of clients interacting with us over digital channels as opposed to traditional channels; digital arguably represents our most important business channel.
As an example of how important technology savviness is, our chairman is championing a multi-day off-site dedicated to disruptive technology for the C-suite to see what technologies leaders in the tech industry are placing their bets on. We understand that technical expertise is not a need for one individual; it’s a competency need for the entire team.
Technology Leadership Program
To develop these competencies in our IT leaders, we use a number of tools. We have a Technology Leadership Program targeted at new hires, which rotates people through various areas of IT to build out their technical expertise. This is combined with business acumen and professional development training to lay a solid foundation for those other two dimensions. This program also serves as a great tool for attracting talented potential leaders.
We believe that rotations and assignments are important in helping our people to understand the business and build credibility, and it gives leaders a more holistic view of things. So we send high-potential performers through various areas of our business like our Corporate Strategy unit or our Center for Excellence, our internal Six Sigma organization. In these assignments they are able to work with other leaders from around the company and on creating strategic insights or solving business problems. Higher education can play a role here as well. We provide assistance in pursuing graduate education, and many leaders choose to get an MBA. Some of our IT professionals even pursue CFA (Chartered Financial Analyst) and other financial certifications for a deeper understanding of the business they work with.
Leadership Training for Non-Management Roles
The challenge in IT is that the work of engineers is so complex that it takes a long time for an engineer to be ready for management. So, how do you give leadership experience to engineers without waiting years until they are ready to be a manager? We thought about that and came to the conclusion that there are many other roles in IT, in addition to managing people, that teach you to lead and communicate and influence and drive change. If you are a scrum master or a project manager, you have to use all of those leadership skills. These non- management roles are rich ground for leadership development. We find that by rotating people through these roles, we are able to develop them as leaders much more quickly than if we waited for them to be promoted to manager.
We also rotate our IT people into non IT roles. In fact, many of our engineers are so analytical that when we put them under a portfolio manager or in a risk area, the managers love them because they are analytical at heart.
We also rotate people within IT, but through the different business areas. So, if you are in the applications department, you will move through the different business support areas. So, you’ll stay in IT, but you might rotate through our advice, international, institutional, 401(K) retail, and other businesses.
One piece of advice on rotational programs: Don’t worry that you are sacrificing specialization for general skills. Traditional thinking is that technologists need to be specialists, but we have found that in rotating our people through different businesses areas and technology areas, they wind up with the ability to work in a broader set of roles, and they are in very high demand.
About John Marcante and Vanguard
John T. Marcante is Vanguard’s chief information officer and managing director of Vanguard’s Information Technology Division. Vanguard is the world’s largest mutual fund company with more than $2.6 trillion in global assets under management. Mr. Marcante oversees all aspects of Vanguard’s worldwide technology agenda to serve clients and manage investments. Mr. Marcante, with more than 26 years of experience in the business and technology fields, joined Vanguard in 1993. After serving in a number of leadership roles throughout the company, he returned to the IT division in 2012 and was named Vanguard’s chief information officer and managing director.
From 1998 to 2001, Mr. Marcante led Vanguard’s Institutional IT organization, supporting Vanguard’s Institutional Investor Group, which serves institutions, such as endowments and foundations, and is a leading provider of company-sponsored retirement plans.
Shortly after September 11, 2001, Mr. Marcante became the head of Global Technology Operations, focusing on data center management and disaster recovery. He was responsible for building out and managing Vanguard’s global infrastructure.
From there, Mr. Marcante moved from IT to lead Vanguard’s Unmatchable Excellence program in 2004, where he managed Black Belts throughout the company with the chief purpose of creating an internal Six Sigma and Lean consulting organization focused on helping Vanguard’s businesses achieve their strategic goals. The following year, Mr. Marcante rotated to Vanguard’s Advice Services organization, where he managed CFPs (Certified Financial Planners) with the mission of re-engineering how Vanguard serves clients with financial advice.
In 2006, Mr. Marcante assumed leadership of Vanguard’s Asset Management Services and the Flagship group, which serves high-net-worth individuals. He led a major effort to reinvent the Flagship service model to maximize client loyalty.
Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies and a leading provider of company-sponsored retirement plan services. Vanguard manages nearly $2.7 trillion in U.S. mutual fund assets, including more than $380 billion in ETF assets. The firm offers more than 160 funds to U.S. investors and more than 120 additional funds in non-U.S. markets