Leadership profile:  Vanguard’s Jack Bogle on Building An Enterprise 

John C. Bogle is founder and former chief executive of Vanguard Group, and author of Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor (Wiley: 1999) and John Bogle on Investing: The First 50 Years (McGraw-Hill, September, 2000).  He spoke on leadership to students in Wharton’s Executive MBA Program on June 2, 2000:  

Leadership has been defined as the one “who guides” or is “in charge of others” or “has influence or power.  The leader has also been defined as “the foremost animal,” leadership as “the blank strip at the beginning of a tape.” 

For me, it is having a vision and being able to attract and excite others to share it.  It’s a positive, even virtuous quality.  It is not based on leading by reason of power, or fear, or financial incentives.   

Am I a natural leader?  No, never.  I was just a determined, responsible, realistic kid who was given, for whatever reason, a rare opportunity to change the way Americans invest.  Out of this came a too rare thing:  Not just a simple company but a company that stood for something.  Here are ten ideas that I used to build it:  

1.   Never lose sight of the ultimate goal, and focus energy on short-term perspectives.  In our case, it was providing investors with the greatest participation in the market’s return possible, through indexing.  The fox knows many things, the hedgehog knows one great thing.  

2.   Set a personal example with visible, memorable symbols or behavior.  Walk the walk.  Be who you are, for you “can’t fool all the people all the time.”  In our case, our nautical theme drills that message home, time after time after time.  

3.   Instill optimism and self-confidence, but stay grounded in reality.  Our message makes it easy:  98% of the market’s return is “guaranteed.”  But don’t forget about idealism:  People want to work (and invest) somewhere with “higher values.”  When I get depressed, all I need to do is visit the “Bogleheads” on the Vanguard Diehards section of the Morningstar website.

4.   Take care of yourself:  Maintain your stamina and let go of guilt (I’ve never had any!).  Sometimes you must “fake it.”  Energy summons you, or you it.  

5.   Reinforce the team message constantly:  “We are one – we live or die together.”  

6.   Minimize status differences and insist on mutual respect.  Treat everyone equally, from the highest to the humblest.  I always told everyone that if I ever caught them demeaning someone who reports to them I would “make you do his or her job for a day…if you can!” 

7.   Master conflict.  Deal with anger in small doses, engage dissidents, and avoid needless power struggles.  This is easy when you have a small, young company and an eager crew, but not so easy as you grow. 

8.   Find something to celebrate and something to laugh about.  Since our beginning, we celebrated various asset milestones:  $3 billion in assets, then $4 billion, then $5 billion.    We’ve had to space the milestone celebrations as we’ve grown to over $550 billion.  

9.    Be willing to take the big risk.  At Vanguard, they came rapid fire in the early years.  In 1975, it was “the Vanguard Experiment,” in 1976, it was the first index mutual fund (“Bogle’s folly”), in 1977 it was our decision to stop selling our funds with sales loads.   

10.  Never give up:  There’s always another move.  Find an opportunity.  I was recently profiled on CNN’s Pinnacle, and at the end I quoted an elderly Churchill’s remarks to a class of young, eager students:  “Never give up.  Never, never, never, never, never." 

A word about power:  It can corrupt.  It can cause you to manipulate people and try to control the organization.  Instead, use it to instill your ideas and values, foster intellectualism, and exchange human values. 

James Norris [a Vanguard manager] wrote of me when he was a student in your Executive MBA program,  “While it is revealing to consider someone like Jack Bogle for insights into what constitutes a leader, your search for understanding, for some kind of leadership formula, is apt to end in frustration.  It is like studying Michelangelo or Shakespeare:  you can imitate, emulate, and simulate, but there is simply no connect-the-dots formula to Michelangelo’s David, or Shakespeare’s Hamlet.  I suppose, when all is said and done, it really comes down to this:  People are leaders because they choose to lead.” 

And so, for each of you, leadership is a matter of choice and determination.