John Taft, the CEO of RBC Wealth Management, has seen his share of ups and downs as a leader. While his expertise lies in financial services, the lessons Taft has learned apply to leaders across all organizations.
What are the three tenets that define your leadership style?
Focus on culture, communicate frequently and with absolutely clarity about mission, and try as much as possible to embody the principles of servant leadership.
Why is culture so important?
Culture is everything when it comes to responsible, long-term business success. Culture is what exists before any given leader shows up, and it’s what exists after any given leader moves on. Culture is in the DNA of an organization. It is not something that a leader necessarily goes out and creates. A leader’s job is to discover, communicate and reinforce culture. If you don’t get culture right, nothing else matters.
What is servant leadership?
It is seeing yourself as holding a type of “office” in which you are equally accountable to the four primary constituencies of any business — customers, employees, shareholders and the communities in which those customers/employees/shareholders live and work. It is seeing your responsibility as a leader as serving in a balanced way the long-term interests of those constituencies. That is a servant-leadership approach. It doesn’t necessarily come naturally but instead is something one has to learn over time.
Tell us about a time during your career when you failed. How did you overcome that failure and what did you learn from it?
I have failed in multiple ways at multiple times. The experience has been enormously helpful. For example, I ran a brokerage firm during a period called the Asian Contagion in the late 1990s. My firm was a small company, and we transacted in very small capitalization securities of emerging companies. Because of extreme market volatility, we got close to violating our net capital rules. I ended up (with regulatory permission) essentially buying our entire inventory personally. I seriously questioned whether the company was going to survive. I had investors, employees and clients, and I truly felt like I had let them down. Fortunately, we eventually rebounded as the market recovered.
You can fail in little ways, and you can fail in big ways. What was critical to my development as a leader was to learn that I could and would survive failure, which made me more willing to take risks and smarter about what kind of risks to take and what kind of risks to avoid.
What kinds of challenges do leaders in the financial services industry face today?
We play a stewardship role in society. One of the reasons people are so upset about the wave after wave of revelations of regulatory infractions is that they have entrusted a stewardship role to financial institutions and they feel they’ve been betrayed.
I believe that the financial organizations that have gone astray have done so because they lost touch with their culture. They lost touch with their stewardship mission, purpose, values and responsibilities. Those have always been at the core of the financial services industry. What we need to do today is not so much invent or create a new culture for our industry but find our way back to the culture that should have been there all along.
Most financial services firms have a culture that at some point, somewhere, was about serving the needs of their clients. It wasn’t just about making money. It was about helping clients achieve their objectives, promoting economic growth and performing a social good. Chances are the people at the firm came to the firm because of the chance to make a positive difference in the world. That ethic is embedded in most of the financial institutions I know. We’ve just lost touch with it in too many cases.
Restoring the culture of financial institutions to what it ought to be is the No. 1 leadership challenge right now in the financial services industry. Regulatory reform is not enough. If we are going to keep future financial crises from happening, we have to address cultural failings at the heart of the financial services industry. Whether or not we get it right will be a case study in leadership for years to come.
Taft is the CEO of RBC Wealth Management U.S. and author of “Stewardship: Lessons Learned From the Lost Culture of Wall Street.”