Frequently
Asked Questions
What kind of book is
this?
It falls into the class of books called business narratives. The
book recounts the history of Charles Schwab & Co. with a particular
focus on its values and corporate culture. This book is at once
a management book and business history, taking the reader through
the company's storied history. It focuses on Schwab's business practices
and the durable culture underlying it, demonstrating how managers
from companies large and small can successfully apply them to their
own businesses.
Who is publishing the book and when will it be published?
John Wiley and Sons. The release date is October 18, 2002.
Why a Book on Schwab?
Corporate America in general and the securities industry in particular
have defaulted on their promises to the investing public. At a time
when corporate credibility has emerged as the major competitive
advantage an organization can offer, it is appropriate to consider
the track record of Charles Schwab & Co. By all accounts, Schwab
has redefined the brokerage industry for the better. In a world
where investors are exploited by self-serving executives, predatory
managers, and conflicts of interest, the value-driven story personified
by Chuck Schwab and modeled by the company that bears his name is
worth telling. Given the fact that there are multiple business narratives
on AOL, Microsoft, eBay, Cisco, and Walt Disney, this book will
be the first on Schwab by an outside journalist.
Okay, you've got 60 seconds. Give me the elevator pitch.
Charles Schwab: How One Company Beat Wall Street and Reinvented
the Brokerage Industry gives readers actionable business value and
thought leadership based on the Schwab experience. It delivers a
gripping view into one of the world's most influential companies
within the context of an evolving and at times ruthless marketplace.
The central theme of the book explores Schwab's organizational elasticity
and what readers can learn from the company's ability to reinvent
itself around an unchanging set of core values. This value-based
strategy is what has allowed Schwab to evolve within its industry.
Many companies spout off about values and putting the customer first-in
reality Schwab is one of the few that has capitalized upon this
approach.
Is this book a puff piece or a hatchet job?
Neither. The book is a positive account about a positive company.
It describes the high value placed on integrity, generosity, and
customer focus that still serve as hallmarks of the company. At
the same time, the book is critical about a number of aspects of
Schwab corporate culture and governance. No doubt, the book recounts
episodes in Schwab's rich history at which senior executives will
likely wince. But while most business books about companies focus
on the accomplishments and dramas of the CEO and the top executives,
this book distills the Schwab experience from people closer to the
ground.
Did Charles Schwab & Co. cooperate with you in this project?
No. The company made it clear from the beginning that it would have
nothing to do with the book. It instructed all Schwab employees
not to talk to me. The company requested that I stay clear of current
employees. For the most part, I honored that request.
Why would you do that?
I respect the loyalty of Schwab employees to the company. Because
I did not want to be the source of anything that would put these
employees into conflict or jeopardy, I agreed not to contact current
employees. I was gratified that the company did not oppose former
Schwab employees from talking to me.
If Chuck Schwab, David Pottruck, and the firm's executives were
off-limits to you, how could you get a decent book out of this?
The perspectives of Schwab's senior management are well documented.
While I would have been delighted to interview Chuck, David, or
anyone with a perspective on the company, current employees would
not have been terribly helpful to me for a book like this. Fortunately,
the alumni of Schwab were eager to talk to me and were much more
candid than current employees could ever be. The Schwab alumni were
surprisingly helpful. I ended up interviewing every one of the former
presidents, a number of former members of the executive committee,
and even some former members of Schwab's board of directors. Of
course, I also interviewed scores of lower-level managers, administrators,
and line workers. In all, the book represents the interwoven perspective
of over 200 former employees, analysts, consultants, vendors, partners,
contractors, financial advisors, and financial journalists.
Why would the company not welcome a major business book about
its accomplishments?
Bottom line? I still don't know for sure. The company gave me a
number of reasons. Those reasons ranged from bad timing (the company,
like most others in the securities industry, is in the midst of
a very painful period) and the distraction such a book would represent
for company executives. The company even trotted out the excuse
that cooperating with me would represent a securities industry compliance
issue under the SEC's disclosure rules.
None of that makes sense. Is there another reason to explain
why Schwab would not participate?
I think it's a loyalty issue. Everyone at the company believes this
book is Chuck Schwab's to write. Given the way Schwab culture has
developed, I was trespassing on holy ground.
What does the company think of the book?
I don't know. My contact at Schwab is Glen Mathison, VP of corporate
communications Glen.Mathison@Schwab.com.
Can you name your sources for the book?
The vast majority of my sources talked to me on the record, and
they are identified by name in the book. The few people who preferred
not to be quoted know that their identities will be protected even
as their experiences became part of the book.
What's the most surprising lesson from the book?
That the founding myths of an organization often outlive their usefulness.
Dismantling myth is a perilous process. Charles Schwab & Co.
prided itself on four founding standards: serving the average investor,
no advice, no cold calling, no commission-paid brokers. In its desire
to recreate itself as a full-service brokerage, Schwab is systematically
abandoning three of the four principles on which it was established.
Can the emerging myths that replace those it leaves behind summon
anywhere near the organizing power of the original founding myths?
It's a messy process, this myth business. A company manipulates
its own identity when it tinkers with its myths, however necessary
that becomes. However, it is imperative that a company see the stories
it actually lives by so it can determine if particular myths are
working for it or against it.
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Preface
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