Charles Schwab

Charles Schwab:  How One Company Beat Wall Street and Reinvented the Brokerage Industry

Since its founding in 1973, Schwab has led the full-brokerage market by stressing customer service. Today, Schwab has established itself as a company with a unique identity: old-fashioned integrity meets technology-empowered financial services. Charles Schwab tells the compelling story of this organization’s uncanny ability to reinvent itself around an unchanging set of core values.  This book is the first objective look at the company and the man.



This book is organized into five sections, each representing a critical juncture for the company when it was forced to reinvent itself or be consumed. Along the way, Kador highlights Schwab’s immutable laws, direct from the Chairman and CEO:

1) Create a cause, not a business 2) the corporate vision is only as good as the values of its culture 3) welcome upheaval

In the whirlwind economic environment we currently face, Charles Schwab provides readers with valuable lessons on how businesses can survive and thrive in any situation.







From The Preface Charles Schwab continues to revitalize what he finds inadequate.

In the beginning, when investors were at the mercy of stockbrokers, financial self-determination, like airplane travel, was reserved for the well-off. Charles Schwab liberated personal finance and we are all better off for it.

From the beginning, Chuck Schwab committed his company to treating customers not as resources to be exploited but relationships to be nourished. In the history of American business, this makes Schwab a revolutionary.

In some ways Charles Schwab is an improbable revolutionary. With his silver hair, tanned good looks, Rockefeller Republican ideology, and, until recently, those distinctive horned rim glasses, Schwab appears as a fat cat banker straight out of central casting. But few executives have so radically changed the relationship millions of ordinary people have with their money.

In three decades, Charles Schwab has emerged as one of the most successful and inspiring financial services organizations in history. Thanks primarily to the values and leadership of its founder, Schwab has a evolved a distinctive management mindset that encourages the company to question its most cherished assumptions and thereby avoid the arrogance that hardens the arteries of other companies that are occasionally kissed by success.

From the very beginning, Charles Schwab has put himself squarely in the bulls-eye of this journey.

What is in the company’s DNA that has allowed it to succeed in so many harsh environments? What permitted a discount brokerage to think success would come from slashing prices by 60 percent to enter the uncertain world of electronic trading? What made it think the World Wide Web would be a friend and not a foe?

The company pivots freely around a set of three core values that define the company. Everything else can change, but these values endure:

Create a Cause, Not a Business. “We are guardians of our customers’ financial dreams.” Think about that. When was the last time you saw a business take itself that seriously? It shows. Schwab people act as if they are curing cancer.

It’s easier to find the courage to abandon the practices that have been making you rich when everyone shares a transcendent purpose. The values serve as a safety net for the high-wire act. It provides cover for anyone poised to discard a familiar but tattered business model for a lustrous but untested business proposition. Schwab welcomes questions elsewhere considered subversive: Who are we serving by this decision? Will my skills and my relationships be as valuable in this new world as they were in the old? How much will I be asked to unlearn?

These are genuine, heartfelt questions that can’t be answered in advance. The courage to leave some of oneself behind and strike off for parts unknown comes not from some banal assurance that change is good but from a devotion to a wholly worthwhile cause. That cause is embodied in three principles:


The Power of Culture, Done Right

Lots of companies pay lip service to a culture of ethics and values. Enron had a very impressive ethics manual, copies of which are now available on eBay. Schwab people actually live it, for they know that a corporate vision may come and go, but the values stay put.

In a world that blurs the distinctions between customers and suppliers and competitors and partners, values are the only thing that defines where Schwab, the company, starts and where it ends. Everything else can recede, the products, the services, the industry itself. But an abiding culture can serve as the custodian of dreams for the team.

This book is about the people who helped articulate the values of the leaders and then created the vehicles that embedded the values into the culture of the company.


Welcome Upheaval

Everybody talks about the power of new ideas. Until a new idea actually requires them to change their behavior. Then stability suddenly looks attractive. How on earth did Schwab find the chutzpah to migrate its business to the Web, knowing that the move would force it to cut by more than half prices on its bread-and-butter service? Culture. People up and down the organization who agreed on little else agreed on the value of putting the customer first.

Even the high tech meltdown has failed to humble Schwab. Although Schwab has had to take its share of job cuts, the company’s exceptionally strong relationships with its customers sustain it. And although Charles Schwab himself is in the twilight of his career – and the book will examine the implications of his eventual retirement – for the present he remains at the center of the company that bears his name.

Silver-haired chief executives, it turns out, are not nearly as irrelevant as the annoyingly smug dot-comers who so exuberantly heralded their extinction. But Charles Schwab – the man and his company – are still with us, going strong, venturing with confidence into uncharted territory