One of the most important jobs of a CEO is to conceive, communicate, nurture, and protect the company’s vision and culture. Culture, built over time, is the glue that holds organizations together through good times and bad.

It is created and reinforced through consistent actions, not words. Ned Johnson was a master at engaging others in a compelling vision and rewarding a winning culture. Regarding vision, I’m frequently reminded of an old story. A man walks by a worker handling bricks. He asks the man, “What are you doing?” The man answers, “I’m laying bricks.”

The observer travels a little farther and encounters another worker handling bricks. Again, he asks, “What are you doing?” The man answers, “I’m building a wall.” The observer travels yet a little father and encounters a third worker handling bricks: “What are you doing?” “I’m building a cathedral.” Ned Johnson was the kind of leader who could engage Fidelity associates at all levels in building the equivalent of a financial services cathedral. Ned Johnson also had an uncanny ability to foresee macro changes long before others did.

Where others were comfortable with the status quo, he saw opportunity. When others were zigging, Ned knew it was time to zag. Fidelity had been successful for quite some time because of Ned’s willingness to disrupt himself, his firm, and the industry time and again. Not every initiative was a success, but Ned certainly was right more than he was wrong, especially on the larger things. A few examples will illustrate this point. In 1974, Ned Johnson had a simple but revolutionary proposition: He thought that if you made it easy for customers to withdraw funds, they would put more money in. While other firms made the process of withdrawing funds as difficult as possible in an attempt to retain their client’s assets, Fidelity made it easy by introducing a simple check writing feature on its money market mutual funds. Ned was proven right. Once the ability to withdraw funds without friction was put in place, the funds came flowing in. A standard practice today, this was unheard of at the time.

Johnson also wondered why mutual fund pricing could only occur at the end of a trading day. This seemed outdated to him. He thought Fidelity could utilize technology to price mutual funds each hour of the trading day, allowing for intraday subscriptions and liquidations. If Fidelity could figure it out, it would be a game changer. Once again, he was challenging a well-established convention that no one else thought could or should be challenged.

Innovations are generally made by challenging existing conventions or creating new ones. Notwithstanding the extremely difficult task of placing a value on a basket of stocks, bonds, and other assets on an intraday basis, Ned was adamant that Fidelity figure out how to do this on a select group of mutual funds every hour during every market day.

From this, Fidelity created hourly pricing on the Select Funds to provide additional points of entry and exit for investors throughout the trading day. It was not like trading a stock, which could be done almost instantaneously, but it was a quantum leap forward for investors who wanted the opportunity to enter and exit the market on an intraday basis through a narrow basket of industry-specific stocks.

This family of approximately thirty-five mutual funds became popular with more active investors who were seeking intraday liquidity and more frequent trading options. As these funds were generally smaller, they also served as a wonderful training ground for up-and-coming fund managers. The Select Funds were the harbinger of the exchange traded fund (ETF) industry that has grown with so much success over the past ten years.

Ned Johnson was also fanatical about leveraging technology to deliver superior customer service. Fidelity was one of the first firms to have touch-tone telephone service and trading, and a myriad of internet enabled services when those capabilities came along. The company also invested significantly in advanced call routing and call management technologies to improve customer service delivery.

Ned also believed in, and heavily promoted, the Japanese concept of kaizen. Kaizen refers to business activities that continuously improve all functions and involve all employees, from the CEO to the assembly line workers. In many ways it is comparable to Six Sigma, which provides organizations with the tools and techniques to improve their business processes. Continuous improvement was a way of life at Fidelity. It made a big difference and resulted in Fidelity having some of the best client satisfaction scores in the industry. Robert Kennedy once said, “Some men see things as they are, and say why. I dream of things that never were, and say why not.” This describes Ned Johnson and his Fidelity culture.

— Excerpt from Taking Stock: 10 Life and Leadership Principles from My Seat at the Table by Peter J. de Silva