Ned Johnson was big on kaizen, the Japanese business philosophy of small, continuous improvement that started spreading around the world a half-century ago.
“It fascinated me that. . . the Japanese could build cameras comparable to the German models at about one-third the cost,” Johnson, then chief executive of Fidelity Investments, wrote in an essay published in 1996. “If kaizen worked so well in production facilities in Japan, I thought it might work just as well in [customer] servicing operations like ours.”
Kaizen did improve Fidelity’s customer service, and in his more than four decades at the helm, Johnson pushed countless small changes — and some big ones — that made it the envy of the money management world and one of Boston’s longest-running success stories.
“He inherited a relatively small, regional asset manager and built it into a financial services giant,” said Bob Pozen, who was a top Fidelity executive from 1987 through 2001 and later was executive chairman of Boston rival MFS Investment Management.
How did Johnson, who died on Wednesday at 91, do it?
To grossly oversimplify, he played the long game with more smarts and attention to detail — especially when it came to customers — than perhaps any of his competitors. Equally important: He kept the business, which his father started in 1946, privately held, allowing him to invest for the long term without the quarter-by-quarter profit pressures of a public company.
And as Johnson often noted, he put great emphasis on tracking how well the company performed — from its investment results to how long it took to help a customer — as a tool to improve quality and lower costs.
“Fidelity has thrived in large measure thanks to the family’s long-term outlook, strategic vision, and ability to execute consistently,” said Richard Chimberg, a partner at CL-Media Relations, a Concord communications firm that works with financial services clients.
Johnson’s big accomplishments have been thoroughly chronicled: introducing the first money-market mutual fund with a checking account. The decision to sell funds directly to individual investors instead of relying solely on brokers. His bet on 401(k) plans long before it was clear they would come to dominate retirement investing.
But the real game-changer was the accumulated impact of continual enhancements to the way Fidelity does business — the result of the culture of innovation he imbued throughout the organization.
Whether it was switching the company to touch-tone telephones or giving employees Internet access, Johnson was an early and savvy adapter of technology. He was, in Pozen’s words, a “radical egalitarian” from a Boston Brahmin family who was able to attract the very best people. And he favored a non-bureaucratic management style where decisions were hashed out through rigorous argument.
“You always had to be imagining that you could do things better and always be working on making things better,” said Sandra J. Sucher, a Harvard Business School professor who worked at Fidelity from 1986 to 1998. “That was his gospel.”
Johnson himself took a very pragmatic approach to kaizen:
“The wonderful thing about making small changes is that you can see the effect they have on the whole system. If a small change does not work well, it can be easily reversed. And if it does work, you can make another change, until cumulatively a tremendous change has been created.”
That is also from his 1996 essay, titled “Adventures of a Contrarian.” Much like Apple’s Steve Jobs, Johnson was not much for conformity.
Abigail Johnson, who took over Fidelity from her father in 2014, put it this way in a LinkedIn post: “He could be counted on to have the contrarian view on just about anything.”
It worked for Ned. It worked for Fidelity. It worked for Boston.