Smooth operator Featured

7:00pm EDT January 25, 2005
When Jon Boscia learned that he was hand-picked by the board to assume leadership of Lincoln Financial Group, he made a few phone calls.

First, to Bill Gates. Then, George Fisher, former CEO of Kodak. He contacted John Chambers at Cisco, Andy Grove at Intel and stock investor giant Warren Buffet.

And he didn't leave his mentor -- Peter Drucker, renowned business economics writer -- off the list.

"I called them up and told them, 'You never met me. I'm going to be starting as CEO of a Fortune 500 company, and I'd sure love the opportunity to get your thoughts,'" Boscia says, reciting his casual prompt without a hiccup or stammer.

His smooth talk sounds like he simply dialed up his old college cronies. No big deal.

"I had several years of stints in sales, and I was used to calling people and having them hang up," says Boscia, who has spent the last seven years as Lincoln Financial's CEO and the last four as chairman of its board. "What was remarkable was not a single one of them said, 'No.'"

Boscia is not afraid to ask questions, analyze feedback and even stare at the ceiling from 2 a.m. until daybreak, allowing his mind to exercise the possibilities. After six months dedicated to travel, more than three dozen face-to-face conversations with business executives and countless tours through company departments from human relations to marketing and sales, Boscia had plenty to think about and a marathon ahead of him.

That's to be expected when the company you run -- a leading provider of wealth accumulation and protection products -- has $110 billion in consolidated assets, annual consolidated revenue of $5.3 billion and more than 5,600 employees. But Boscia leads the way undaunted by the task.

Avid for advice

Boscia's presidential training breached traditional succession practices. Rather than shadowing his predecessor, Ian Rolland, Boscia clocked miles on the road and studied other companies' systems.

"Ian said to me, 'Jon, the typical transition would be for me to move into the chairman and CEO role only, and you would become president and COO,'" Boscia recalls of his conversation with Rolland, whose tenure exceeded 20 years.

This was 1998, when Lincoln Financial was based in Fort Wayne, Ind.

"He told me if we did it that way, I would spend seven days a week tied up with the most detailed decisions,'" he says.

Rolland warned Boscia that employees would ask him, "What are your plans?" Putting out fires consumes time that is necessary for concentrated business decisions, Rolland told him.

So Boscia selected executives to work on his team and spent the six-month transition period traveling and learning the following business lessons that steer the Lincoln Financial's success today.

* Tap technological talent.

Lincoln Financial Group is not a technology company, but smart systems are crucial to delivering products, serving customers and efficiently doing business in a competitive market. Boscia wondered, should we hire tech wizards or outsource?

He asked Bill Gates.

"Imagine you are at MIT," Gates told Boscia. "You've got Microsoft recruiting tech people, you have Intel recruiting tech people and you are recruiting tech people. Where do you think the best will line up to go to work?"

Boscia won't outsource everything -- "You have to be selective in how you utilize outsourcing in technology," he says. But he reconsidered his stance on hiring outside firms to handle technology projects, and today he depends on outside resources for a significant portion of technology development.

* Think big picture.

Business issues cross industries, Boscia learned. This insight prompted him to drop his perception that the best corporate advice for finance companies comes from peers in the industry.

"Best practices exist in almost any company, and they are transferable to your company and industry," he says. "You need to have a broad view of business."

* People power success.

Quality counts when hiring workers to drive a company toward growth goals. Boscia always placed priority on people, but during his conversations with other executives, he confirmed the importance of recruiting the best in class and keeping them professionally challenged and personally fulfilled.

"Employees really are the only major sustainable source of competitive advantage a business has," he says.

This reality resulted in many all-night cram sessions for Boscia. He thought about some of Michael Porter's economic studies. The author of "Competitive Strategy: Techniques for Analyzing Industries and Competitors" presents a competitive analysis of nations and sparked a serious question: Should Boscia move Lincoln Financial headquarters from Fort Wayne to a region with a financial services hub and a greater chance of finding the best and brightest?

"Innovation occurs when people can leave one company and go to another without hardship," Boscia says, referencing Porter's work. "A constant stream of going from one company to the next gives employees fresh perspective."

* Tackle tough decisions first.

At the time, Boscia didn't realize the value of Dick Fisher's commentary on dealing with demanding issues. The former CEO of Kodak asked him, "Are there any emotional issues that you are grappling with or any hard decisions you have to make?"

Boscia thought about the potential move.

"I said, 'Yes,'" he says. "Fisher said his advice was to make them as soon as you take on the leading role. Get it behind you and move on."

The financial services cluster is bracketed by Boston and Washington D.C., with Philadelphia resting right in the middle, Boscia says, explaining how he narrowed his search for headquarters locations.

"There was a lot of emotion with moving the company out of its birth place, and I was right on the fence as to whether or not to make that move," he says. "But after I talked with Dick, it became clear to me that if I didn't move the company right away, it would be almost impossible to do it later."

Boscia became CEO in July 1998 and announced the move the following November. Thirty people moved with Lincoln Financial -- there were 60 at the Fort Wayne headquarters at the time. Today, Lincoln's four companies employ 1,300 workers in Philadelphia.

Rearranging the house

While moving the business challenged Boscia emotionally, reorganizing Lincoln Financial's corporate structure was by far the most trying task, he says. He paints a snapshot of most companies' back-stage operations, a model Lincoln mirrors, as well.

Sales, marketing, product development and research are silos in this vertical structure.

"They are totally independent business lines with complete vertical integration," he says.

Boscia drew some lines. He separated sales from manufacturing so each could concentrate on delivering 100-percent performance.

"We centralized sales, so rather than being a product vendor, we could bring a wider solution set to the organizations and people we deal with," he says.

Business lines dedicate efforts to ensuring products are competitive and customers are cared for after the sale. Sales focuses on customer needs and on differentiating Lincoln Financial's products in the marketplace.

Manufacturing doesn't sell or cold call. The department concentrates on producing quality investment products.

"Last year, Barron's named us the No. 4 family of mutual funds," Boscia says proudly. "Five years ago, Delaware Investments was literally named one of the 10 most dysfunctional fund families in the marketplace. In five years, we went from 10 most dysfunctional to one of the four best."

Boscia attributes this to a focused company structure, although he didn't reassemble the corporate clockwork without careful consideration.

"If I had been wrong ... " he muses, weighing the potential consequ ences.

No one had advice for Boscia when he shook up operations.

"There was no other visible business model at that time to support the decision," he says. "So, it was a combination of business judgment and intuition."

And plenty more late nights, he adds. Boscia knows his ceiling quite well.

Three-pronged plan

Boscia is particularly light on his feet after flipping through a copy of National Underwriter magazine on the train ride to his office. An article posted year-to-date results for variable annuity sales.

"Lincoln Financial is a pretty big variable annuity company," he says, noting that the industry average was 6.5 percent. Lincoln was up 83.7 percent. "I note that not to highlight variable annuities, per se, but we have gained market share in all of our primary product categories, whether mutual funds, insurance products or 401(k) products."

Strong business results are due to a three-tiered success model Boscia relies on to drive growth. The lucky charms are quality products, broad and deep distribution, and a strong brand.

"If you don't do any of these three well, you will not be successful," he says. "If you do one of the three well, you will continue to exist, and if you do two well, you will be very successful. If you are fortunate enough to excel in all three, you will be tremendously successful."

The model works. Lincoln Financial posted $511 million in net income in 2003 and reported $317.6 million for the first three quarters of 2004, compared to $317.2 million the first three quarters of 2003.

"The sales success in variable annuities is coming on the heels of some exciting product innovation we introduced in mid-2003 through 2004," Boscia says, pointing to the first tier in his success model. "We have competitive products that are well-positioned."

Boscia expects 401(k) products and mutual funds to take off in the next five years as baby boomers retire. He says many will seek out investment options that allow them to draw regular paychecks, and creative insurance products will allow clients to do just that,.

The trick is to deliver these products to the market. So the company launched Lincoln Financial Distribution four years ago to identify attractive relationships in the stock, bank and independent financial planner channels. A team of 400 wholesalers targets these customer groups.

"Their job is to get in touch with the stockbroker sitting inside an AG Edwards & Sons office or the personal trust banker at Wachovia or the independent financial planner," he says.

But if customers don't recognize the brand, they are not likely to buy its products, Boscia points out. He considers advice from his mentor, Peter Drucker.

"He said to me that there are two things you should never reduce your budgets for, and they are the first two things that virtually everyone on your staff will tell you to reduce spending on," he says. "One of them is training dollars for your employees, and the other one is advertising. It's like heroin, where you get addicted to saying, 'I don't have to spend because my results didn't go down.' That's a very slippery slope to step on."

Boscia remembers watching Lincoln commercials on television in the 1950s, but since then, the company had invested little in advertising. Today, the picture is quite different -- Technicolor, actually. Lincoln Financial is the naming rights sponsor for the state-of-the-art stadium that houses the Philadelphia Eagles football team, a $139.6 million investment over 20 years that pays off generously in name recognition.

"It's important for financial intermediaries to know who we are," Boscia says.

Lincoln representatives don't have to do a lot of explaining these days. An annual familiarity and awareness survey showed that 95 percent of financial intermediaries know Lincoln, compared to less than 50 percent a few years ago, Boscia says. The company spends $30 million each year on advertising; $7 million of this goes toward the stadium sponsorship and a majority of the rest goes toward TV advertising.

Tending to these three tiers will continue to drive the company forward as it deals with industry challenges -- an economy that is out of any CEO's control, rising interest rates and unpredictable consumer confidence.

Even CEOs aren't immune to worrying over uncontrollable variables.

"You have images that executives are 100-percent confident and certain in what they do," he says, reflecting on his numerous conversations seven years ago. "The reality is, they are human beings struggling with the same decisions and issues as anyone else. When you realize that, you have increased confidence.

"You don't have this insecurity blanket wrapped around you -- you can show your humane side and make mistakes and errors, as long as you learn from them."

And if Boscia gets stumped, he'll just pick up the phone.

How to reach: Lincoln Financial Group, (877) 533-0003 or