by Helen Cunningham
This article is the second in a two-part conversation with DTCC’s Executive Chairman Robert Druskin, who joined the company in April of this year. Here, Druskin talks about DTCC’s competitiveness, culture and some of the challenges the company faces.
To read part one (which appeared in the Aug/Sept 2011 issue of @dtcc), click here.
How do you see the competitive landscape in which DTCC operates?
It’s getting tougher every day. We don’t have monopolies in our businesses. We actively compete for business and some of our competitors are for-profit companies with a whole different set of dynamics.
To remain a key provider of services to our clients, we have to continually step up our game – just like our competition does and just as our participants do in their businesses.
How will DTCC be stepping up its game?
We’ll become more client-focused than ever. We’ll improve outreach and find new and innovative ways of interacting with our participants.
Clients can expect to see a more proactive DTCC. We will help lead change in the industry, even more forcefully than in the past. DTCC has always been a thought leader, and I think we can leverage that role to provide real benefits to our stakeholders.
We will also make sure to keep our antennae up. We want our clients to think of DTCC when they have new and interesting ideas, and to know we’ll work with them to think through their ideas and execute them when it makes sense.
What are some of DTCC’s competitive advantages?
This is a company with a strong strategic and market position in an industry that’s changing and consolidating rapidly. We have great people. We have an extremely informed Board, which is a tremendous advantage. Our Board members have deep knowledge of what we do, since many of them are in related roles in their respective companies, plus they represent some of our biggest clients. So they are able to provide very valuable input.
We also have the ability to tap into the enormous intellectual power that our participants represent. As we learn to maximize that resource, it will be a huge asset for us.
We are a non-public company, so our motivation for doing business, in some ways, differs from that of some competitors. We’re not trying to increase earnings per share. We’re industry driven. We’re thinking about what’s right for the industry and our participants, so anything we do strategically has an important industry dynamic to it. And DTCC has a great history of success in delivering innovation, efficiencies, cost reduction and risk mitigation.
As you’ve delved into the business since joining DTCC in April, has anything surprised you?
I’ve had a couple of upside surprises.
One is the quality of the people. I came in expecting good people or I wouldn’t have wanted to join, but they’re even better than I thought, so that’s been a very pleasant surprise.
Another is that both the issues and the business processes themselves are way more complicated than I’d anticipated, but I like complexity, so that’s also a positive.
What are your impressions of the DTCC culture?
I’ve spent a lot of time thinking about the culture here. It’s very different from my previous experience. Where I came from, in addition to creating value for clients, the focus centered on profits and shareholder returns.
At DTCC, clients always come first. The difference is that we are not a traditional for-profit company. Our results are not expressed in earnings per share, but our financial performance and how we operate are important to both us and our participants. So getting our people thinking and acting commercially has to be an important part of the culture because, in addition to managing risk and providing high-quality ideas and execution, our job is to do the best we can financially, to make the right investment decisions, to keep costs down and to create efficiencies for the industry.
What are some of the challenges DTCC faces?
The industry and DTCC are going through dramatic change, and managing all of it at once is not an easy trick.
Internally, there are enormous organizational changes, such as creating the job I have and bringing in a group chief risk officer to oversee all our risk areas. And, as we bring new folks into the company, we have to remember that one of the strengths of DTCC is the experience of its people. So to get the best cross-fertilization, we’ve got to get the right balance of people with experience and people with new ways of looking at things and new ideas.
We are also in the midst of an enterprisewide initiative to take risk management to a new level, called DTCC 3.0. It’s a tremendous undertaking. As an example, we are focused on upgrading the company’s communications avenues, which is a key 3.0 precept. We are spending a lot of time getting people to communicate more openly, challenge, question, probe and push back in order to help foster a risk management mindset. At the same time, we have a significant work-transformation effort going on that will have a broad impact on the organization and our people.
So when you look at the cultural shifts within DTCC, along with all the change taking place in the industry and the intensified regulatory focus, there is a lot to juggle at once.
Now, DTCC has an enormous history of success and I think all these changes will ultimately enable us to deliver better capabilities to our participants, but the issues are quite complex.
And it’s really critical that we make the right strategic choices. DTCC performed unbelievably well during the 2008 crisis and it has a great tradition of delivering for the industry. We have an enormous base of strength, so we have to be sure not to disrupt our core. We have to invest in the parts of DTCC that make it a great company and build on those capabilities by making changes we think will be beneficial.
So it’s not simple but, as I always say, this is a team sport – and we have a great team.
Speaking of teams, could you talk about DTCC’s approach to partnerships?
We will continue to partner when it makes sense.
It’s difficult for any company to have all the capabilities it needs. We have many strengths, but there are other companies that do certain things better or differently than we do, and vice versa. So when we see opportunities that require a combination of competencies, we will explore partnering.
Joint ventures are hard, but they’re doable, and I think the people at DTCC have a record of making them work. We have some strong partnerships now and it’s very likely we’ll see more in the future.
A final question: what drew you back to work in the financial services industry?
I had no intention of working anymore, but one morning I got a call from a search firm. The recruiter said he might have something that, as he put it, would get me off the beach. The more I thought about DTCC and the more I talked to people – both Board members as well as Don and Mike – the more I realized it was a perfect fit.
It was the people. It was the company. DTCC’s role in the financial sector is very important, and the industry’s going through enormous change – and I love change. And it’s not a huge company, which greatly appealed to me. So all the pieces fell into place. It was fortunate things worked out so well and I’m happy to be part of the team.@