By Christine Giordano
"A leader is one who knows the way, goes the way, and shows the way,"
-John Maxwell
There is indeed a shift happening in the industry, with a volume of chief investment officers retiring within these past two years and continuing to do so. We're at a time when grooming solid and skilled future leaders will be a crucial part of our industry's success. And so, we turned our attention to the the anomaly of Exelon's CIO Doug Brown, whose ability to create (at least) eight strong chief investment officers is something we found worth exploring. Over the course of this series, we have been interviewing a few of his many mentees to find what he instilled in each of them to empower them rise to their own chief investment officer seats.
Accolades As He Retires
But first, a note: Brown, CIO of Exelon, announced his retirement last month, effective July 1. We will be celebrating his career and contributions to the industry by inducting him into the CIO Hall of Fame at the Markets Group Institutional Forum on May 14-15 in Chicago.
During his 14 years as CIO of Exelon, Brown added $30 billion in investment returns during his tenure, bringing its portfolio to $52 billion. He guided the investment team whose responsibilities included pension funds, defined contribution trusts, other employee benefit trusts and the nuclear decommissioning trust funds.
In 2022, Brown helped to create and launch Exelon’s Community Impact Capital Fund, which aims to provide more economic opportunities to businesses in under-resourced communities within Exelon’s footprint. He also helped create the Women and Minority-Owned Investment Manager Initiative and was a member of Exelon’s Corporate Investment Committee and Exelon Foundation’s Board of Directors.
“It is rare and remarkable to work alongside someone who is considered an icon in the field,” said Exelon Chief Financial Officer Jeanne Jones in a written statement when Brown's retirement was announced. “It was a privilege to have Doug at Exelon. Beyond his contributions to the business, Doug has left a lasting impression on everyone who has had the honor of working with him.”
Power and Influence
Chief investment officers are a rare breed, with a top set of skills from both the right brain and left brain, with the talents of diplomats, investors, futurists, researchers and managers, and detectives. (In the New York Spy Museum one event tested positively for cryptographer.)
Brown's reputation for mentoring leaders was so wide-known that job applicants have clamored to be on his team in order to gain the type of well-rounded experience they needed for their futures.
Perhaps this series will help their wisdom to be transferred in the most beneficial ways.
More than eight of Brown’s mentees have risen to become chief investors, and, as part of this series, we’ve reached out to Neil Roache (of Johnson and Johnson,) Angie Buk (of 3M), Bob Watson (Chrysler), and now, Jessica Hart, and his friend, Andy Ward (who was already a CIO.) Most have credited Brown with their success and some have even modeled their investment offices after his.
“That’s what it’s all about,” says Brown.
In analyzing Brown’s effective mentorship, it’s interesting to study the concept of power. In organizational psychology, the concept of power can take different shapes within a firm. It starts with legitimate power which is usually granted to the chief executive. But there are other types as well, sometimes through rewards and punishment. But there are leaders who lead by their expertise and wisdom, or their expert power. And others with access to certain information, or information power. Then there are those whom people just want to follow and emulate, called referent leaders.
Robert Greene, author of The 48 Laws of Power, describes how those with natural charisma as often “outer-directed,” -- people whom you might find listening attentively and recognizing a person’s dreams and desires as an individual.
Doug Brown’s mentees speak of him as the consummate leader, with legitimate power, as well as expert, referent, and informational, who is also a friend and a strong sounding board with information connections throughout the industry with which to vet new ideas.
Brown has all of the traits of leader that comes from his post, his expertise, access to information, empathy and gravitas. In short, people want to be just like him, and if they learn his lessons, their careers seem to skyrocket.
Brown’s friends describe him as one who has been willing to sacrifice himself at great lengths for a greater cause, and that's where we will start Part 4.
CIO-to-CIO
It’s almost hard to imagine, but when Brown first started his new CIO job at Exelon years ago, he actually took on another role as vice chair at one of the most influential organizations for corporate pension plans in the United States in order to help a friend in need, and a trade group that he respected.
CIEBA (Committee on Investment of Employee Benefit Assets) was in the midst of transition. With vacancies in both the chair and the executive director positions, its future was ambiguous. IBM Chief investment officer Ray Kanner was retiring, and leaving his position as chair. Andrew Ward, then CIO of Boeing, (now CIO of University of Chicago) had been vice chair and ascended to become chair. Left without resources, Ward needed the most solid wingman he could find to help steer the organization into a solid future.
Ward knew Brown from having worked for one of the aforementioned team of excellence (known affectionately as the “Chrysler Mafia”) that emerged from Chrysler, Mark Schmid, (who then went on to also head the University of Chicago, and double the size of the endowment in 12 years.) By affiliation, Ward was introduced to Brown, especially after Brown had taken the new CIO post at Exelon, in Ward’s Windy City. Ward had welcomed him into the softer side of Chicago — the social clubs and golf courses — and even their wives became friends. Having swapped investment chief ideas with Brown, Ward knew the Exelon chief was both a solid investor, and strong, guiding force.
“Doug is thoughtful. Deliberate. And always has a level head. He doesn’t overreact. He's the kind of a person who's just the calm in the storm,” said Ward.
But Brown, having recently started at Exelon, was reluctant to take the vice chair role at the trade group, knowing the work involved and that he had just started his new job.
“He had a full plate with all of his responsibilities, but I kind of convinced him to do it,” said Ward.
After that, they made it work. As the new vice chair, Brown dug in like a soldier. The two navigated what the executive director role would look like, and implored the Ray Kanner to take an interim executive director position. They envisioned what future leadership would look like. What programs would be helpful. They held brainstorming sessions with Robin Diamonte, now CIO of RTX, who got very involved in stabilizing the organization.
Eventually, CIEBA found its footing again.
Said Ward, “I could not have thought of having a better partner at a time of volatility for that organization, to make some really important decisions about the future direction of CIEBA.”
But it's hard to imagine what iron days Brown must have experienced, as both vice chair as well as a first-year CIO at Exelon, where one of his many responsibilities was managing the longest liability of a trust on record: the nuclear decommissioning trust for thousands of years into the future.
Foxhole
Time passed, and then another time of deep uncertainty developed. During the COVID pandemic, when offices were closing and the economy was unpredictable, Ward reached out again to Brown. It wasn’t a time when people could meet in person with their investment teams, and young families on teams were struggling with childcare as well as their day jobs. Leaders needed to be rock solid and take on whatever they could, grasping whatever new knowledge they could to find to navigate the murky future and the volatile markets.
Outside cafes and firepits became boardrooms where CIOs would meet and discuss the future of the world, as well as their portfolios. For Brown and Ward, meeting for coffee, with yellow notepads in hand, provided both companionship and perspective.
Ward said, “In sharing notes, we were trying to navigate, to share best practices for our respective organizations the best we could. We talked through the challenges of COVID and the market reaction to COVID and shut down, and the economy struggling at that time, and what that meant for our portfolios, and how we were thinking about risk management, liquidity, and all of those things.”
Theirs was a friendship that soothed the stress of the world’s ambiguity.
“It's very valuable, because, you had a trusted colleague that you can not only use as a sounding board, but also share notes about tactics that you're using to navigate through the crisis,” said Ward. “I couldn't think of a better person to be in a foxhole with.”
The Next Generation
Similarly, now that Doug Brown has announced his retirement from Exelon, he has named the heir to the chief investment officer seat.
Jessica Hart.
Hart is being promoted from vice president of Investment Strategy and Public Markets, a role she’s held since 2022. She comes from a background of leadership roles at Northern Trust Asset Management, including one where she led the company’s Outsourced Chief Investment Officer (OCIO) Retirement Assets Practice advising corporate, public and multi-employer plans.
The first time the two met was when Brown interviewed her.
Despite being in the same town, and being a client of her former firm for years, their paths had never crossed.
“I knew him by reputation of course which is one of the reasons I jumped at the chance to meet with him,” she told Markets Group.
Brown’s reputation in the investment industry preceded him, and he was well-respected within the company, she said. But you'd never know it by talking with him. "He led with integrity and humility, two qualities that I believe are critical for durable leadership over time,” said Hart.
The future CIO studied Brown’s unique leadership style, and noted some of the things that brought out the best in his team.
“I’ve thought a lot about Doug’s style and the characteristics that make him an exceptional leader,” said Hart. “Doug is an excellent judge of character. He puts his trust in the skills and ideas of the people he’s hired and allows them the room to run. In this way, he engenders trust and loyalty from his team. He asks good questions and challenges his team and in this way makes them better. The team wants to do their best work for him. He has a unique ability to bring out the best in the people that work with him.”
As Hart steps into leadership, she’ll be emulating his style and encouraging intellectual curiosity and team exploration.
“I plan to continue with much of what Doug built here at Exelon. Our Investment Office has a culture of intellectual rigor, healthy debate and collaboration. Those characteristics are things to be protected and I hope to continue to foster those characteristics into the future,” said Hart.
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