From the C Suite with Commonwealth’s Joe Deitch: Recognition he didn’t know enough helped him save the firm

Joseph Deitch didn’t study business before starting advisory firm The Cambridge Group in 1978 or before founding broker-dealer Commonwealth a year later.
But the Boston born, international relations major succeeded with both until national market conditions started pulling financial institutions under in the 1980s.
With some help, he managed to right Commonwealth Financial Network, and the Waltham, Mass.-based company now boasts 1,650 advisers, $100 billion in assets and 775 employees.
Along the way, Mr. Deitch, 65, has cultivated a few other passions, including a love of theater that helped him pick up a 2012 Tony Award for co-producing The Gershwin’s “Porgy and Bess.”
Liz Skinner: You are chairman of one of the nation’s largest independent broker-dealers. How did you come to snag a Tony Award?
Joe Deitch: Like many ventures, we get into them because we meet someone. In my case it was my cousin’s business partner who was dabbling in theater. I have always loved theater and my first foray was fun and profitable. After that, another friend introduced me to a great guy who was a veteran Broadway investor and we became partners. He died a few years after, but I had the bug. Broadway also served as an activity where my son and I could work together.
As for the Tony, that was for Gershwin’s “Porgy and Bess,” the great American musical. Interestingly, it was the only production out of the dozen we did where I was in it primarily for the art. One of the lessons learned is that we generally do better in areas where we have experience and expertise; therefore, after Porgy we stopped producing plays and now we are quite content to be in the audience.
LS: When was the first time you were in a leadership role?
JD: In high school I was the president of numerous clubs and initiatives, but it was when I started Commonwealth that for the first time it became apparent to me that the staff didn’t see me as one of them. This was the first time I was really looked at as the boss, which felt like a loss to me because as human beings we enjoy friendships with others. It was lonely for a few years. Then I attended an owners and managers executive program at Harvard Business School. It was a three-year program that went 24/7 for three weeks a year, and there were 120 company presidents from 20 countries — and it was delicious! Everyone there was like me. We were running organizations and trying our best, but we all faced challenges.
LS: What were the trials that led you to invest such time in the program?
JD: In the 1980s the business was suffering from a combination of outside circumstances and from my not yet knowing how to manage an organization during trying times. It was after the Tax Reform Act of 1986 and the stock market crash of 1987. We were going down. But I realized that the real problem was me. And since I was steering the ship, in order to fix the company I had to fix me. The executive program was perfect and it absolutely saved Commonwealth.
LS: What was a key takeaway from that program that helped you revive the company?
JD: I was desperate for knowledge and I would take copious notes. At the end of the program, I had 10 pages of distilled nuggets written out, but it was too much to be functional. I eventually got it to one page with 40 points, and that was too long. I eventually got it down to one word for me, and it was “listen.” To listen to the people around me, to listen to the whispers within myself, to listen to the environment, to listen to what was coming down the road, and listen to everything big and small. That was my mantra. Prior to that I had not been very good at that. I thought I was good at it. I remember back to my younger self and I would politely listen to people until they finished what they were saying, and then I would tell them why they were wrong. I thought that was listening, but it wasn’t.
LS: What other important leadership lessons did you learn along your career path?
JD: Not rushing towards a decision, but waiting until everyone has their say, and waiting until there’s a clear consensus. We have a partnership group at Commonwealth; there’s 11 partners and another 11 senior vice presidents. If we are going to function as a group, consensus is critical. When there is a challenging issue or some thorny question, we work our way through it. When you do that you make much better decisions.
LS: So you lead by being collaborative?
JD: I’m the majority stockholder at Commonwealth and as such I can always pull rank. But if you’re looking to empower your senior team, you don’t accomplish that by constantly overriding them. So I will probably overrule something once every two or three years.
LS: Can you remember a time that was important enough to overrule the team?
JD: There was a time when there was an issue with one of our advisers where 10 people felt one way and one person who knew the adviser felt differently. He was quite passionate in his disagreement. So I decided we should continue to deliberate and look at the facts. In the end, the partner who was the lone voice convinced all of us. Now that we look back on that, it turns out he was right.
LS: What kind of culture are you trying to foster at Commonwealth?
JD: We wanted to be utterly wonderful in terms of both personal and professional development. We want Commonwealth to be successful, and it has been, but because we all spend more time at work than we do at anything else in our lives, we would be foolish not to create an environment where we can thrive. Commonwealth has always dedicated itself to quality and community. We literally want to be the best in the industry at everything that we do. I got that from Horst Schulze, founder of the Ritz Carlton chain. He realized in speaking with every department of the company that each person wanted to be exceptional at what they did. People want to feel great about what they do. They want to feel like they are making a difference, that they are bettering their career.
The other part of the culture is we absolutely want Commonwealth to be a great place where everyone can thrive, where everyone there trusts each other. That’s enormously practical. Sometimes I hear someone say, “I can’t stand that company,” about a cell phone or some other company, and why do they hate that company? Because they had a bad experience with one person. In their mind, that person represents the entire company. So we want to make sure we have the right people and that everyone is happy and delivers the kind of service and message that we want.
LS: Last year you added to your mission statement, “We want to make a profound difference in our world.” Why?
JD: In 1998 we hit $100 million in revenue at Commonwealth and we asked what our next goal was going to be. After months of discussion we settled on striving to be a $1 billion boutique. We reached that in 2015. Last year, I said it’s time to think about where we go now. I think it’s important to choose primary goals that are heroic, that somehow connect with our purpose and passion that we can aspire to, that get our juices going. Our giving back initiatives are hugely popular and we realized we wanted to add that to our mission and vision. As we look to grow and stretch ourselves, this whole notion of making a profound difference will serve as a catalyst.
LS: When you are hiring, what is something that you look for in people?
JD: We are looking for the right match. There are some jobs that need someone very outgoing and some jobs don’t. For 15 years we’ve used a particular protocol called the Predictive Index, which helps make everyone clear about what’s needed for a specific job and whether this person, as nice as they may be, is best suited for this position.
LS: Who were some important mentors for you?
JD: My father died when I was a teenager and I always felt that I lacked a mentor. While I never found a specific mentor per se, I have benefitted from so many other people. One was my wife, who passed away; she was a brilliant psychologist. I learned parenting skills and relationship skills from her. She was a pied piper; men, women, adults, and children, everyone adored her. Another was a fellow when I was a teenager and had a construction job and he was the supervisor. There were a couple supers at the firm, but everyone loved this guy. We’d work harder for him. He had a reputation of getting jobs done ahead of time and under budget. I was always fascinated; how did he do that? Basically he was a good guy, he was in there with you, he was honest and he cared about you. He was the embodiment of everything I try to do today.
LS: What kind of feedback have you received over the years about the way you manage?
JD: People appreciate clarity, collaboration, fairness, honor and humility, and I get good grades in those areas. That said, they also point out my weak areas. I can speak without thinking something through, I can run inefficient meetings and I’m not always punctual. When you’re at the top of an organization, all eyes are on you and mistakes get magnified. Fortunately, I have an amazing team and we all do our best to help each other.
LS: I hear you’re writing a book. What is it about?
JD: I’ve been writing a book for 20 years, and it’s now a few weeks from heading off to the publisher and editor. Like most people, I have learned a lot in my lifetime and had a lot of “a-ha” moments, and I have wanted to pass them along. But most such books are either “how tos” or they are books about being more aware. There didn’t seem to be a volume that condensed everything into one accessible and overreaching theory that people could understand and reasonably reference. So my goal has been to create a single volume which would apply to all and everything.
LS: Does it have a working title?
JD: “The Knowledge.”

Related Topics: Commonwealth Financial Network LLP