Use the Five‑Year Test: Franklin Templeton CEO Jenny Johnson

11:38Steve Sedgwick:What's the best decision you've ever made in your career?

11:41Jenny Johnson:Well, I got to tell you, I really love being CEO.

11:44Steve Sedgwick:That might be the best decision.

11:46Jenny Johnson:Was it inevitable? No, no. To be honest, I was the younger sibling. I was number six of seven. I was staying in my lane. I didn't really aspire to be CEO because I felt like if I were going after the CEO job, it meant that either something happened to my sibling that was in there or it was going to be a battle. And you hear about these family businesses where that happened.

12:10Steve Sedgwick:We've all seen succession.

12:11Jenny Johnson:Exactly. Except people who say, is that your family? I go, no, no, no. I promise you it's not. Are you sure? Yeah. I know. I promise you it's not. Ever? No, we're pretty good.

12:20Steve Sedgwick:Okay.

12:21Jenny Johnson:And honestly, my dad is such a great man. He's always thinks about other people. And honestly, I think we all wanted to respect the fact that he's given us this incredible gift. I mean, I'm honored to be in this position. And I'm not convinced it would have happened if it hadn't been my father, who was one of the key founders in the company. And so what ended up happening is my brother had this other opportunity. And I do think that, I think he's probably more men than women. I'm going to be stereotypical here, but who love the idea of running a sports team. I mean, I don't think my brother's ever been happier.

12:57Jenny Johnson:And so he had an opportunity to do that. And so then it made sense for me to be able to move into this role.

13:02Steve Sedgwick:Jenny, you strike me as a very strong feminist as well and a very strong advocate of women. And I know you're involved in charities that get young women to invest as well. But isn't that buying into the patriarch a little bit saying, yeah, guys like sport, they're better at running or they prefer running it as well?

13:17Jenny Johnson:Well, I didn't say they're better at it. No, you didn't. They might like it more. Again, I was on the board, so I was very close to a lot of the decisions, but I didn't aspire. Now, that's me personally, and I don't want to say that other women, I shouldn't generalize about it. I didn't aspire to run that baseball team. I aspired much more to probably this job as a CEO.

13:39Steve Sedgwick:So CEO, standout, best decision of your career as well. What do you love about it? apart from helping people, which you've already described.

13:46Jenny Johnson:Yeah, it's, believe me, it's a lonely job. And there were other decisions that were important. Running technology was a really pivotal decision. And I, it was hard. I didn't come from a technology background. I started out on running technology because we, this shows you how old I am. I was given the job of e-business and the definition was anything to do with the internet was under me. So anything to the internet. At the time, companies thought of the internet as a billboard, not as a communication channel. But over time, I just kept taking more and more of the technology kept coming under me.

14:25Jenny Johnson:And today, honestly, in a time which I would tell you that in my career, I have not seen the kind of pace of change like we're seeing now with AI and tokenization, that to have that technology background is such a great tool in the tool chest as a CEO, because I can comfortably talk about these topics. I have a strong view. I can sit there and talk to my CIO and my CTO, challenge them on how we're thinking. Are we pushing enough? That I think if you didn't have that background, it would be difficult to do. So there's a lot of lucky decisions and then I made some bad ones too.

14:59Steve Sedgwick:All right, well, let's go through it. What's the luckiest decision you've ever made?

15:02Jenny Johnson:Well, I would probably say ending up taking on that technology role because I really think -

15:06Steve Sedgwick:You had to learn.

15:07Jenny Johnson:I had to learn. And I got into the details. And I mean, I'll tell you something. Sometimes technology people, they'll say, listen, it's too complicated for you. Don't worry yourself. I've got this. That's so patronizing. It's exactly, I've got this. And I'd say, yeah, I appreciate that. Humor me. Could you just explain that one more time? And I just was relentless in trying to understand it. And ultimately, you know what I learned, and this is what I'd say to anybody sort of in a leadership role who doesn't have comfort there, is it's actually not that complicated. Technology is moving one piece of data from here to there, and then sometimes adding some data.

15:41Jenny Johnson:So if somebody can't describe it to you, it's probably more their lack of understanding the technology than their ability.

15:46Steve Sedgwick:Isn't that the Einstein quote that if you can't explain it to an eight-year-old, then you don't understand it well enough yourself?

15:52Jenny Johnson:I think there's truth to that in technology. And so I don't think anybody should be afraid. And if somebody ever says, listen, it's really just too complicated for you, it's because they don't know how to describe it. I'll remember that on CBC.

16:03Steve Sedgwick:Look, you said you've made some bad decisions as well. Talk us through some of those.

16:06Jenny Johnson:I'll tell you it was so it's interesting. I'll tell you one of the hardest times I had at the company and how ultimately I put it as one of my best experiences, learning experiences. So we had a bank and we decided to get into the auto loan business. Let me just say, if you don't know who the sucker is in the room, it's probably you. We might have been that for a little bit. We were trying to build a loan portfolio and we were buying it from finance directors and dealerships. And we ended up having a lot of credit problems. I probably will know more about auto lending than I'll ever know about asset management because I had to learn all the data.

16:45Jenny Johnson:Now, exactly. And the regulators, we had a problem and the regulators came in and it was one of those where this teeny little business was the regulators were coming down so hard on us that it was actually affecting our asset management business. And I remember I would wake up in the morning sometimes and I'd find myself literally in the fetal position thinking, oh, no, I got to meet with the board or the regulators. And it was the lesson I learned is in some of those toughest times, probably the most important thing is just keep putting one step in front of the other. It can be overwhelming to think about how you get out of the problem.

17:21Jenny Johnson:But what you can do is you can solve today's issue and you make those steps. And what you can't do is just freeze and paralyze yourself from moving forward. I tell the story about when I climbed Kilimanjaro and they say pole pole, slowly, slowly. And on the last day where you're doing the peak, it was literally that like, okay, five more steps, five more steps. And I think sometimes when you're facing a really difficult business problem, that as you kind of lay out the framework, address what you have to address in front of you.

17:55Steve Sedgwick:it's so fascinating listening to what you just said and the line you said earlier about it's a lonely place being a ceo because i've been privileged to have a lot of these interviews now with amazing men and women like yourself and people look from the outside they're omnipotent they're always confident they've always got a great answer but knowing as i do now how lonely the position can be and how mentally difficult it can be in those moments of crisis and i've heard about moments crisis from others as well. That is the toughest part, isn't it? Even making just normal decisions when you're under so much pressure.

18:33Steve Sedgwick:Tell me a bit more about that.

18:34Jenny Johnson:Well, the funny thing about the CEO's job is the first and most important decision you ever make as a CEO is the team of people you surround yourself, right? It's kind of like a sports team. I mean, if you're the coach, you got to put the right people in the right positions and field the right team. So if you do that well, chances are the only decisions that are coming to you are the ones that they haven't solved themselves, and they're going to be really tough decisions, right? And so there aren't a lot of easy decisions that get fed up to the CEO. So they can be tough. My dad always said, not making a decision is a decision in itself, right?

19:11Jenny Johnson:So it was kind of a lesson that you can't escape from not dealing with it. You really need to deal with things head on. And then what you do is if you have the right team, you really sort of trust and talk to them. And I think it's important to build a network of other CEOs that you can talk to confidentially about things.

19:30Steve Sedgwick:That are peers and mentors. Yes. But again, you mentioned being in the fetal position. And I've known in moments of my career, when I was a trader, I made a howler and it was like everything went wrong. I didn't know what to do. I didn't know where to turn. What do you do as a mechanism internally or who do you go to or how do you cope with those absolutely horrible moments?

19:53Jenny Johnson:Well, first of all, you definitely have to find the strength internally to face it, right? So the first thing is you have to decide, I'm going to face this. And what do I have to do today? And that literally at times it was, you know, what do I have to do today? I'll tell you a crazy story, which I didn't tell for years. We had a software, we were installing a new software and it was had some bugs in it. It was something that was automating the wiring of when people did redemptions, we'd wire the money to their account. It was just automating that. And it kept having these bugs. And so somebody said, hey, why don't we flip this switch and let's try it tomorrow?

20:32Jenny Johnson:And so we did it tomorrow and the next day and it crashed after 15 minutes.

20:37Steve Sedgwick:Your own personal Y2K.

20:39Jenny Johnson:Yeah. Well, it crashed because it was looping the wiring and it wired out$680 million. dollars. Wiring is good funds. And so, as you can imagine, at the time, that was more than a quarter's earnings for Franklin Templeton, right? I mean, it was a massive amount of money, still is. And having to figure out how to solve it and just breaking it down into the small steps of, and it was as simple as like you had to call up, you know, somebody, the little old lady who was getting her redemption. You said, I know you wanted 14 ,000. We sent 1.4 million. Can we come to you and, And, you know, will you go to the bank and sign it?

21:16Jenny Johnson:So, you know, there's difficult days and it's all about how you respond to them. And we got every dollar back. And as I said to the board, this is the challenge of every CEO runs any kind of operations. Your test environment for technology is never exactly the same as your live environment. And so there's always a risk whenever you're updating or adding new software into your environment, there's always a risk in that environment.

21:42Steve Sedgwick:When things are that tough, and there are always going to be moments like that, how do you balance your life? How do you still be that person who's there for your family, for your amazing children as well? Or actually, do they just have to, do you have to kind of prioritize and just say, look, I can't be the parent or the family member I want to be at the moment because this other decision, this other problem is just dominating?

22:04Jenny Johnson:Yeah. So I had kind of a trick that I used myself when my, now my kids are adults. So now the problems are just more expensive and harder to solve.

22:15Steve Sedgwick:Tell me about it. They're never off the books, are they? They are never off the books.

22:18Jenny Johnson:Somebody described themselves recently as a retired mother, and I said, oh, you're so optimistic. Yeah, I got a 26-year-old son.

22:24Steve Sedgwick:They're never off the books. Never, exactly.

22:27Jenny Johnson:So I would try to, if I were facing a true conflict between the two, you know, demanding of time, I'd try to think to myself five years from now, which of these things is going to be more important? And actually, if you did that, often there became clarity about where to spend that time. Maybe it wasn't so important at work. Maybe you knew you were going to be okay with your kids if you didn't show up at that particular thing. So that was one kind of technique that I used. And look, you're not there all the time, but the key is, are you there when it matters? And I think my children would say that I was there when it matters and continue to be.

23:08Steve Sedgwick:To be successful, you have to fail as well. You comfortable with failing?

23:13Jenny Johnson:You have to fail. And I actually think what's going to determine whether somebody's successful is not how well they do on their successes, but how well they dust themselves off from failing. And can they admit it early enough before it becomes too damaging that you can't reverse it? Like you're going to try things as a company. You're going to try things individually. And you need to stay on top of it to make sure you're in the right direction. And if you can't admit that the decisions that you made are working out, if you're too afraid to say that that wasn't the right decision at the time, I think that's when you're going to be in trouble.

23:50Jenny Johnson:And you make decisions based on the information that you have at that moment, but you'll gather more information. You have to be willing to pivot based on whatever information you have at that moment.

24:01Steve Sedgwick:A lot of female CEOs I've spoken to have taken on board that not only do they have to be very good at their job, all CEOs do, but it seems that the women really appreciate that very often there's a lot of men saying, why has that woman got this job as well? But they also see themselves as a role model for other women as well. Do you see yourself not only as a very competent CEO of your business, but also a role model for other women? I certainly hope so. Is that important to you that you use your position as that?

24:28Jenny Johnson:I think it's important to me to try to mentor other women who are thinking through and aspiring to do if this is something that they want to do. It's funny, I was just talking to a woman who was saying that she's being considered for a CEO role. And I said, make sure they know you want it. I actually think that that's one of the mistakes that women make is they don't speak up and say They want it. And just in my career, I will often, it is more often that you will hear men say, okay, I'm ready for the next thing. And what do you have for me?

25:04Steve Sedgwick:Even if they're not ready for it, because that's in the male psyche. That's a very male psyche plus Wall Street equals overconfidence.

25:10Jenny Johnson:Okay, you said it. I didn't say it.

25:12Steve Sedgwick:I said it because I've seen it a hundred times. Yes.

25:14Jenny Johnson:And so, and what I realized as a manager of talent is, you know, the moment that's said to you, it's sort of now on you, the leader, to say, oh, I got to find something, right? I'm going to lose that person, that talented person. So the one that doesn't speak up, you assume, oh, that's, I don't need to worry about that now. They're okay now. And so I actually think it's important for women to speak up and say, I'm ready for the next thing. And chances are, if a woman speaks up and says, I'm ready. She really is ready.

25:42Steve Sedgwick:Are you saying that from what you just said, that women actually need a bit more bravado to match the men? Oh, I think for sure.

25:47Jenny Johnson:Absolutely. I mean, there's this, you know, I think that women will feel it. And I did it even myself. I remember my dad coming to me and saying, oh, maybe you should do this. And I was like, oh, no, no, I'm not ready to do that. And in the end, I think it was a mistake. It would have been better for the company had I done that. It was kind of managing some of the investment teams, and it was many, many years ago. And I was like, well, I'm not an investment person, but I'm a reasonably good people manager and it's about talent management. But I did not feel like I had the expertise to do it. And so I do think that that's something that women sort of feel like they have to have ticked all the boxes before they're ready to move into the role.

26:28Steve Sedgwick:I've got a quote here. I think it's from you. Second generation guilty mom does feel guilt, but also sees yourself as role model. A, is that accurate? Yes. That is accurate, great. So I don't see the reason why you should be guilty, but let me go with this. What needs to change in society to stop that?

26:43Jenny Johnson:So a couple of things. And thank you, because that is a great question. So number one, the reason I say that is because my mom was a working mom, I am really close to my mom. And so I see that you can be the child of a working mom and have a great relationship. Whereas if you're a woman who grew up with your mother always being there for you, you feel guilty that you're not there for, you know. And so that's what I mean about that second generation. I'm lucky because I've actually seen that role model. I'll tell you one of the, I think the most important things that can really help women is if senior men say things like, hey, I got to run out of the office today because I got to take my son to the dentist.

27:25Jenny Johnson:Or I'm running out of the office this afternoon because I'm coaching my daughter's soccer team. or whatever, that if men as leaders normalize that behavior, it will actually free the women a little bit from one feeling guilty and not being able to speak about it in the office. And to be honest, for men, there can actually be a stigma of like, really? You're going to leave to go do that? Why isn't your wife doing that, right? Because if some of the senior peers actually have a stay-at-home wife, the chances are they're doing it. But I think that's where men can make a difference. And you can have the HR policies that say this is all okay, but people replicate what the senior leaders do.

28:09They'll say, if that guy was successful, how did he become successful that way?

28:12Steve Sedgwick:So the CEOs who are your peers on Wall Street and elsewhere, they need to make the decision to say, I'm going to be this role model. Yeah, and say it openly. But we talked about bravado and machismo. Do you see enough of those kind of guys?

28:28Jenny Johnson:Do I see enough of them? I think it's getting better since, but again, society, I also, you have to respect that there's some pressure on men to not actually say that, right? And so we also, that's where the leaders who have kind of made it, if they can normalize it, that'll be a really good thing.

28:46Steve Sedgwick:There's no doubt about it. Your company and the whole savings and investment business is under a lot of pressure as well. And you mentioned some of the changes, AI, tokenization, crypto, what have you, private markets as well. What are the big decisions that you think you and your industry needs to make pretty imminently to stay ahead of those changes that are happening in finance? So I think that two things that are going to be in many ways, it's almost too late if you haven't done them.

29:17Jenny Johnson:If you're a traditional asset manager and you haven't already acquired significant capability in private markets, it's going to be too expensive for you to do it. Because the differential in what a traditional manager trades at versus a private markets manager. Because you have to be able to offer the full spectrum of capabilities. and the future is going to be a combination of private and publics coming together in pooled products. You take the world of fixed income. I actually think that the future of fixed income, you will have investment teams that cover both public and private and that the best teams will have really good sourcing of deals built as part of their team where they're going to be able to say to a CFO, oh, you're interested in getting some debt.

30:03Jenny Johnson:We can give you a solution in the private markets or we can give you a solution in the public markets. And so if you haven't built that capability, and let's say you're a high yield analyst and you're not aware of what's going on in the private markets, you're literally managing money with half the information. So I think that one, having made the decision to go into the private markets is absolutely critical. And the second thing I think will happen is if you don't have scale, you are not going to be able to compete with AI. Today, none of us are doing it really well. We're all doing stuff in it, right?

30:35Jenny Johnson:But none of us really differentiate it in a way. But data is going to be critical. We already spent, Franklin Templeton spent hundreds of millions of dollars on data. And if you're subscale and you can't get the data, you can't afford that level of data to be able to train your models, I think it's going to be difficult to compete. So those are kind of the two critical things. And then I think, look, we got involved in tokenization. And I think this is where my background in technology was really helpful. That's why I became such a believer in it.

31:02Steve Sedgwick:Your self-learned background in technology. Yeah, exactly.

31:06Jenny Johnson:Because I look at blockchain and it's such an amazing technology that I genuinely believe it will replace the rails of financial services over time. And so we have a tokenized money market fund that has some really cool features that you couldn't have if it wasn't built on blockchain. You literally get your yield paid to you in your account every day. Now, you're going to earn it in a money market fund, but you don't get to use it. Here, if you're a CFO and you've got hundreds of millions, even a billion dollars of cash sitting there, you can actually get that capital to be able to deploy because the technology allows us to pay it every day.

31:40Jenny Johnson:We actually calculate it every minute. So to me on the tokenization side, I think it's one of those things where it may be a few years before it becomes meaningful, but it's going to transform parts of the business. And I think you have to have the core knowledge in your firm to be able to understand and make sure you're riding the front of that wave.

32:01Steve Sedgwick:What are Jenny Johnson's best qualities?

32:06Jenny Johnson:I'm very loyal. I love being a mom. That's like the best. I love what I do. I think that people trust me. I think I'm pretty candid and honest. And I think people feel that. I don't know. I'd have to ask other people.

32:30Steve Sedgwick:I'll ask your team after. Exactly. You got to talk to them. When you're not a top CEO and you're not a top mom, what is the most selfish thing that you love to say? What did you decide to do for Jenny Johnson when you don't have to worry about anyone else?

32:43Jenny Johnson:Oh, man, I go and ride my horse in Montana and just feel like I've escaped. It's the best.

32:52Steve Sedgwick:We'll leave it there. Thank you very much indeed. Superb. Thank you. Thank you. Jenny Johnson was incredibly warm and generous with the time she gave us for the podcast. She's an amazing leader who fully admits that she got her initial break from being a Johnson the Franklin Templeton Company was built up originally by her grandfather and then her father. So it's very much a family enterprise. And she admits that was where she got her initial break. But look, she's had to work so hard to prove she was worth it, at least as hard as others, possibly twice as hard to prove that she was worthy of that position and ultimately becoming CEO.

33:31Steve Sedgwick:Another really fascinating thing about Jenny is she's got these amazing patriarchal role models, her father, her grandfather, building up a really big financial company, but also her mother, a woman who's extraordinary in her own right, building up a very large family, looking after her and her siblings, but also studying at Stanford Medical School and becoming very successful in her own right. Jenny Johnson's story is both fascinating and inspiring. Thank you very much indeed for joining me on Executive Decisions. I would love to hear your feedback. Drop your thoughts in the comments or a review.

34:07Steve Sedgwick:And please hit that follow or subscribe button. You won't want to miss the next episode of the podcast dropping on Tuesday, where I speak to the CEO of Schneider Electric, Olivier Blum.

34:17Jenny Johnson:When I hear a leader who tell me or managers, I know everything. I say, look, I think you got it wrong. Because the higher you go in a company, the less you know.

34:33Thank you.