Andrew S. Doman of Russell Investments

Andrew S. Doman, a former physician and founding director of McKinseys European Asset Management Practice, became CEO of Russell Investments in early 2009 and has since been on a drive to accelerate innovation in the global asset management company.

Early career: My father had a ranch in South Australia. You learn about self-reliance and hardship. It becomes part of your psychological makeup. Australia has its own myths of the outbacker as a pioneer, just as the U.S. has the Wild West. Myths are ways of communicating values, how to make your way in the world.

On hierarchy: When I was deputy medical director of a large teaching hospital in Sydney, I realized that a lot of the conventional wisdom about management didnt apply. We had 15 different stakeholders such as doctors, volunteers, city council members and charitable organizations. They all wanted to influence the way the hospital worked. Everyone wanted to maximize and self-actualize and their interests were competing with each other. Thats why I did an MBA. I discovered Henry Mintzbergs book on the [non-hierarchical] organization [The Structuring of Organizations].

The strongly hierarchical approach doesnt give much latitude for self-actualization. If you want to attract and retain really good people that are self-reliant and thoughtful and intellectual, as we need to do at Russell, you need to give them lots of autonomy and lots and lots of scope for personal action.

Changing Russell: We want to adapt our culture to a changing world. The world has globalized. At Russell, we value 65 stock markets worldwide every day, compared to just a handful after World War II. There has been enormous growth in access to capital markets. That has meant enormous growth in wealth. We at Russell are leaders in understanding this and thinking about the implications.

The flip side of globalization is specialization. To succeed, you have to be innovative and quick to market. What you want is a genuinely dispersed capability. If you can find the brain in an organization, you are in trouble. We need to evolve toward this global networked organization where you cant find the brain, where its enormously flexible and dynamic. We need people working together in interesting and unexpected ways to create value for our clients.

Hiring: In this kind of organization, we expect more from individuals. What we need are leaders, people who can create ideas from the ether of our organization. Consensus is the enemy of innovation. I look for people who are thoughtful but who are prepared to challenge the status quo, people who are bold in their thinking and iconoclastic.

The Russell advantage: We advise clients as to what is the right combination of assets for them and then implement that by placing money with fund managers we recommend. We are actually very good at it. We get a 0.5-to-1 percentage point advantage just on this. We measure asset managers on 100 attributes and try to distinguish which ones are most powerful in predicting success.

New headquarters: The free flow of ideas is important at every level. We will have easy access to world-leading CEOs as well as world-leading human resource managers and to people who have developed successful businesses around the world. All that is extremely important for a free flow of ideas. Its what makes the world go around.

We are using the open design of our [new headquarters building] in Seattle to enhance collaboration [within the company]. The space is designed to bring people closer together, to force people to bump into each other. We have all of our investment team on one floor. All our research team, asset allocation team and portfolio management team are all on one floor.

Collaborative technology: By mid-year, clients will be able to just open up a laptop and have video access to [Russell] experts from around the world. The new technology will also allow employees to collaborate in virtual space. They will be better able to make connections across the nodes of the organization, allowing the brain to be where it needs to be. The flow of ideas will speed up, helping to create new products.

New products: One new product idea is a hybrid of the traditional defined benefit plans and [the 401(k)-style] defined contribution plan. With the 401(k), the individual is in control and the company doesnt have liability. But unlike traditional plans, the individual cant disperse risk to the group and faces risk around investment decisions and how to live off the proceeds in the years following retirement. Were trying to create a product that takes benefits from each approach. To develop something like that requires a lot of collaboration.

A Seattle finance cluster: State pension funds could [attract asset managers to Seattle] by directing money to local asset managers as they do in Singapore. Russell could be helpful in evaluating the strength of [local] managers. Education is also important. We will be working closely with the Foster School [of Business at the UW]. I will teach there. Our CIO will teach there. Well get the opportunity to expose students to what Russell does and get them excited about the asset management industry as a whole, and hopefully create a center of deep talent. There are already venture capitalists, quantitative players and other asset managers in Seattle. If we are more organized about it, we could encourage the growth of this industry. It will take 10 years, but Im hoping we can really build something.

Seattle has a state-of-mind advantage. There has been a lot more innovation and leadership in Seattle than our population would suggest. People really believe that they can be successful and make a major contribution. Thats an important psychological advantage. Everyone wants to play on the successful team.