think tanks with deliverables: how communities of practice helped lpl financial manage rapid growth...

Think Tanks With Deliverables: HowCommunities of Practice Helped LPLFinancial Manage Rapid Growth andOrganizational Complexity J ACK REGAN

AND JODI GOLD

In the wake of acquisitions, new hiring, and a shiftfrom a functional to a customer channel structure,the company pulled its best and brightest talent intopractice centers (PCs) to share knowledge, trans-fer best practices, standardize policies and practicesacross the channels, drive key initiatives, and cementcollaborative relationships. The authors present thebusiness case for communities of practice; describeLPL’s vision and process for implementing its PCs,including strategies for enhancing success and avoid-ing potential pitfalls; and highlight the PCs’ accom-plishments. They also share how the PCs facilitatedthe company’s response to the 2008–2009 financialcrisis. © 2010 Wiley Periodicals, Inc.

LPL Financial grew out of a pioneering vision: tobuild a formidable alternative to large Wall Streetfirms by helping entrepreneurial financial advisorsestablish successful businesses through which theycould offer truly independent financial guidance andadvice to their clients. Founded in 1989 throughthe merger of two small but successful broker-age firms, the company experienced a decade ofdouble-digit growth prior to the onset of the globalfinancial crisis in 2008. It was ranked as the number-one independent broker/dealer for 13 consecutiveyears, supporting more than 12,000 financial ad-visors across the United States, and at the endof 2008 had $3.1 billion in annual revenue and$259 billion in brokerage and advisory assets, aswell as approximately 7,000 branch locations and2,500 home-office employees in Boston, Charlotte,and San Diego.

In the mid-2000s, the company sought to broadenits business model, through acquisition and organicgrowth, to include services to banks, credit unions,independent branches and broker/dealers at majorfinancial services companies. To implement the newstrategy, the company embarked on a major reor-ganization, transitioning away from a historicallyfunctional structure toward one with a greater focuson customers, aligned along three distinct customerchannels:

� Independent Advisor Services, the existing chan-nel for independent financial advisors;

� Institutional Services, serving regional/commu-nity banks and credit unions; and

� Custom Clearing Service, serving large financialinstitutions.

Each channel would have dedicated resources toprovide broker/dealers with service and operationsofferings and “back-office” support that includedsales and marketing expertise, information technol-ogy services, investment research, and oversight oncompliance with state and federal regulations.

In just a matter of a few years, the new strategy hadled to tremendous organizational growth, includingseveral acquisitions; construction of the third home-office location in Charlotte; and rapid hiring at allhome offices. At the end of 2007, a large percentageof the employee population had a year or less tenurewith the firm—including senior leaders, many ofwhom came with large-company experience—and

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programs were established to integrate them intothe culture. LPL Financial was on its way to becom-ing one of the nation’s leading diversified financialservices companies.

A Business Case for Communities of Practice

During 2007, with the transition to a customer-focused structure well under way, the company,desiring to preserve its traditionally high level ofcustomer service in the midst of the dynamic change,sought a way to ensure the following:

� Preserve the legacy functional expertise, includ-ing industry knowledge and technical capabili-ties, and leverage it within and across all threecustomer channels.

� Communicate a consistent core message aboutthe firm to customers and the industry.

� Align policies and procedures for the many newemployees who had been recently hired or hadjoined the firm through acquisition.

Many forward-thinking organizations bring individ-uals with expertise and passion together in com-munities of practice (also called communities ofinterest), to share their knowledge and engage in in-novative thinking that fosters creative, meaningfulapproaches to problems.

Many forward-thinking organizations bring individ-uals with expertise and passion together in com-munities of practice (also called communities ofinterest), to share their knowledge and engage ininnovative thinking that fosters creative, meaningfulapproaches to problems. Communities of practicehave added value to their organizations in a numberof critical ways:

� Help drive strategic direction in the organization.They are designed to take on significant areas

that require cross-functional participation tothink and act strategically as well as implementstrategies.

� Solve key problems quickly. By virtue of alreadyfunctioning as a cohesive collaborative entity,communities of practice are well positioned toaddress, in a high-quality and an accelerated way,any new issue or problem as it arises in theorganization.

� Transfer best practices. A key focus of commu-nities of practice is to uncover and relate the bestpractices that exist in the company or in the in-dustry so that they can be transferred and imple-mented throughout the organization.

� Develop professional skills. By working withone another on a specific area or function, par-ticipants can develop key skills together andimpress them upon one another. Communities ofpractice can be a professional development expe-rience that invites and utilizes mentoring.

� Help recruit and retain talent, especially throughinclusion of high-potential leaders and a focus onwork that is closely related to the interests andexpertise of participants.

LPL’s Vision for Practice Centers

With these insights about communities of practice,LPL Financial decided to establish what it calledpractice centers (PCs):

Cross-customer, cross-channel teams of the bestminds from the key functional disciplines whowould share knowledge and learn best practicesfrom one another; undertake projects; and coordi-nate work, including standardization as appropri-ate, across the firm—all with the goal of drivingbusiness success.

The company envisioned the PCs as becoming intel-lectual cornerstones of the firm—a sort of think tankwith deliverables—that would be an integral part of

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managing rapid growth as well as integrating anincreasingly complex organization.

A cross-section of key stakeholders were either in-terviewed individually or brought together in focusgroups to help understand all the ways the PCs mightadd value to the business, and to provide input on PCdesign and execution and on which PCs to launch.

A cross-section of key stakeholders were either in-terviewed individually or brought together in focusgroups to help understand all the ways the PCs mightadd value to the business, and to provide input on PCdesign and execution and on which PCs to launch.The stakeholders voiced a number of useful opin-ions and ideas during this process, including thefollowing:

� They thought highly of the idea of forming thePCs; it made a lot of sense to them, and theywanted to know how they could support it.

� It would be very important that the PCs showvalue to the customer channel owners and notbe just conceptual entities—they must focus onimplementing important initiatives.

� The PCs could also be used as a mentorshipopportunity for some of the “rising stars” inthe firm, as well as be teams that people wouldaspire to be part of.

� The PCs could address areas where it was im-portant for LPL Financial to present a consistentlook and feel to clients and the industry (includingregulators) within and across customer channels.

� PCs should initially be created in those areaswhere LPL Financial faced competitors in themarket, and therefore required consistency ofmessage and continuity of policy.

Which Performance Centers to Launch

Taking stakeholders’ input into consideration, thecompany decided to form six practice centers.

The first group of three was rolled out inSeptember 2007:

� Recruiting (responsible for managing the LPLsales force, which brings new customers to thefirm);

� Advisory Sales (responsible for managing theprograms and the sales force that advises andsupports customers with growing their advisorybusiness); and

� Compliance (responsible for understanding andimplementing regulatory policies and proce-dures to ensure customers are doing business incompliance with state and federal laws).

After giving the first three PCs time to settle in—and the company some time to learn from the ini-tial rollouts—the remaining three were launchedfour months later, in January 2008:

� Marketing/Branding (responsible for supportingcustomers’ marketing efforts and evolving thefirm’s brand within the industry);

� Sponsor Relations (responsible for working withcompanies that provide investment products tothe firm’s customers); and

� Advisor Training (responsible for training cus-tomers to use the firm’s technology, and forother courses that support the development andrunning of successful businesses).

Mission and Vision of Success

Key LPL Financial executives articulated an overallmission and vision of success for the practice centersthat would serve as a broad guideline for eachcenter’s specific charter and would inspire indivi-duals to join:

� Establish and implement best practices across theorganization.

� Accelerate the transfer of knowledge and infor-mation within and across the channels.

� Foster close working relationships among keyknowledge leaders.

Global Business and Organizat ional Excel lence March/Apr i l 2010 19DOI : 10.1002/ joe

� Raise the level of excellence throughout the firm.� Become “learning hubs” for new knowledge as

the company continued to grow by stimulatingand supporting innovation.

Implementation Process

The process for establishing and launching the prac-tice centers entailed seven steps:

1. Gain executive sponsorship.2. Draft the team charter.3. Get input from executive leadership on team

charters and membership.4. Support each PC with an effective coach/

facilitator.5. Conduct enrollment for each team member.6. Review draft charter with the leadership of

the functional area (i.e., Compliance, AdvisorySales, etc.).

7. Conduct a kickoff event.

The key elements in this implementation process arediscussed in greater detail in the sections that follow.

For each PC, it was vital to ensure that at leasta couple of key senior leaders take on a role asa sponsor, classically defined as someone who isfundamentally accountable for the success of theteam being sponsored and is also willing to find orprovide the resources or budget required by the teamto achieve its goals.

Executive Sponsorship

For each PC, it was vital to ensure that at least a cou-ple of key senior leaders take on a role as a sponsor,classically defined as someone who is fundamentallyaccountable for the success of the team being spon-sored and is also willing to find or provide the re-sources or budget required by the team to achieve itsgoals. The sponsors worked with others in advance

of the launch of the PCs to develop a draft char-ter. After the launch, they attended practice centermeetings and used the practice center venue to getwork accomplished that would be critical to a busi-ness unit’s success, thereby helping to ensure thatthe PC created real value for the company. In retro-spect, strong sponsors were certainly one of the keysuccess factors of the PCs at LPL Financial.

Team Charters

A team charter is in effect a delegation of powerto the team to carry out a mission and, hence, isa document of empowerment. At LPL Financial,the charters for each PC were developed throughan iterative process that assured input from allstakeholders, including the members themselves.Sponsors and key stakeholders initially drafted theteam charters, which were further refined basedon input from executive leadership, functional arealeaders, and conversations with team members dur-ing enrollment. Each PC team finalized its charterduring the kickoff event.

These iterations were geared toward developing afinal document with the following key components:

� Purpose: The reason why the PC exists, its par-ticular mission

� Performance Goals/Deliverables: The specificgoals/deliverables in the coming year that wouldaccomplish much of the purpose of the PC

� Resources/Roles: Who would serve as a resourceto the PC, and who would be filling what roles,including sponsor, team leader (if one existed),each team member, and a team coach/facilitator

� Operating Assumptions: The assumptions amongteam members as to how the PC would op-erate (e.g., frequency of meetings, modes ofcommunication, etc.)

� Operating Principles: The key principles thatwould guide how team members behaved withone another


� Boundary Conditions: What is included in andexcluded from the PC’s work/purpose

� Decision-Making Process: A clear descriptionof how decisions would be made within theteam in order to achieve its performancegoals/deliverables. At LPL Financial, all PCs op-erated with a universal form of decision making:strive for consensus on all decisions, wherein eachmember understands, can “live with,” and willactively implement the decision. When consen-sus could not be achieved, the fallback decisionmaker was a subset of the company’s executivemanagement team.

At both the draft stage and during further refine-ment of the team charters, it was critical to differen-tiate the work of a PC from other projects or venuesto avoid potential conflicts or overlaps/redundancieswith the work of other teams/committees through-out the company. In addition, the purpose and deliv-erables of a PC had to be seen to bring value to all thePC members and the business channels representedin order to motivate a high degree of cross-entitycollaboration.

At both the draft stage and during further refinementof the team charters, it was critical to differentiatethe work of a PC from other projects or venues toavoid potential conflicts or overlaps/redundancieswith the work of other teams/committees throughoutthe company.

Effective Coach/Facilitator Support for Each PC

A coach/facilitator was assigned as a resource toeach PC team to initially conduct enrollment conver-sations with the individuals invited to join the PC,and then to provide ongoing support and problem-solving tools to the team that would ensure ahigh-quality process and accelerated results. Threesuch individuals supported two PCs each, and they

often shared their cross-PC experiences and learn-ings with each other, which enabled them to con-tinuously strengthen the level of support to allteams. As someone who was committed to achiev-ing the chartered deliverable but from a neutral,process-focused role, the coach/facilitator was crit-ical in mediating interpersonal challenges amongteam members, helping the team to find positiveways to address any potential differences, conflicts,or relationship difficulties.

Team Membership

Selection

Key executive leaders provided input on which in-dividuals would be invited to serve as members ofeach PC as an adjunct to their full-time jobs. LPLFinancial sought individuals who met the followingcriteria:

� a longstanding reputation within the industry aswell as credibility within LPL Financial,

� clear functional expertise (versus just havinga title),

� the ability to think strategically and movefrom theory to execution, and

� the demonstrated skills and maturity that are apart of a successful team process.

Another important success factor for the PCs wasselection of members who were senior leaders in theorganization with the authority to reach agreements,make decisions, and, of course, implement them. Wealso sought to include one high-potential leader ineach PC, using the effort as a developmental oppor-tunity for LPL Financial’s leaders of the future.

The Enrollment Conversation

The coach/facilitator conducted an enrollment con-versation with each potential member of a practicecenter to ensure that each member believed in thenecessity of the PC and his/her involvement in it.The coach/facilitator explained that the person wasbeing asked to participate because his/her recognized


functional expertise and ability to think and actstrategically could bring considerable value tothe PC.

The enrollment conversation included the following:

� a review of the particular PC’s purpose, as statedin the draft team charter;

� the potential participant’s input on the PC’s keydeliverables;

� the individual’s personal concerns or expecta-tions, especially related to the potential timecommitment for team meetings; and

� a discussion of any other questions that arose.

At the conclusion of an enrollment conversation,the coach/facilitator asked the individual, “Are youready to participate fully in the activities of thePC? Will you?” The question was designed to movethe person from commitment to true enrollment—alevel of engagement that cannot simply be assumed.A response of “OK, I will try” conveys compliance,while a reply of “Yes, I will do it” conveys a commit-ment to the request. But LPL Financial sought indi-viduals who could say with certainty, “I am willingto fully participate,” a sign of true enrollment in PCmembership.

LPL Financial sought individuals who could say withcertainty, “I am willing to fully participate,” a signof true enrollment in PC membership.

The Kickoff Event

The two groups of three PCs were launched fourmonths apart, with a daylong kickoff event for eachgroup, preceded by a dinner the prior evening to cre-ate a social setting in which participants could beginto develop and build relationships with their teammembers. Trusted relationships would be importantto each team’s ability to effectively collaborate in

achieving its shared goals. During these events, in-formal sharing about past experiences and currentprojects and challenges often occurred and was animportant part of each meeting.

All three teams were together for the first portionof the kickoff session the next morning, and thenbroke away into their own PCs for the remainder ofthe day.

The kickoff event launched the practice centers withclarity, enthusiasm, and momentum in order to setup each PC for success on its deliverables. The eventwas designed and conducted to achieve the followingoutcomes:

� an understanding of the business case and visionfor the practice centers at LPL Financial;

� a greater sense of who the PC members are andthe value each brings to the team;

� clarity on the areas the PC would be exploring inits first three months;

� understanding and agreement on all elements ofthe PC’s charter (each team received a draft of itsPC charter, which reflected the input of execu-tive sponsors and leadership, functional leaders,and the team members during their enrollmentconversations, and then revised that charterthrough collaborative conversation during thekickoff event);

� agreement on the PC’s three-month work plantoward PC goals, as well as a short-term (usually30-day) action plan for meeting the PC’s nextmilestone;

� an initial set of best practices of the practicecenter; and

� a shared perception that the PC’s work is worth-while and personally meaningful.

Ensuring Success

After the kickoff event, each PC met monthly forthe first 3–6 months, and then either monthly orquarterly depending on the nature of its work at the


time. Face-to-face meetings were supported by andsupplemented with online and phone meetings asnecessary. When new members would come aboard,the coach/facilitator ensured that an enrollment con-versation took place with them to prepare them fortheir work with the team.

A number of mechanisms, described in the sectionsthat follow, were implemented to keep the teams ap-propriately focused and on track, and to keep seniorleadership informed about PC activities and results.

Focusing on Significant Deliverables

It was vital for the PCs to stay focused on intrafunc-tional deliverables that were significant to the firm.Only then would the teams’ work be worth the timeand effort invested.

Establishing Clear Agenda/Outcomes

for Each Meeting

Prior to and again at the start of each PC meet-ing, the team articulated and clarified a clear agendaand desired outcomes for the meeting, with thecoach/facilitator playing a major role in keeping theteam on task and focused. This was important forassuring not only that the PCs met their deliverablesover the longer term but also that members left eachmeeting feeling they had accomplished importantwork, and that they had useful information or ma-terial they could incorporate into their day-to-daywork and share with their staff. This reinforced thesense of creating value for their organizations andfor the firm as a whole.

Creating Ongoing Visibility of PC Work

to Executive Leadership

To keep the executive leadership team (and spon-sors) up-to-date and informed about the work of thePCs, each PC made periodic brief presentations tothe executive leaders in the LPL Operating Forum to

review current membership, the current work plan,and accomplishments to date.

To keep the executive leadership team (and spon-sors) up-to-date and informed about the work of thePCs, each PC made periodic brief presentations tothe executive leaders in the LPL Operating Forum toreview current membership, the current work plan,and accomplishments to date.

Annually Updating Team Charter

As a real clue to success, each PC would not onlyconstantly monitor its charter but, at least on an an-nual basis, also concentrate on what the upcomingyear’s performance goals/deliverables would be aswell as the other key elements of the charter. In someinstances, it might be the time to celebrate accom-plishments and close down a PC that had achievedall that it had set out to do.

Avoiding Pitfalls

The coaches/facilitators and the teams also re-sponded to and resolved a number of potential pit-falls, described below, that arose during the work ofthe PCs.

Participation Not a Priority for a Member. In cases wherethe member was not suited to the work or was notfully engaged and participating in the PC, the mem-ber was replaced, and the coach/facilitator enrolled anew member using the process described previously.

Competitive Elements Among Leaders. Early on, someposturing was apparent in some of the PCs.Coaches/facilitators stepped in when needed to chal-lenge group members to keep the team on track,and/or to keep an agenda focused on productive in-teractions. As relationships were built over time,such competitive elements were transformed intocollaboration.


Perception That PC Members Are Not Equal Participants.

This was especially important for teams where long-time legacy LPL leaders were participating alongsideleaders from recently acquired companies. It was im-pressed upon members that in a PC, everyone is anequal partner (otherwise they would not have beenselected).

During the year-and-a-half that followed the launchof the PCs at LPL Financial, the PCs, through theirfocus and collaboration, were successful in deliver-ing on many of their goals and creating value for thecompany.

The Accomplishments of the PCs

During the year-and-a-half that followed the launchof the PCs at LPL Financial, the PCs, through theirfocus and collaboration, were successful in deliver-ing on many of their goals and creating value for thecompany. For example:

� The Compliance PC explored 95 financial regula-tions and determined best practices to implementacross brokers/dealers.

� The Recruiting PC collaborated on significantevents that led to increased new customer referraland lead flow across channels.

� The Advisory Sales PC made regional sales andtraining events available across customer seg-ments, thus increasing the number of opportu-nities for LPL to be face-to-face with customers.

� The Advisory Sales PC also strengthened the abil-ity to communicate LPL’s vision and direction,which aids the sales process and provides a con-sistent voice of LPL’s research and philosophy invarious markets.

� The Advisor Training PC brought a higher-quality and consistent experience to advisor train-ing programs across the channels, as well asimproved management of training vendors thatled to cost savings for the firm.

� The Marketing/Branding PC coordinated keycommunications to customers for consistency ofmessaging and support of the overall brand.

� Across all the PCs, cross-channel priorities wereestablished regarding budget submissions, sup-porting the firm’s ability to allocate funds toprojects that would benefit all the customerchannels.

In addition, PC members themselves shared feed-back about what they saw as the PCs’ accomplish-ments. For example:

� “We’ve made incredible progress in aligning keypolicies and ensuring that high standards willexist across LPL Financial.”

� “We now have a shared understanding of ourvalue proposition to potential customers—whatis core to LPL Financial, and what is specific toour channel. The result will be a more consistentmessage in the marketplace.”

� “The biggest impact has been with the flow ofcommunication. Since we are situated in differentcities, it allows me the periodic ability to gatherdata and marketing tools, discussion, and inputon upcoming projects and get project updates.”

The PCs created significant organizational bene-fits as well. The teams were a catalyst for align-ing a diverse membership—legacy LPL employees,new hires, and employees from acquired firms—around a common culture, even as they were ableto leverage the members’ different experiences andknowledge to find innovative approaches to businesschallenges. Two participants described the experi-ence this way:

� “Since the PC included folks from acquired firms,there was a ‘cultural divide.’ Some were fromsmaller organizations that had different views ofand experience in how to approach [the func-tion] than those of us with LPL experience did.Meanwhile, those from the acquired firms had to


understand the LPL culture and how to get thingsdone the LPL way. . . . We would have active di-alogues on differing points of view but come toagreement or a conclusion on how to move for-ward. . . . We all overcame our differences andgot engaged on the same page, which resulted inus becoming a collective team over a very shortperiod of time . . . that accomplished a lot ofimprovement in processes and procedures.”

� “The partnerships created in the PC took thepressure off the standard ‘hierarchical approach’that [had] existed at LPL and allowed us to be-come effective very quickly. . . . We did cre-ate tangible results, but the cultural impact wasmore significant—now the culture of collabora-tion across the function will always be my goal!”

Members also commented on the value of the PCexperience from a developmental perspective. As anexample:

Rotating the monthly PC conference-call chairman-ship among all PC members—whether they were aSenior VP or an Assistant VP—was a wonderful ex-perience, a leadership development opportunity foreveryone. . . . At a personal level, the PC may havegiven me the opportunity to have a whole bunchof folks—including senior leadership—recognizeme and my capabilities, which I feel led to mypromotion.

Epilogue

For several years, LPL Financial had been moving to-ward decentralization to focus dedicated resourceson building out new businesses and responding tounique customer needs. However, the collapse of thestock market in late 2008 and into 2009 demandeda rapid shift in the company’s strategic priorities,as it did for many companies in the financial servicesbusiness. LPL Financial centralized some resourcesto better focus on helping customers stabilize theirbusinesses and support their clients in the challengesbrought on by the economic crisis. The PCs’ workof policy/practice standardization and innovation

has been absorbed by each division’s (function’s)leadership team.

LPL Financial centralized some resources to bet-ter focus on helping customers stabilize their busi-nesses and support their clients in the challengesbrought on by the economic crisis.

One significant, if perhaps unanticipated, benefit ofthe PCs has been that they have enabled the cen-tralization efforts to proceed much more smoothly.Many members of practice centers now find them-selves working together on the same organizationalteam, which in some cases spans multiple geogra-phies, and have been able to rapidly leverage therelationships they established with each other in thePCs. As members of two PCs commented:

� “Being on the same organizational team haspushed us over a finish line that the Practice Cen-ters were already walking us toward. It’s beeneasy because we already know each other verywell, and have worked together closely on anumber of initiatives.”

� “The PC experience was the genesis of our cur-rent ability to think more ‘globally’ across thefunction than just in our respective areas. Thatwas certainly a big win for LPL! . . . And I learnedthe value of getting together, being more focused,getting prepared, and actively participating—thetypes of processes that will always lead us tobeing successful.”

In addition, the work of the PCs to standardize,streamline, and implement best practices has en-abled the restructured organization to respond moreconsistently, efficiently, and effectively to customers’current needs.

Communities of practice are a unique collaborativetool to foster business results while also building


strong relationships. As LPL envisioned them, theywere the intellectual cornerstones of the firm, a placewhere bit by bit and brick by brick, they became ahaven for creatively thinking and acting together—competencies that are now invaluable to the enter-prise as it moves forward in challenging times.

Jack Regan is based in Boston and is principal of MetisConsulting Group, Inc., a management consulting and train-ing firm whose mission is to initiate and build collaborativeworkplaces where individuals and organizations realize the

results that matter most to them. Regan was a lead in design-ing and launching the practice centers at LPL Financial, aswell as coach/facilitator for two PCs. He can be contacted [email protected] Gold is senior vice president of organizational develop-ment and training for LPL Financial in San Diego, California,which she joined in 2007 to be part of building a new hu-man capital function for the firm. She was responsible for thePractice Center Project and also served as coach/facilitatorfor three of the PCs. Prior to joining LPL Financial, Goldwas a senior consultant in her own business, supporting in-dividuals, teams, and companies in growing their leadershiptalent.


think tanks with deliverables: how communities of practice helped lpl financial manage rapid growth...

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