The Bregman Leadership Podcast
Episode 78

Brian Gaffney

Collaborating Change

How do you turn around a company? For this podcast, I interview one of my clients, Brian Gaffney, the former US CEO and managing director of Allianz Global Investors. The year we began our work together, his organization had an annual loss of $30MM. In four years, Brian turned that into an annual gain of $140MM. One of the key things we did in our work together is bring five disparate organizations (and leaders) into one collective force, aligned and accountable. Discover Brian’s formula for meetings that dig deep, why star talent is not the most important thing, and how he eliminated tension between functions.


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Bio: Brian Gaffney served as Chief Executive Officer US and a managing director with Allianz Global Investors, which he joined in 2008. He is a member of the firm’s Global Executive Committee and US Executive Committee. In a previous role, Mr. Gaffney was CEO of the firm’s US distribution entity, responsible for retail distribution and marketing for Allianzowned asset managers in the US. He has 26 years of investment-industry experience.


Peter: Welcome to the Bregman Leadership Podcast. I’m Peter Bregman, your host, and CEO of Bregman Partners. This podcast is part of my mission to help you get massive traction on the things that matter most.

We have with us today, Brian Gaffney. I know Brian, for many years, having worked with him. Brian is the retired CEO and U.S. Managing Director with Allianz Global Investors. Brian and I started working together in 2011 or so.

To give you a sense of what Brian was able to do, he was facing a loss, and the organization was facing a loss of about $30 million in 2012, and his goal was to reorganize and turn that around. Again, to give you a sense of the success that Brian had, one year later they made a profit of $40 million, the next year it was a profit of $92 million, the year after that it was a profit of $113 million, and when he retired in 2015 the business was on track for $140 million.

So, there are some things to learn from Brian. How do you turn around an organization that’s losing $30 million a year, to one that’s making $140 million a year? Again, as I said, Brian and I have worked together, I know him well, he is every bit a good person as he is a successful person. He achieves these results with deep integrity, and passion, and vision, and all things that we look for in leaders and we look to emulate in leaders.

So, without further ado, Brian Gaffney, welcome to the Bregman Leadership Podcast.

Brian: Hello, Peter. Thank you. That’s a terrific introduction. Thank you, I appreciate that.

Peter: Brian, let’s go back to 2012, or maybe even a little before 2012, and you’re facing an organization that’s losing money, a tremendous amount of money, and you’re in the CEO role here to turn it around. What are you facing, what are you looking at, what scares you or disrupts you, and what do you do to begin to shift the organization forward?

Brian: Well, maybe, Peter, I’ll take a half step back. When I joined in 2008 I was brought in to run the distribution company, I was CEO of the U.S., running third party distribution for the multi-affiliate structure. PIMCO, Nicholas-Applegate, RCM Capital, Oppenheimer, these were all companies that really comprised the Allianz asset management, also including PIMCO in the United States, and that had been built over the years through a series of acquisitions and one of the selling points was, “We’ll acquire you, and they’ll be some benefits at scale, but we really want you to continue to do things the way that you’ve always done them when you were independent.” These were, really, quite independent companies.

The distribution business went very well, but in 2012, we launched a project called Project Decade at the same time I was appointed CEO for the United States, so it was beyond distribution, it was CEO for all the business functions, for all of the multi-affiliates. Frankly, when I looked at it Peter, it was one of the most daunting challenges I had seen. I was quite comfortable in the distribution company, but because of the multi-affiliate structure, and because of the autonomy, the idea of trying to pull together such disparate businesses, and yes, we’re all in the same industry, but the cultures in all of these organizations had been formed over many years, and we’re really quite different. In some cases, senior leaders of these organizations had never met each other.

Peter: So, Brian, let me pause. Just for listeners who don’t really know what it means, what distribution means versus the broader CEO role that you took on, can you in a sentence or two describe, that people who aren’t in finance and don’t understand, can get a grasp of it?

Brian: Sure. Allianz products need to find their way on to platforms such as 401K platforms, the Merrill Lynch system, independent financial advisors, and that’s done through a sales organization, and my job was to lead the sales and marketing effort that allowed Allianz products to make their way on to those platforms, and then be sold to end consumers.

Peter: And example of products would be asset portfolio managers, and funds that-

Brian: Mutual funds.

Peter: Mutual funds. Great. So, when you stepped into the larger role, what was that increase? So, right now you’re, in 2008, you’re running a sales organization to get the mutual funds into 401K plans, and into larger retail-based financial organizations. What is the step-up represent?

Brian: In each of the independent companies, they had their own institutional sales force, and as you might imagine, if you were a small company, when you talk to institutional buyers you’re only able to bring those products that are affiliated with your company.

The challenge was to create an institutional sales organization that could bring all of the solutions to a conversation instead of the smaller solution from one company. That was part of it, but there was also infrastructure. Every one of these companies their own legal, complaints, IT support, all the things that went along with operation an independent asset management business. That created tremendous complexity and tremendous regulatory challenges, and the biggest thing that it impeded was the ability of us to bring products that were manufacture by Allianz and other parts of the world into the United States and vice versa, this complexity would not allow us to take products manufacture in the Unite States and get them distributed in other parts of the world, and therefore, Project Decade was launched.

Peter: Got it. So, you’re basically faced with having the multiple disparate businesses, in effect, run by multiple disparate people with multi disparate objectives and goals and personalities, and you need to integrate them in such a way that they’re working together effectively, so that you can then bring them as a holistic offering to spread the sales more broadly across the U.S.

Brian: Correct. I think it leads to the natural question, “Why would these independent companies want to agree to become part of one company?” They like their independence. The challenge was they were each running their own separate P&L, and it really forced them to make very difficult decisions because of scale, or lack of scale. If we could combine all that into one P&L, we could make longer term strategic decisions for each of their operating entities, and they wouldn’t be stuck with having to navigate the up-and-down cycles of an investment management company with very specific mandates. It would give it a broader opportunity to participate in a bigger P&L and longer term strategic discussions.

Peter: So, it’s like you’ve stepped into an organization that has done, in effect, conceptually, a tremendous amount of M&A and never integrated any of the companies, and everybody likes operating independently, and everybody likes their freedom, and, maybe they’ve been bough out, in effect, but nothing’s really changed for them except a little safety, and so they like it that way. You’re coming in, and you’re basically saying in order to make this thing run effectively I’ve gotta get people to play together, and work together, and roll up what they’re doing, in such a way that we could have economies of scale and a market strategy that looks much more unified than we currently look.

Brian: Yeah, that’s correct. It was interesting that people were cooperative and supported this effort and really did understand that this could lead to broader distribution in other parts of the world, and obviously accepted the fact that, that would require change. Change was always acceptable on the surface, it was until you had to touch their particular operating entity that you caused a lot of friction, and that was the challenge that really had to be overcome. Mentally, people thought they were in the place that they thought change was appropriate, but when you tried to touch their organization there was quite a bit of resistance. The challenge was, how do we really get people to understand everybody has to accept that some change will affect their organization and to be willing to support that, with the eventual goal of being able to create life for the organization and eliminate drag that was embedded in the organization just because of the autonomy.

Peter: Great. So, how’d you do it?

Brian: As I said, it was quite daunting and I was given some guidance by Dr. Joachim Faber, who actually built the asset management business. Early in 2011, I didn’t know I was going to be appointed to the CEO position, but he encouraged me to really make my way around to all the separate affiliates, and make sure I had good and growing relationships with all the key members with those companies. So, I got on the planes and I made the trips, and I made sure to get to know everybody. Then, when I was appointed CEO I understood why he did that. So, I had built up some relationships that really made the going, in the beginning, a little easier than had I just stayed focused on the distribution company. That was terrific guidance.

The next thing we did is, one appointment was made very quickly after I was appointed CEO, and it was from a retiring general legal counsel who appointed who would be next in charge of legal. Really, thanks to guidance from you, Peter, that night that that appointment took place I sent out a memo, there would be no more appointments. What it took to be successful in your operating affiliate, may not be the same traits that are going to be required to build this bigger one organization, and to find those people we were going to have an interview process, we were going to have a committee. We were going to use some of the same things that had been expressed globally, and we had expressed it loud in the distribution company, that we wanted core values of respect, integrity, passion, and excellence, and you were going to be interviewed on that basis and we were going to gauge your ability to be collaborative and cooperative.

There were nine functional head positions that had to be filled. There were people that had the natural talent, or either guided in organization that was large enough, that would tend to indicate that they should probably get that post. As you got into the interview process, because of the different cultures, there were people that were just not geared up to try to build a collaborative and a cooperative environment. So, we didn’t necessarily get the most talented people, but the view was if there’s a talent gap we can close that, but if we have a cultural gap, that’s not something that’s easily changed or easily … You can’t really direct that. So, we leaned very heavily on finding the leaders that we thought could collaborate and be cooperative, that would ultimately, make it’s way through the organization and create the lift that was required. That turned out to be one of the most important moves that happened, was to eliminate that appointment structure and to take control of what the culture needed to be for the new, one organization, and to make sure that the right people get into the key positions for those roles.

Peter: You know, it’s an amazing signal to send to the organization when you’re willing to say what you’ve said, which is, “I’m willing to take someone with less capability, if they exhibit the values, because we can develop capability, but it’s much harder to develop values.” It takes a leap of faith on your part to do that, and it sends a message to the organization about how important the values are. That even the people who are already there realize, “Wow. This is being taken very seriously,” as opposed to what happens in a lot of organizations, which in order to know the values you have to pull out this sheet and look at them to figure out what they are.

Brian: I think a side benefit to it is, it made people that were either potential leaders or thought they were potential leaders, stop and think a little more clearly about where we’re going next. Not necessarily try to think about how you’ve been doing what you’re doing, and you just need to do it a little bit better in the new organization. If you wanted to interview for one of these positions, you automatically had to think differently before you even got into the interview process, if that makes any sense to you.
Peter: Okay, so, now you’ve established this and you’ve sent clear signal to the organization, the values are going to be the most important, how we work together is going to be critical. What happened then?

Brian: Next, we formed an executive committee, and this was probably the second biggest challenge, but maybe it was the biggest challenge, because I was the CEO over the business functions, but I was not the CEO over the investment functions. The investment professionals and all of these affiliates reported to Chief Investment Officer that was located in London. So, I needed to bring them to the table, because it was critical to get their support. When I sat at a table in San Diego, and I sat at the head of the table, my knees were literally knocking under the table, to try to figure out how do I get some of these people, and you have to understand that there’s a natural tension between sales and investment professionals. The investment professionals never really quite think that sales and marketing do enough for them, and sales and marketing are always challenged to get product that perhaps haven’t hit the threshold of performance that make them saleable. So, I found that tension in every organization I’ve ever been in, so it wasn’t unique to this particular challenge, but to try to get cooperation to move this into a one company with lift instead of drag, there had to be some method to try and break down some of those natural tendencies.

In other cases, we had competing entities at the table, if we were gonna build a new product there was always a discussion about which one of these operating entities should lead that effort and should own that product. So, in some cases, we had people who didn’t like each other at the table. So, I would say that our first few meetings, Peter, were really quite miserable, and really functioned quite poorly. We used the function to, I think, partially to avoid controversy, which is absolutely the wrong thing to do. So, we used it as a reporting function, and after sitting in two days of reports you could see, people had their iPads out, investors were investing, and there was absolutely zero collaboration that was taking place under that structure.

Fortunately, you and I talked a lot about that, and you helped me formulate the type of a meeting structure that would promote a real engaged dialogue. That made a very significant change. We followed your instructions, we said look, keep the iPads at home, turn them off. More importantly, think about leaving the cap of what business you operate at the door, because you’re really in this meeting to help think about how we take the greater organization forward. The most important thing is we’re going to circulate a series of questions and you might be surprised at the questions, because they’re going to be the un-discussable’s, they’re the things that are really important to move the organization forward, but we never really talk about them because they’re painful, they’re uncomfortable to talk about. That’s what we’re going to do in these meetings and you’re all smart enough to read the reports. We’ll post those on a site, you can read them, we hope you would before the meetings, and if you have questions bring them to the meeting, but the meeting is to discuss the very, very tough subjects that have to be dealt with if we’re really going to take the organization to a better place.

Peter: How did you, I’m curious, what was going on for you emotionally around that too, because you’re suggesting that they go places that they’re all trying to avoid to go, and your kind of on the line for it. I’m curious whether you felt that pressure, whether you were scared, or concerned, or anxious, or whether you feel like it was the right thing and you knew what you were doing. Where were you in this?

Brian: I wouldn’t say I was exactly confident. I was somewhat excited, because it did become clear, as we thought through this exercise that these were the smartest people in the organization, sitting at this table. That if we could get them engaged, we really could get something out of this that could be very valuable for the greater organization, simply because of the high quality of the people that were in that room. What made me nervous, was I capable as a leader to bring about that kind of dialogue, and I was very uncomfortable with that because I had never done it before in my career.

What I think was happening inside, was people were embracing this idea, because they thinking about their own pet peeves that they were finally going to get on the table. Not so much about how they might collaborate and cooperate, but I can finally talk about the crummy sales organization and what we need to do to make that better. The sales people are thinking, oh good we’re finally going to talk about the poor performance and why we can’t sell, and we’d like to know what you’re gonna do about it. So, I think people came to the table thinking, I’m gonna knock some things off my list that have really been bugging me, and not necessarily thinking about this is really a great dynamic and I’m a participant, and I’m going to really contribute in a positive, constructive way to this. I don’t think people really brought that mind set to the table.

Peter: So, how did you shift it?

Brian: I’m not so sure that I shifted it. The dynamic that I hadn’t expected was that when you put the tough subject on the table, it didn’t really concern everybody at the table, but when somebody was on the hot seat there was a certain degree of empathy that started to emerge. People would feel, and they would also hear, misunderstandings, as the facts were placed on the table, people may have had a few, and when those misunderstanding were cleared up with facts, it made people see things through a slightly different lens. This didn’t happen over night, this was numerous meetings, but it also made people more comfortable over a drink to talk about some of the difficult conversations and issues that the firm was facing. That also started to build trust. So, little by little, empathy started to build and trust started to build, and then the conversations took on a much more lively pace, and I say pace because they sort of slowly moved in the beginning and as people began to trust each other the pace started to move a little more quickly, and we could get to potential solutions and potential new ideas faster as the trust and the empathy started to build within the group.

Peter: You know, it’s interesting what you say about drinks, because I remember the first time I really became aware of this, that I really noticed it. It was one of the very, very early meetings I was running, maybe two decades ago, and I had run a meeting where we were trying to air a whole bunch of issues. I thought that we had resolved them and that people seemed to be forthright and open, and then we took a break. We literally didn’t go to drinks, we literally stayed in the same room, but we took a break and there was some food that was brought in and now we weren’t “meeting,” we were having lunch in the meeting room. I said, to one person, “How do you think it’s going?” He said, “Oh, I don’t think we’re airing any of the issues we have to air.” I thought to myself, why is he telling that to me now, while we’re having lunch in the same room, in the same seat he was in ten minutes ago, when he was part of the conversation but not bringing this up?

I think there’s something about the formality and the informality, and that if you could talk about the work in an informal way, people are much more forthright than when they think we’re having the formal conversation.

Brian: You know, it was interesting, some of the more tense conversations we had were in the early days. With the drinks before dinner, or the drinks after dinner when people really started to dig a little deeper into an issue that we had talked about during the day, but maybe, we sort of, scratched the surface, but in a more relaxed environment the really deep digging really started to take place. It was interesting to watch. It was great for me, because I could sit back and observe the dynamic and start to think about things that I could do to improve the dynamic, instead of necessarily having to feel as though I needed to resolve all these challenges on my own.

Peter: That’s great. How did this come to fruition. How did this work end up helping you get to these results that I described in the beginning, where you’re going from a $30 million loss to $140 million profit?

Brian: Well, good results always require a lot of variables falling into line. As far as getting people pointed in the right direction, this dynamic and appointing the right leaders at the beginning really started to get people pointed in the right direction, because to get the kind of results we did get, you needed to do some difficult things. There was a tremendous amount of complexity in the organization and we needed to get rid of the complexity. We had four separate companies once we had separated from PIMCO, but we had 15 operating legal entities that needed to be compressed. You needed cooperation to be able to do those things, you could not effectively improve the results if you had resistant at every point of change.

The leadership and the executive committee created a clearer path to accept some of the tougher decisions that had to be made to eliminate the complexity in the organization. It lent itself into a good year, the first year, where we … Nobody had really put all the pieces together and added it up as one P&L. Honestly, people thought their operating entities were making money, and everybody was quite surprised to see that when you put the pieces together that we were losing $30 million, in fact, it was quite shocking for the operating entities. There was one operating entity that was really supporting the other three.

So, it became clear on paper and on a factual basis that things had to be done, so, that supported cooperation. Then, we pretty aggressively moved to make the changes and eliminate complexity with the support of the executive committee and with support of leadership. The next three years, continued to be record breaking years for the United States, and I believe the last year, I retired at the end of 2015, before I left, I left at the end of the year, the results indicated through November that we were on track to meet the objectives of the year, which were a substantial increase from the year before, and would be the fourth consecutive record year for the United States.

Peter: It’s amazing. It feels like from what you’re saying that a tremendous amount of it was get the data, get the right people in the room, have conversations where you require a level of openness and honesty and that you create the environment to have that level of openness and honesty, and that you put the difficult issues on the table that are getting in the way, and that you make them unavoidable, in fact, the undiscussables become unavoidable. Then, you have those conversations, and then people emerge both edified and having learnt more, but also realizing that the pain of having these difficult conversations are, in effect, much better than the pain of trying to avoid having them, and then taking the loss.

So many times I look at organization’s, Brian, and I see that everybody, individually and quietly, will talk to you about what the problems are, but they’re not having those conversations together, and so they get stuck in the problems. I think what you’re describing is the courage that you showed to say, I’m going to take these conversations that are happening and I’m going to commit to the culture that we say we have, and to the values that we talk about wanting to see. I’m going to commit to them in a real way where I’m hiring and firing based on them, and then I’m going to take the conversations that people are having quietly in the side lines and I’m going to bring them to the front, and I’m going to shine some light on them. I’m going to bring the right people in the room to have the conversations that we need to have and me move them forward.

So, that takes a lot of courage, I want to say. It seems very simple and straightforward, but it’s following through on decisions based on commitment to values, and based on the data that leads you to make tough decisions about who to hire and who to fire, and how to reorg in a simple way, and how to get people to work together.
Brian: Not to belabor this, but a subtle change, that I think made a difference, is we really pay a lot of attention to the core values, the respect, integrity, passion, and excellence. There was a lot of work done around those core values, but most importantly, there was enforcement of those core values. Where I had control, and bad behavior was evident, and change needed to be made, we made it, and in the earlier days we made it aggressively so that it would serve as proof statement that we’re really taking these values seriously.

In a smaller organization, depending on the leadership of that organization, different styles of behavior were allowed to coexist. When you got into the bigger, one organization, and the core values had been expressed so loudly, it was much more challenging to demonstrate bad behavior, and also you knew that if you did demonstrate bad behavior you’re probably not going to stay around for too long. That was very helpful, as well.

Peter: Brian, thank you for sharing this story with listeners. Thank you for sharing both accomplishment and the … I know, because we were together, that it wasn’t always easy. That you sweat through some of this, and that’s the nature of it. It’s your demonstration of your integrity, and respect, and passion. That you’re living those values, that … I don’t even know if you know how important it is, and was, to the organization that they can look at you and that they see someone who exhibits passion, and respect, and integrity. That it’s not just hiring and firing based on that, but it’s really living the values yourself, as the leader that sets the tone that people realize they have to live up to it.

So, thank you for doing that. Thank you for sharing your wisdom here on the Bregman Leadership Podcast.

Brian: Thank you Peter. I’ll just take one more second to say, the work that we did together was very, very critical to the success. One of the keys that you taught me was, you had to stop and think. I’ve always had a tendency to react through my gut, through my instinct. Through the work with you, you got me to stop in critical instances and, in some cases, either react and do something that I hadn’t thought through, or in some cases, don’t do something that I naturally would’ve done. You were very, very helpful in helping me think through the proper approaches to this, and I’ll be forever grateful for your help.

Peter: Thank you so much Brian.

Brian: Thank you Peter.

Peter: I hope you enjoyed this episode of the Bregman Leadership Podcast. If you did, it would really help us if you subscribe on iTunes and leave a review.

A common problem that I see in companies is a lot of busyness, a lot of hard work that fails to move the organization, as a whole, forward. That’s the problem that we solve with our Big Arrow Process. For more information about that, or to access all of my articles, videos, and podcasts visit

Thank you Clare Marshall for producing this episode, and thank you for listening.