'The Internet Is Going to Change Wall Street as We Know it.'

Peter Maillet & Peter Miller, 40 and 48
Labmorgan, J.P. Morgan & Co.
New York, New York

Peter Maillet began transforming J.P. Morgan when he tossed out the long-standing assumption that nothing gets done on Wall Street during the holidays. Maillet remembers that it was a Thursday evening when he sent his email out -- December 2, 1999. At the time, he was serving as business manager of Morgan's IT department. Before that, as chief operating officer for the Asia/Pacific region, he had helped the investment bank build its business there. Now he was assuming the temporary mantle of leader of J.P. Morgan's six-week-long e-SWAT initiative. The email informed 70 employees from across the company -- roughly half of them managing directors -- that their attendance was required at 15 Broad Street, a Morgan office located directly across from the familiar facade of the New York Stock Exchange.

"We asked them to show up on the Monday after we had sent out the email -- four days later," recalls Maillet. "It was a little surprising to some people, since December is not traditionally your high-intensity time on Wall Street." Instead of planning how they'd spend their year-end bonuses, the group of 70 people would spend six weeks plotting Morgan's e-finance strategy.

"We had a clear sense, even then, that the Internet is going to change Wall Street as we know it," Maillet says. "It had already happened at the retail level, and it was starting to happen at the wholesale level as well. And we were confronted with a question: Did we want to be a constructive force in driving change? Or did we want to have change done to us?"

The e-SWAT team included then-CIO Peter Miller, who had been Maillet's partner in forging stronger bonds between IT and the rest of the firm, as well as some top Morgan executives from around the world. The head of cash-equity trading for North America was there, as was the company's CTO, its head of corporate communications, and both coleaders of global research at Morgan. Several of Morgan's younger employees were involved too.

Douglas A. Warner III, Morgan's CEO and chairman, had given Maillet and Miller wide latitude in their mission. He had told them that he didn't want them to spend six weeks trying to validate any of his preconceived notions. Instead, he said simply, "I want to know what 70 of the best and brightest on Wall Street think about e-finance."

Warner himself helped kick off the initiative at that first meeting at 8 am on Monday, December 6 -- which sent a powerful signal that the results of the group's brainstorming wouldn't merely wind up in a three-ring binder on a shelf somewhere. Throughout the process, Warner made daily appearances, informally asking various working groups about their assumptions and their ideas. "In a company of 16,000 people, with the history and the embedded culture of J.P. Morgan, that kind of direct involvement by the CEO made it clear that this was not your typical strategy session," Maillet says.

The e-SWAT group divided itself into pods of six or seven people each and pressed those people to think about ways that Internet-based technologies could improve current clients' experiences with the bank and could extend the bank's reach to new clients. "Breakfast, lunch, and dinner were served on-site," Maillet says. "We worked six and seven days a week, full time, until the 20th of January." The group distilled 600 raw ideas into a list of 10 recommendations for review by Warner and by the bank's global managing directors. Some of the recommendations were specific -- say, creating Web portals for certain client groups, like corporate treasurers. There were also recommendations about branding and about building a knowledge-management Web site for employees.

The e-SWAT team also suggested that Morgan continue to explore how its role would change as markets went virtual. But the team didn't want to create a think tank that would ruminate on the potential impact on Morgan, or a skunk works that would develop products and services to replace those that the bank currently marketed. It wanted a new division of the bank -- on equal footing with the investment-banking, asset-management, and markets divisions -- that would help guide Morgan's transformation into "the preeminent e-finance firm in the world," as Maillet puts it.

By this time, it was February. The holidays -- busier than usual this year -- were over. It was time to get moving.

J.P. Morgan's Learning lab

LabMorgan, the new division born out of e-SWAT, started with just 35 of J.P. Morgan's 16,000 employees. But it has been a power player from day one. It has three central missions: to fund new e-finance companies, as a venture capitalist would; to incubate e-finance ideas that come from the outside world or from the ranks of Morgan employees; and to help push new Internet technologies into the mainstream of Morgan's business.