PHILIP J. PURCELL III IS A VISIONARY. Unconstrained by conventional wisdom, Purcell has charted his own sometimes shocking course–one that has eventually led him and his company to great success.

Throughout his career, Purcell has made bold, forward-thinking decisions. As head of strategic planning for Sears, Roebuck & Co., he convinced the chairman to purchase Dean Witter and then sell stocks from desks in Sears stores. Later, he developed the Discover Card, pioneering the idea of foregoing an annual fee and offering cash rebates to customers–an idea so successful that the company became the biggest credit card issuer in the United States.

Then, several years after Dean Witter Discover spun off into its own company with Purcell at the helm, he did the unthinkable–he engineered a merger between Dean Witter, a brokerage known for its Middle America mentality, and Morgan Stanley Group, a white shoe investment bank.

Few outside the companies thought it would work. As an article in Business Week noted, “the cultural chasm between the two firms inspired such witticisms as ‘white shoe meets white belt’ and ‘the Four Seasons meets Burger King.’”

But Purcell, looking ahead, held firm. He knew that the investment bankers at Morgan Stanley would gain from the distribution power of the more than 10,000 Dean Witter financial advisers. And the financial advisers would gain from being able to offer their customers more products and “the best research in the industry,” said Purcell, ’67.

Besides that, Purcell had faith in his people. “I think it’s a mistake to spend too much time agonizing over cultural differences. They do exist, and when two companies merge, you’ve got to be aware of them and deal with them,” he said. “An important part of leadership is simply picking the right people and then giving them the freedom they need to run our various businesses. To do that, you’ve got to make sure you establish a great deal of trust and mutual respect. You can’t have people second-guessing each other all the time.”

And now, two years later, the results are in: Morgan Stanley Dean Witter, with Purcell as chairman and CEO, is a resounding success, with two years of record earnings and a record first half for 1999.

In recognition of his foresight and corporate leadership, Purcell was named the 1999 Distinguished Corporate Alumnus.

Purcell’s ability to envision and plan didn’t begin at Morgan Stanley Dean Witter; it dates back to his school days. He came to Chicago from Notre Dame in 1964; by 1966 he had earned a master’s degree in economics from the London School of Economics through the GSB’s International Business Exchange. The following year he received his M.B.A. from Chicago and was a rising star as a consultant at McKinsey & Co., where he became the youngest-ever managing director at age 32.

Many in his position might have stuck to the fast track at McKinsey, but in 1978 Purcell surprised McKinsey by jumping to Sears, Roebuck & Co. as vice president of corporate planning. While at Sears, Purcell and then chairman Edward Telling decided to purchase Dean Witter in 1981 as a first step toward creating the Discover Card in 1985. In 1982, Telling put Purcell in charge of the brokerage firm; he refocused the company, avoiding the boom-bust cycles that plagued other securities firms. When Dean Witter Discover spun off from Sears in 1993, Purcell became president and chief operating officer and, four years later, chairman and chief executive officer. Under his leadership, Dean Witter Discover thrived, becoming one of the largest firms serving individual investors. After so much success it is perhaps no surprise that Purcell bucked conventional wisdom by seeking a merger between Dean Witter Discover and Morgan Stanley.

“I try to focus as much as I can on strategy, looking ahead three to five years from now,” Purcell said. “Thinking strategically means you have to know your company’s competitive strengths, or potential competitive strengths, and what your customers need, or what they’ll need in the future. There will always be opportunities out there and you’ve got to be ready to take advantage of them–hopefully before anyone else.”

One recent opportunity Purcell has pursued is the potential of the Internet. “I believe we were the first of the major Wall Street firms to begin offering online trading to individual investors,” Purcell said of the company’s deep-discount, online trading operation.

Several years ago, Morgan Stanley Dean Witter acquired Lombard Securities, a brokerage firm that developed online trading technology designed for the Internet. In the past two years, the number of Internet trades per day for the renamed Discover Brokerage Direct has more than tripled–this year, the company plans on making these online capabilities available to their more than two million full-service brokerage clients.

To be the leader in using Internet technology, Morgan Stanley Dean Witter had to invest significant resources. “The growth in electronic commerce in just the past year has been explosive, and to stay ahead you’ve got to make investments in new technology across a rather wide front. The head of our institutional equities business says it’s like paying tuition,” Purcell said.

The Wall Street Journal noted that few on the Street have followed his lead so far, fearing that offering such no-frills trading will cannibalize full-service operations. Purcell, however, would rather customers go to Discover Brokerage Direct than outside no-frills brokers. Because some clients desire online execution of trades, he expects that soon all retail firms will offer online trading. This, he said, will not eliminate the need for either professional financial advisers or the trading floor. He believes that the Internet is an “enabling technology, like the telephone. The key is to use it to get closer to your customers, to serve them in whatever medium is best for them.”

Purcell is also keeping a close eye on the paths brokerage firms and investment banks may take in the next century. He believes that the pace of consolidation will accelerate in the next few years, following on the heels not only of Morgan Stanley Dean Witter, which was the first of the “blockbuster deals,” but also Travelers/Solomon, Swiss Bank/ Union Bank of Switzerland, Citicorp/Travelers, and others. The next generation of mergers will be bigger, he said, with more cross-border and cross-industry mergers.

“Consolidation is being driven by deregulation and globalization and by consumer needs,” Purcell said. He stressed that consumers are turning to global firms that can provide advice, products, and liquidity across all geographic markets. He noted that the next frontier is the global distribution of securities and asset management products to individuals. Purcell also sees an opportunity to offer U.S.-style products abroad, where traditionally most people have kept their assets in bank deposits or savings accounts.

Under Purcell’s leadership, Morgan Stanley Dean Witter has taken its first steps toward seizing this opportunity, by founding a new business unit to pursue global opportunities in retail securities and by acquiring AB Asesores, the largest independent financial services firm in Spain. The rest of Wall Street is looking on. Where Purcell goes, they will most likely follow.–Jennifer Vanasco


Philip Purcell III, ’67, was named the Distinguished Corporate Alumnus.


Read more about the other DAA winners:

Ernest Wish, XP-29 (’71), Distinguished Public Service Alumnus

David Booth, ’71, and Rex Sinquefield, ’72, Distinguished Entrepreneurial Alumni
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