Dunn deals

Patricia "Pattie" Dunn sits quietly at her computer, oblivious to the stunning San Francisco Bay view dominating her office at Barclays Global Investors (BGI), an affiliate of London-based Barclays Bank PLC. "Quiet Giant" BGI has $800 billion in assets while managing over 1,500 funds as the world's

As global chief executive of BGI, Dunn, 47, would have happily remained the stealth leader forever, yearning for the "good old days" when institutional asset managers were never seen and rarely heard. So why did she reluctantly decide to step into the spotlight?

Dunn, a 25-year investment veteran, decided that the public, or individual investors representing $13 trillion in

investable assets, could be educated to become hybrid "instividual" investors. Armed with more information, individual investors could be taught to appreciate the value of indexing, and to expect the kind of results provided by that tool. Thus BGI would have a whole new market in addition to its pension plan sponsor clients, such as Citibank, General Electric, and the U.S. Federal Employees Retirement Plan.

So, under the tutelage of a new public relations director, Dunn took her message to the masses. With a commitment to visibility, she gave BGI a public face. She began making frequent appearances in the media-- although she joked to the Financial Times of London, "I would have to jump off a building naked to get coverage in the San Francisco Chronicle."

But Dunn's first attempt at a "consumer" product, with the launch of WEBS (World Equity Benchmark Shares) in 1996, languished in relative obscurity, despite the fact that the 17 funds attracted $2 billion. Rebranded as iShares in May, 2000, the now 61 funds trade like equities and feature low management fees. The heavily promoted offerings, with Dunn out front, ballooned in value to $7.4 billion by the end of fiscal 2000, gaining an additional $1.5 billion in the first quarter of 2001, despite a 13 percent drop in the S&P benchmark.

Buoyed by the success of iSharesand seeking to close the gap between high-end institutional customers and the iShares for the general public-Dunn launched down-market ClientConnect this past January, which allows customers to purchase 20 different BOI institutional index funds with as little as a $5 million investment, substantially less than the previous $100-$200 million buy-in. While ClientConnect is directed at smaller plan sponsors, such as endowments and foundations, the real competitive target is Vanguard. Investors pay 0.05 percent for a $5 million investment in BGI's S&P 500 stock index vs. Vanguard's fee of 0.12 percent for a comparable index fund. With $494 billion in U.S. index assets, BGI has the efficiencies of scale to challenge fees charged by $237-billion Vanguard's domestic index offerings.

Keeping up healthy returns during an economic downturn is top of mind for the CEO of any investment firm, and Dunn is no exception. But what keeps her awake at night is the angst about a possible loss of her other assets, BGI's intangible intellectual capital. Dunn's dozens of brilliant PhDs create the "Black Box," powerful proprietary software modules that make indexing profitable, while keeping fees down. Given how much of BGI's value is tied up in intellectual capital, the loss of talent is a genuine threat to profitability. "That should be my biggest concern, because those are the assets of the company," she says.

Ironically, Barclays Capital, the investment-banking arm of Barclays Bank, staged a futile raid in February to lure away 40 senior bond executives from Credit Suisse First

Boston, a move that reportedly cost CSFB $300 million in "retainers" to placate the would-be defectors.

Could it happen at BGI? "It certainly could happen," she says. "However, our sustained commitment to the best and most talented people is key to our long-term success," said Dunn. "I have worked hardest on creating a sense of independence and real ownership [economically speaking] for people in the company. Eventually you get a virtuous circle going that becomes a critical mass."

Leaving one company for another is something of a foreign concept to Dunn, who-in what is increasingly becoming an anomaly-has worked for one company her entire professional life. Her 20-year route to the top started in 1976, after graduating from UC Berkeley with degrees in journalism and economics, the old-fashioned way-at the bottom-as a temporary secretary at Wells Fargo Bank (predecessor to BGI). Dunn survived multiple mergers and acquisitions, emerging in sole control of BGI in 1996 while becoming a practicing believer in the value of a meritocracy.

"Pattie's focus on meritocracy echoes [Hewlett-Packard CEO] Carly Fiorina's philosophy that, `Companies cannot afford the luxury of bias; they must play the talent game to win,' " observes Ellen Shuck of Hagberg Consulting Group in Foster City, CA. "This is particularly critical as the war for talent becomes more intense."

Lew Platt, H-P's former CEO, appointed Dunn to the H-P board just months before Fiorina succeeded him in 1999. Dunn's appointment, industry observers agree, signaled a significant change in H-P's leadership direction. "Lew's a classic example of an enlightened meritocrat. There are a lot of them out there," Dunn says. "It's like motherhood and apple pie. I can't imagine a leader in this day and age saying, `Our promotions are based on something other than merit.' "

"In a meritocracy, you will see much more gender balance," she adds. "My message to women is, if you're not working for [a meritocrat], move on. I can think of no greater recipe for guaranteed success in a company-BGI for sure-- than a Nirvana in which every person is devoted to the success of his or her immediate superior. That would unleash unbelievable productive capacity because it would mean that everyone was pulling together to help everyone else grow." A

-Christopher Springmann

vital Statistics

Patricia DUNN

Global Chief Executive Barclays Global Investors

"I can think of no greater recipe for guaranteed success in a company than a Nirvana in which every person is devoted to the success of their immediate superior."

Age: 47

Birthplace: Las Vegas, NV

Education: BA in journalism and economics, University of California, Berkeley, 1975.

Family: Husband, William Jahnke; four grown stepchildren

Hobbies: Spending time with family, hiking, reading, traveling. Recent reading: Chopin in Paris by Tad Szulc and Evelina by Frances Burney

Favorite vacation destination: Home in Kona, and just about anywhere in Italy or New Zealand

Notable Quote: "I can understand fortune as a desire-but I can't understand fame."