Love of Learning

8 December 2009 Edward B Rust Jr

For Edward B Rust Jr, chairman and CEO of State Farm Insurance, lifelong learning is a prerequisite for success. Phin Foster talks to the man who believes the downturn has provided one of the greatest lessons in business.

As chairman, CEO and a 35-year veteran of the US"s largest personal lines insurer, Edward B Rust Jr could be forgiven for looking back over a successful career and concluding that life cannot have too many lessons left to teach him. After all, this is the man who has been calling the shots at State Farm Insurance since 1985, a company ranked 31st in the 2009 Fortune 500 with revenues of over $60bn.

However, spend some time in the Illinois native’s company, and there is little doubt that the affable 60-year old has an innate hunger for knowledge and a set of principles that value education above all else.

"We work with London Business School, have structured programming at Oxford and there's periodical involvement with INSEAD and IMD."

Rust’s scope extends well beyond the boardroom, with an impressive number of roles including: former co-chairman of the Business Coalition for Student Achievement; board member on America’s Promise Alliance; the James B Hunt Jr Institute for Educational Leadership and Achieve; former chairman of the Business-Higher Education Forum and Business Roundtable’s Education Initiative; member of the National Commission on Mathematics and Science Teaching for the 21st Century; the No Child Left Behind Commission; and contributor to George W Bush’s Transition Advisory Team committee on education.

"In today’s world, the need for fundamental skills that help you tackle the challenges of tomorrow becomes ever clearer," he says. "The world is changing so quickly that lifelong learning has become a given, but before you get there those strong, formative skills must have already been instilled."

While much of this work has one eye on the development of future generations, associates of Rust will confirm that he is as passionate about ensuring that those whose schooldays are but distant memories continue to value the benefits of seeking out knowledge.

"I was thinking only this morning that not 25 years ago Microsoft was but a small, private company," he chuckles. "Go back ten years and ask someone about Google. What leadership needs to understand is without parallel. You can’t take a two-year sabbatical and expect to pick up where you left off anymore."

It is easy to see how the US-centric nature of State Farm, with operations in three Canadian provinces constituting its only 'international' business, might make matters somewhat simpler, or at least reduce the extent of the syllabus. Not anymore, says Rust.

"We can’t think the only influence on our markets will come from within the States," he counters. "The flow of capital, technology and competitors showing up on our radar are coming out of Asia and Europe. We need to be aware of what’s going on there in terms of innovation, processes and new thinking. Some of those lessons can be applied to our business practices and all of it must be understood."

But this raises another challenge: how does a company with such intense regional focus and a lack of international operations acquire such knowledge? The search for answers has seen Rust cast his net far beyond North America.

"You get a lot from forums and CEO gatherings, but it is also about dialogue with your own people. We can all learn so much from each other."

"Finding ways of helping our people gain some of that critical broader experience that truly global companies bring to bear is something we’ve focused on more and more over the past few years," he says. "A lot of the impetus has been on strong internal development, but we’ve also reached out to specialised programmes in Europe and Asia. We work with London Business School, have structured programming at Oxford and there’s periodical involvement with INSEAD and IMD. A number of US universities also have campuses in places such as Beijing, Singapore and Tokyo. We’re always looking for opportunities."

Learning in person

At no point does Rust exempt himself from this requirement for new knowledge. He believes his experience serving on the boards of truly international companies such as Caterpillar and McGraw-Hill has only heightened his sense of how much he still needs to learn and the value of surrounding oneself with people who can teach you.

"It’s all about that broader perspective," he explains. "I may not be an expert on international markets or technology, but I need individuals around me who are and to acquire enough knowledge through them so as to have credibility and be certain that the information I’m receiving is solid. You get a lot from forums and CEO gatherings, but it is also about dialogue with your own people. We can all learn so much from each other."

A key component of this is engineering situations where Rust and his fellow executives are taken outside of their comfort zone. State Farm’s Youth Advisory Board consists of 30 students aged 17 to 20, and is charged with helping the organisation design and implement a $5m-a-year signature service-learning initiative. Its work is indicative of Rust’s faith in youth, but he is also enthusiastic about the fringe benefits of working in such close proximity with a different generation.

"Our senior people spend a lot of time with these youngsters, discussing our experiences and how we think about things," he explains. "While this is hopefully of some benefit for their development, what really counts for us is hearing about their ideas for the future. They’re discussing different experiences and aspirations to what our guys are used to, which we don’t get from one another. Business leaders must find ways of placing themselves in these situations, because that is how you learn."

Rust also cites an annual Fortune conference on new technology as a forum in which he is forced to cede control to the youth and passion of a different type of specialist. "I turn up and see these kids, their enthusiasm, and it creates a huge buzz," he exclaims. "The scale of what they’re proposing can seem naïve, but some innovations you hear about constitute such a shift in the way things have been traditionally done that you get swept along."

"Isolate yourself in a finite set of experiences and the wisdom you acquire will ultimately be limited."

It is all about building what Rust defines as 'a repertoire of experiences', without which one cannot hope to build a full leadership skill set: "The broader you make your exposure to new things, the more profound an impact such learning will have on your intuition. Isolate yourself in a finite set of experiences and the wisdom you acquire will ultimately be limited."

While some CEOs may be more amenable to this argument than others, one lesson that has been compulsory over the past 18 months has been the fallout from the global economic crisis. State Farm has been hit less hard than many of its competitors, but, nevertheless, Rust’s interpretation is munificent.

"It’s rather tongue in cheek," he says, "but aside from the countless trillions of dollars in tuition fees, this may well have been one of the best learning experiences in several generations of management. It has forced us all to step back. The search for answers is encouraging everyone to take learning seriously."

Old adage

Having gone through such a long period of relative prosperity, during which many reached out for absolute truths, must the syllabus for business education be reviewed? Rust believes many of the old adages continue to hold firm, but we will see differences over the years ahead.

"I expect to see people less enamoured with the idea of modelling," he begins. "It's a great tool, but is never any better than the assumptions that go into it. You can back test your company strategy over the past 70 years and the results may make for interesting reading, but how much can it really help you going forward? Everything changes so fast now. The dynamics are evolving as we sit here talking. People need to search out more theoretical responses that are not dependent on guesswork."

Rust believes such inquisitiveness is an inherent facet of good leadership and cites Andy Grove’s maxim, 'Only the paranoid survive', as encapsulating what personally drives him to continue seeking out new answers.

"We can all sit down and debate the merits of any given programme or direction, but the world is moving too quickly for us not to do anything at all."