Dangerous job claims one more

Ned Johnson, the visionary who built Fidelity Investments into the nation's largest mutual fund company, has long been a believer in the Japanese workplace philosophy of "kaizen," which emphasizes constant change as a way to improve efficiency. He is certainly familiar with this old Japanese proverb: The fish rots from the head down.

The circus continues at 82 Devonshire St. Less than four months ago Ellyn McColgan emerged as the new new thing at Fidelity, moving up when Robert Reynolds became the latest in a long line of number twos to go POCO -- that is, decide to pursue other career opportunities. McColgan, a passionate embodiment of the Fidelity Way, was the future, the complement to first daughter Abby Johnson, who had been born to run the family business.

"In Ellyn and Abby we have two strong leaders," Ned Johnson said in April.

Yesterday, McColgan went POCO herself, leaving Fidelity with one less strong leader. The immediate cause of the latest departure was Mr. Johnson's decision to bring back Rodger A. Lawson for a second tour of duty at Fidelity. Suddenly, McColgan found herself having to go through Lawson to get to Johnson, and she decided she didn't need that.

At the time she was named president of Fidelity's distribution and operations, I offered one piece of advice: "If history is any measure, she should wear a helmet." Sitting at Ned Johnson's right hand has always been one of the most dangerous jobs in Boston, but even by Fidelity standards this is extraordinary.

Succession has always been tricky in family businesses, and Fidelity has always been very much a family business. An all-star lineup of top executives -- Sam Bodman, Jack O'Brien, Bob Pozen, Bob Reynolds, and now Ellyn McColgan -- have come and gone because their name was not Johnson. Rodger Lawson, 60, is no more likely to run Fidelity, either.

"There is a glass ceiling at Fidelity, and the problem is Ned is standing on it," says John Bonnanzio, group editor at Fidelity Insight, an investment newsletter. Added Jim Lowell, publisher of Fidelity Investor, another newsletter: "It is a huge loss for Fidelity. It is the single biggest management loss I have seen in my decade of closely tracking Fidelity."

Despite the critics, who have included her father, Abby Johnson remains the odds-on favorite to run the family business. Forget about selling the place; it is not in the Johnson DNA. What Abby Johnson needs is a partner to eventually run the business with her. McColgan would have made a very good one.

Fidelity has lost a lot of ground to its competitors in recent years. Its fund performance has been mediocre for several years, though improving lately. That has allowed other big mutual fund complexes to blow by Fidelity. American Funds and Vanguard Group, for instance, took in roughly nine times the new money that Fidelity did through June of this year, according to Financial Research Corp.

Ned Johnson, who is 77, built one of the nation's great mutual fund companies, and then ran it like his name was on the door, a good thing. Many other great men have made the mistake of staying too long. Mr. Johnson should not make the same mistake.

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Neighborhood news. Cardinal Bernard Law, who was responsible for covering up the shameful clergy abuse scandal for years, goes to work every day at the Vatican in Rome now. But it is the Boston Archdiocese that still pays the $9,000 a year for his healthcare, according to an executive familiar with the archdiocese's finances. A church spokeswoman said such insurance payments are common for all priests, even when they are assigned to Rome. The Boston Archdiocese, however, does not provide Law with any other financial payments, she added.

Steve Bailey is a Globe columnist. He can be reached at bailey@globe.com or at 617-929-2902.