JB Horner, WCM Investment Management

07.11.2025

In this episode of Meet the Investor, host Joey Mouracadeh sits down with JB Horner, Business Culture Analyst at WCM Investment Management – a global investment firm specialising in high-quality global equities. JB takes us inside WCM’s distinctive approach to investing – one built around “moat trajectory” tailwinds, and the often-overlooked power of organisational culture. He explains how the firm identifies companies not just with competitive advantages today, but those expanding those advantages over time.

They unpack what it means to analyse culture as an investment factor. How can the behaviours and adaptability of a management team shape a company’s long-term moat? What does “cultural strength” or “cultural alignment” actually look like in practice? And how does WCM’s collaboration with leading academics help turn a qualitative concept into a repeatable research framework that supports performance through changing market cycles?

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Transcript

Joey: Hello everyone and thank you for joining us for the latest episode and meet the investor. Joining us today we have JB Horner Business Culture Analyst from WCM Investment Management at Global Investment Management Firm. Thank you for joining us today, JB.

JB Horner: Thanks Joey.

Joey: Maybe we could start as we often do with you telling us a little bit about yourself, your background, and then also the firm and its history and what you mainly focus on.

JB Horner: Sure, so I joined WCM about, 11 years ago now in 2014 in a junior role. The firm was a lot smaller than it is today. I think it was around 20, probably 27 employees, so when I came in, I was kind of wearing a lot of different hats, helping across different parts of the business. I had no kind of formal background in, culture research if, there is such a thing. But given the kind of the nature of the culture here at the firm, there’s always been a strong focus on, helping and essentially supporting people to pursue areas of interest that align with things that are important to the firm. And so, within the first year or so joining WCMI, I became aware of the cultural focus in the portfolios and not just internally and how we run our own firm, but also in how we evaluate companies we may invest in. That really interested me based on kind of background interest in some stuff I studied in undergrad. I also realised that there was a lot of interest in doing more around it, but there wasn’t necessarily the bandwidth on the team to do it.

Like, any kind of good junior level person, I raised my hand and volunteered to chase it down. And I think we’ll get into the story in more detail, but it’s been an incredible journey with a lot of help, from academic partners and, also a great learning journey, interacting with a lot of world-class operators who’ve led effective cultures at various, companies we’ve invested in. So yeah, happy to share more.

Joey:  And maybe a little bit about WCM, if you could.

JB Horner: Yeah so, WCM was founded in 1976 in Southern California. We’re now headquartered in Laguna Beach, California, and there’s maybe two, maybe to kind of two periods to think about. WCM through the first is kind of the original founding period from, again, the mid seventies until the mid-nineties. And then the current leadership team bought out the original founder in the mid-nineties. And part of that transition involved a, essentially a cultural 180. So, the founding team will kind of joke about, kind of how dysfunctional the culture was before, and so they essentially had a front row seat for many years as to.

How not to run a money management firm. They’ll probably be the first ones to share that. And so when they, kind of took the reins, they joked that they really had no idea how to run a money management firm. But if they figured, if they inverted everything the prior founder had done, they may have better luck. And so, some of, the changes they made really helped, to improve retention of key talent. And it also helped kind of wire decision making on the portfolios in a way that incorporated kind of a broader set of perspectives than. Before it was really just the founder kind of making all the decisions.

JB Horner: And so over time, what they saw is, portfolio decision making, improved retention of key talent, improved results improved. We were able to grow assets in a way that the business had never managed to do. And out of that, experience, there was really kind of this common sense inside of, hey, if culture was so instrumental in helping to improve the performance here at WCM, it’s probably something we should consider when we’re looking at companies to invest in.

Joey: I’d love to dive a little bit more into culture a bit later and what you mean by the changes and so on. Before we do, let’s keep it high level in terms of your portfolio construction, what are your broad investment pillars at WCM? How would you pick a company to invest in and, how would you build out the portfolio?

JB Horner: Yeah, it’s a great question. So, some of the kind of hallmark WCM kind of philosophical traits, one is, MO trajectory and is really this notion of trying to find businesses. That not only have a competitive advantage today, but more importantly are expanding that competitive advantage over time. So, trying to find businesses that are getting better. The other one is really kind of looking for tailwinds and trying to understand, which industries will be an advantage and kind of finding the companies that are expanding competitive advantage within those. And then the third pillar is really our focus on organisational culture and really how that’s tightly linked to MO trajectory.

Joey: You said MO trajectory there. Just help us define what you mean by that in a bit more detail, please.

JB Horner: Sure. That’s, essentially the label for this notion of finding companies that are expanding competitive advantage over time. Companies that are growing their moats over time, rather than looking at, kind of the static nature of moats today. It’s really trying to find, companies that are getting better and that where that’s not appreciated already by the market.

Joey: Okay, cool. And given that you are the culture analyst there, let’s dive into the culture pillar a little bit more., It’s not something that you hear a lot about, when investment managers are talking about how they identify and pick companies. I’m sure many of them will talk about interviews with management and so on and so forth. But let’s dive into that in terms of what it is you look for in culture and exactly how you do that.

JB Horner: Absolutely, an important point is we do look at culture through the context of MO trajectory. So ultimately, if we’re trying to find companies that are getting better over time or becoming more competitively advantaged over time, culture gives us a lens to really understand the human kind of, and behavioural mechanisms behind that. For example, if you’re looking at let’s say a software company that’s trying to expand to a new geography. From a cultural perspective, we can kind of take that lens and try to understand the team that they’re building around that new geography and whether they have kind of the right insights and on the ground understanding of what it takes to succeed in that market for that bit of strategy to be successful essentially. It’s really kind of bringing just a different lens on a lot of the strategy questions that a normal business analyst or PM would be looking at.

Joey: And, has that identity of corporate culture that you look at has that evolved over time with WCM?

JB Horner: It has, I mentioned kind of the origin story of our focus on culture. It kind of grew out of our own experience at our firm. How it had initially been applied was in kind of a simplistic way, WCM’s culture’s been really effective in a number of ways. Let’s maybe use that as a model and go try to find other companies out there that have those same traits. You know, relatively quickly we realised that there was a lot of really effective companies with really effective cultures that look nothing like WCM’s. Like if you look at a Canadian Pacific Railroad culture is worlds apart from what WCM is, but it’s incredibly effective for what that company is trying to do.

When I stepped in, there was kind of this, early notion of there’s kind of no one size fits all good culture. It’s about finding an effective culture, one that’s appropriate for the company’s strategy. Around that time, we were fortunate to strike up a very collaborative relationship with Jim Heskett a HBS professor who had done a lot of the foundational studies linking, culture with financial performance. And a key aspect of his work had actually centred on the same thing. And it was really looking at whether a culture was appropriate for a company’s strategy. So, it was sort of rhyming his findings, his empirical findings were rhyming with what we had observed anecdotally in running portfolios. And so that was the first kind of pillar of our framework. It gave us kind of a clear, more intentional way of looking at culture in companies.

What Jim also helped us to identify were other aspects of culture that were important to financial performance. Second of which being this notion of cultural strength. So if you think about culture and its impact on a company’s performances, really as a behavioural operating system, there has to be a degree of shared consciousness around what that culture is specifically what are kind of the behaviours that are encouraged organisation-wide and which ones are discouraged. And the notion of cultural strength helps us kind of identify that. When we go into look at a company, we’re not so much concerned with kind of the values that might be listed on the website or the walls, is really try and understand, how are people actually behaving day to day when they see oh isn’t around watching? So that’s cultural strength.

The third pillar that we came to with the help of Jim and a number of other academics is this notion of cultural adaptability. And there’s a couple different ways to slice it, but at its core it’s really finding companies that, have the external awareness to understand what change is happening in their industry, whether it’s regulatory, whether it’s competitive in nature, whether it’s shifting needs of customers. So, one’s kind of this awareness aspect, and the other is, do they have the flexibility internally to adapt strategy and to adopt their operations, and really their priorities to meet whatever the industry is calling for at that time. When we go into look at a company, we’re really looking at it through this lens of cultural strength, culture strategy alignment, and then adaptability. And it gives us, essentially a universal framework, that holds true across industries and geographies.

Joey: I’m fascinated by the fact that you, yourself are a culture analyst and the fact that there are roles specifically designed within WCM to think about culture. Can you tell us a little bit about culture analysts and that side of the research team within WCM, and how you, sort of do your day job, I guess, and what you’re doing every day with respect to that.

JB Horner: Sure, like I said, I had kind of raised my hand to work on this as a side project originally. And then over time as we were producing cultural data there was increasing demand on the parts of the PMs for culture workups on companies. They were finding it useful, which is a good thing. Fairly quickly over the course of a year and a half or so, it went from this project being a kind of a minority of my time, to taking up most of it. And at that point we kind of took a step back and thought, well, what’s your position going to be and what might we call that?

If you look around the industry, there’s kind of no such thing as a culture analyst. So, we debated internally what we were going to call that. And I think, me and another person on the team proposed culture analyst to our CEO and he said, that doesn’t sound legitimate enough, let’s put business culture analyst on it. So that’s how it came about. And then as the demand for this work internally continued to grow, we have added to the team. We now have a team of four full-time dedicated business culture analysts.

Joey: Alot of what you said sounds relatively subjective. How do you. Bring that together into data. And then how’d you analyse that data? How would you make that more objective and sort of rank one culture over another? Or things like that?

JB Horner: Undertaking a lot of our data is qualitative in nature as you mentioned. It involves a lot of interviews with various people kind of in and around a company. And by its nature, culture is a fairly subjective kind of qualitative subject. In general, I think what was really instrumental is, devising a framework that allowed us to kind of filter and analyse this data in a consistent way across companies. So the three pillars that I mentioned before, our workups are really rooted in trying to assess the degree of culture, strategy, alignment, cultural strength and adaptability in a company, but ultimately relating that back to the investment thesis on a company and try and understand, okay, what does this company need to do over the next 2, 3, 4, 5 years for the investment to work for us?

And then we bring that cultural data to bear on that. For example, if, let’s say we’re looking at an industrial company and its really kind of a margin story. We have to gain conviction that margins will improve over the next few years for the investment to work. We can then bring essentially our cultural toolkit to bear to understand whether the day-to-day behaviours are present for us to have conviction in that. Like is there sufficient level of discipline, day-to-day focus, clarity? Is there objective measurement going on inside the business where people kind of know where they stand performance wise on various priorities? So I’d say while the overall assessment is qualitative, it is really rooted in trying to diagnose really execution risk on things that are pertinent to the investment thesis.

JB Horner: So, we don’t come away with a, a kind of this broad fuzzy sense of, okay, this is an 8.5 out of 10 culture. It’s really trying to understand this company needs to do X, Y, Z to be successful, and do we have conviction based on the cultural data we’ve gathered that they have kind of the right, wiring in place to be successful in doing that.

Joey: That makes sense. And you touched earlier on, , how some of, or a lot of these processes have come from academic literature. You talk a little bit about the interaction and the overlap between the cultural analyst team and the research team there and, academia in general.

JB Horner: Yeah, absolutely.  I mean, it was interesting like historically, there weren’t very strong ties between academia and WCM. I think it was just the nature of this subject where, as we know, it’s not an area that’s typically explored by investors, and so we kind of had to go outside the investment world. And given just I think how productive those interactions were, it’s something we’ve really leaned into overtime. And so as recently, I mean, I was out last week meeting with a long-time kind of collaborator on the academic side and, every subject on the sun came up. But a lot of it was really focused around, kind of adaptability as it relates to AI adoption. What are kind of some of the early signs of companies that are kind of wiring themselves in a way to, kind of adopt AI in a meaningful kind of value-add way, knowing that there’s still a lot of ambiguity in terms of how things will play out ultimately.

And so, this is like an example of where, like one pillar of a framework, adaptability is particularly important in a period that like we’re in now. Or there’s a lot of noise and volatility, so that happens. I would say we’ve, been more intentional about bringing people together that are focused on culture across different domains. So that includes bringing academics together with, practitioners, with CEOs, with founders, with board members, both within the corporate world and beyond it. So, think kind of, for professional sports or government and such. And I think that’s really rooted in the sense of, as we’ve spent the last 10 years or so doing extensive interviews with management teams around this topic of culture that’s really fed in learnings in a powerful way that’s informed our framework and how we actually diligence companies.

It’s sort of like once you have a broad reference set of what kind of good looks like and, what may be ineffective or kind of bad looks like, you’re able then to apply that to other cases. And so increasingly we’ve basically tried to accelerate that learning by making sure that kind of we’re building a good community of people who are really focused on this topic, but come at it from different, areas.

Joey: Great, and if we could try to bring maybe the process to life a little bit, can you give us an example of, a company where strong culture has directly improved their competitive moat or long-term performance?

JB Horner: I’ll speak to kind of a past investment of ours. Not by name, but you know, there’s a logistics company, operating out of North America. And in general, the part kind of the industry they were in was very low mode, incredibly competitive. Very difficult for any company to really differentiate in a meaningful way. So not necessarily kind of like the best backdrop for a successful growth investment. What we found through doing culture work on the industry is there was a company with a strong level of cultural differentiation. And what it was really rooted around was delivering superior customer service and basically service levels. While they weren’t the lowest cost provider, what a lot of customers came to find over time was that even though they had to pay more to go with the service provider, they tended to have shipments that were on time at a much higher rate and tended to be damaged at a much lower rate.

It was essentially kind of a low overall cost, like input cost, but a really high cost of failure. because a lot of these, it was like B2B, and so you had, you know, parts that needed to make it to a factory on time. And if that part didn’t make it to the factory on time, or if it was damaged, that line would be down for, an hour, 2, 3, 4, 5, or a day. And that cost was enormous compared to the relative nominal cost of the actual shipment or delivery. And so, this company had really clued in from a strategy perspective around, hey, there’s a way to kind of differentiate meaningfully around this. Actually executing on that and delivering at scale across the huge network consistently on time with low Jan rates is incredibly difficult.

It’s not like every other competitor out there didn’t want to do that in theory, but what this company had done is really built a culture in a very savvy way that encouraged, and kind of enforced the right behaviours across their whole network for that to happen. So, what that looks like in practice, when we were talking to people in the industry, former employees from the company, we got pretty granular in terms of what does freight facility look like at this company versus a peer. And behaviourally what’s different is what you see is a lot of time and attention put into innovation around how you pack freight, how you break freight, and how you repack it. So that ties directly back to really like the damage rates, the lower damage rates that they were seeing. You also see a real pride around that had been instilled in socially reinforced culturally around this notion of delivering on promises that people have made to their stakeholders and warehouse level leaders.

We’re very savvy and kind of building this true sense of pride around we’re different in the industry, we’re better at this. And that sounds all like nice and, warm and fuzzy, but like in practice, what you saw when we talked to people. Like if somebody saw that a tie down was loose and they’re super busy and they’re under a bunch of pressure, these people would take the time to go tighten it. Because they knew that it probably did matter. They also took the time to put cushions between freight in the right way. There’s also a lot of stories of, sometimes like things are beyond your control and there’s weather or whatnot, and despite best intentions, the delivery is going to be late. We came across numerous stories of people, getting up at two in the morning on their own volition to go manually in a pickup truck rather than a in a big truck, go and deliver, like basically hand deliver stuff to a customer that really needed it. That wasn’t really happening at these peer companies that we were looking at.

And it’s not just like these isolated stories as we gained conviction that this was actually happening across the company. The culture was managed in a very intentional way from kind of the top down. That gave us better insight into why they were able to differentiate in the way they have and gave us conviction that there was kind of staying power in that.

Joey: That’s a great example, and maybe then on the other side, a company that you’ve looked at, the firm has looked at that hits some great investment metrics, traditional metrics, and then you’ve looked at it and been uncomfortable with the sort of cultural aspect and decided not to go ahead. Have you got something in that bucket.

JB Horner: Yeah, absolutely, often when we tell people about our focus on culture, I think people’s minds naturally go towards like, how do you find a grade or effective culture that’s going to drive, incredible returns.  I think what people hear, and the team have realized over time itself included, is that a lot of the value add is on the flip side and it’s avoiding risk that isn’t seen by other investors. To give you kind of an example of that, there was a company that we actually were invested in a European software company. Essentially enterprise in nature had executed very well on selling into European companies and had really. From kind of a cultural and personal relationship standpoint, really kind of knew the decision makers at all, kind of the companies that were important to their business in Europe.

And had been a very good investment. The next kind of stage of the thesis that the market was looking towards is really their ability to parlay that success into a North America expansion. And from our perspective, the company had a good amount of credibility. They executed well in Europe. But we did do a cultural kind of re-underwriting because again, getting back to pattern recognition. We have seen over time that to succeed in one cultural context doesn’t mean that you can necessarily succeed in a different national cultural context. And the early signs were positive. So, we kind of dug into the story. They had essentially done an acquihire to secure a really good commercial team in the US. All signs were good as we did deeper cultural work. What we came to understand was the team in the US’ success was really dependent on essentially back office and implementation support that was still based in Europe and the culture of the European headquarters, that kind of flowed from leadership was essentially like I would say maybe a disinterest in the US market and supporting them.

And what we came to understand is. There was a sense that the company had to do this and had to expand it into the US and North America to really satisfy investors. And it wasn’t something that was really, there was any level of energy conviction, passion around from a leadership level from the rest of the organization. As we continue to monitor it, we started to come across instances of, the requisite support not being provided to actually execute on deals in the US. Meanwhile, you had companies in the US who were really looking towards the first few implementations of this company as a sign as to whether it could be a trusted provider in the US.

From our perspective, while it had been a great investment, we saw execution risk really ticking up in a way that was really kind of rooted back in kind of deeper or cultural dynamics. And we don’t always get those right, but running really concentrated portfolios, it gives you the luxury of being fairly selective. And so, when a company has some idiosyncratic risk like that, we’re able to avoid it.

Joey: That’s fantastic. For our final question, maybe we can just zoom out to sort of bigger picture. The equity markets in the last few years have been particularly strong, especially in the US. Inevitably there will be a pullback at some point. How do you think the cultural overlay that you have at WCM and maybe some other parts of your investment pillar really help support the performance of your portfolio through a pullback at, some point?

JB Horner: That’s a great question. I think in these situations we find a lot of value in the work we do around adaptability and understanding companies that, are probably more aware than their peers around how things are changing in their environment. Then again, companies that we have conviction that are pretty good at, adjusting kind of strategy, operations, etcetera, to kind of rise to the occasion. Again, it’s not something that you’re going get right every time, but we do kind of view it as a bit of an insurance policy in the face of ambiguity. If you have a high degree of conviction in the leadership team and the ability of the company to respond effectively to kind of the unexpected. It gives you a little bit of comfort that you’re not going to have with other companies.

Joey: JB we’ve come to the end. Thank you so much for your time today in highlighting a particular aspect of analysis that I’m sure many investors will be less familiar with. Thanks.

JB Horner: Yeah, absolutely. Thanks Joey.

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