As participants listened from around the world, Mordell and Chambers delved into leadership, the future of AI and the importance of company culture. Filled with informative takeaways for business leaders and packed with personal stories of successes, failures and childhood misadventures, this illuminating, high-energy conversation ends with a meditation on going outside your comfort zone as Chambers and Mordell snack on crickets — a potential solution to world hunger.
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Scott Today, I have the honor to be with John Chambers — a legend of business, a legend of leadership and quite frankly, I think a model of the human spirit and the positivity that it can bring to changing the world. So glad you’re here, John.
John Scott, it’s a pleasure; it’s an honor to be with you, thank you very much.
Scott Just a little bit about John, because he’s “been there, done that,” in so many different ways, which makes him a wonderful teacher for us today:
During his 20 years at Cisco, he’s grown their organization from USD70 million in revenue; that’s USD47 billion when he left the organization. He experienced many different downturns: five major downturns and six very significant market transitions and he’s grown the company through them. During that time, there were more than 180 acquisitions that he oversaw and led the organization through. It’s wonderful when one can look back and say that most of the competitors you had when you started, ceased to exist. In that sense, it’s truly fantastic.
John Scott, glad to be back with the organization. I think last time was March 2017, when I talked to a number of your members.
Scott Yes, that was in-person and actually from this very room during Innovation Week. You did a global webcast, which included a Q&A with a number of our members, in addition to the local bureau here. It’s just been great content discussing different subjects within the framework of you being a teacher for us in this world.
John Well it’s an honor and I’ll try not let you down. The good news is, I’ve seen every movie there is to see, I’ve done some things right and made a lot of mistakes and can share those so that perhaps your audience can say, “Alright, lessons learned! This one I can avoid, or this one I can leverage …”
Scott So to start us off, we’re having a lot of discussion within YPO about how the expectations and roles, in many ways, of CEOs have changed in recent times because of all of the disruption and everything else that’s happening. From your perspective, how would you say things have changed for YPOers out there but also CEOs everywhere?
John One of the reasons I wrote the book was that I tended to get the same questions regularly and I thought this was a way I could teach and here are the questions I get, here are the answers and here are the mistakes I made.
But in terms of the core requirements of a CEO, I would argue those remain the same. Their importance, however, is varying dramatically and the speed at which they’re occurring varies dramatically. The role of a CEO or a President in today’s world is to:
- Number 1 – Have a vision and strategy for the company.
- Number 2 – Develop, recruit, retain and change that leadership team as deemed appropriate and as you know, that’s one of the hardest things to do as a leader.
- Number 3 – Instill culture. I know as a young CEO I probably did not put as much emphasis as I should have on that; I kind of backed into how important culture was.
- Number 4 – Communicate. Communication is at an entirely different speed today. You could be a Jack Welch — not be a very good communicator, he would tell you he is not — and yet be one of the greatest CEOs in the 1970s and 1980s, but in today’s world, you have to listen to social media and you’ve got to be out there when the bumps come along the way.
Scott In YPO, we’re recognizing that the world needs better leaders. Some people forget the fact that business and commerce ultimately pay for everything that happens around the globe.
John Creates all the jobs.
Scott Exactly. And the world needs our leaders to bring those businesses together and to do different things. And through YPO, we connect across geopolitical boundaries. We’re non-political, we’re all about the leadership and so in that sense, this is an important mission and purpose for us as an organization. But ultimately, each individual takes it for him or herself as they begin to go forward.
John Yes.
Scott What I loved about the book is how you really created a replicable playbook that people can work with in order to repeat practices and to actually succeed in this time.
John Again, I actually backed into it. As we started to do things, I realized I used to consider process like bureaucracy and it was bad. And boy was I wrong. You’re never able to scale with speed without process behind it, but you’ve got to design it for speed. And so one of the first things I designed was how to do acquisitions. We literally came up with some golden rules of doing acquisitions:
- Understand what you’re buying and protect it at all costs.
- Only do it if it has tremendous strategic importance to you because they’re really hard.
- Only acquire companies with similar cultures — that’s something that I did not think about until I got into it further in.
- Only do it if you can maintain the people because you usually pay such a premium that you won’t get the product out for the next generation.
So we developed our playbook, ran it again and again through 180 acquisitions and I think most everybody in the industry would say we are the model they teach at Stanford or Harvard University on how to do acquisitions.
We use that same playbook on everything from recruiting people, to digitizing countries, dealing with problems in a customer account, dealing with a Cisco family member that has a crisis — either for themselves or their spouse or their children …
Scott And let’s remind people that an organization only has a few parts to it: There’s a sense of purpose in terms of what it’s trying to accomplish, they need to have some processes so that all the people who come together have more impact than they would have individually —
John I could not agree more.
Scott And then we need some capital, right? So that’s all got to come together. And it ends up being people that actually revolve around the mission and come together with the processes and bring the capital so let’s talk about culture for a minute — are CEOs paying enough attention to culture?
John When I became a CEO, I didn’t really appreciate how important culture was, even though I was already building it very strongly in the company; how to interface with customers, with employees in crisis, how I focus on innovation … but I then realized that I’d never seen a great company without a great culture. You may or may not like the culture of Microsoft, or Oracle or Cisco or Walmart or JPMorgan Chase, but you always see very strong cultures.
Using Cisco as an example, it’s got to be owned by the CEO who has to believe the culture, has to walk the talk and articulate it. It’s got to be easy to understand; it can’t be vague. When you’re a young company with 20 or 30 people and you’re growing, people can understand how the CEO wants his or her culture. But once you begin to get to the breakpoints — 500 1,500, 5,000 — you have to have a process where people understand what your culture is. At Cisco it’s changed the way the world works, lives, learns and plays.
- The first element of our values is, make innovation happen.
- Second, is treating customers as the top priority, every moment of what we do.
- Third, we are a family. That’s not to say that every company should view it that way. But I sure did at Cisco; I knew every illness of every employee and was there for them like no one else.
- Also, basically, just do the right thing.
One of the most exciting things about coaching young CEOs is that they get vision and strategy pretty quickly and I help them on that. I can really help them develop and scale. I work on the communications, often doing interviews together, teaching them how to sandwich a question, how to deal with the return question with humor, how to deal with really tough questions — if it’s emotional, you do it with facts, if it’s factual, you do with it with emotion.
But the culture one is often confusing. When they finally get it, when they really understand the detail and the power behind it and then try it with their employees or customers and see it … that’s what coaching is all about. It’s what mentorship is about.
Scott In my intro I was giving a picture of the successes you’ve had and just talking about the growth and the leadership is a part of why you’re such a legend, but in our conversations and very much in the book, you talk about the value of setbacks versus successes. For you, what’s more important and can you share a couple that would help people really understand the context?
John This I did not get as a young leader. I never wanted to have setbacks or make any mistakes, but I realized if you’re taking risks you’re going to have setbacks and make mistakes and you will not succeed without making them. If you would have asked me 20 years ago, “Are you more a product of your success or your setbacks?” I would have said, “Successes.” They’re a lot more fun to talk about, as we all know, but one of the things you do with your program is exchange views and practices and everybody’s going to get knocked on their tail, right? Most companies never get back up, including the CEO. It’s so important to realize that you are more a product of, or at least equal to, how you handle your setbacks than your successes.
I navigated through five major downturns in Cisco — some of them partially self-inflicted, some economically-inflicted — and you develop a playbook for that as well. When a setback comes how much of it was self-inflicted versus market? Was your strategy working? How long will it last? How deep will it be? Where do you want to go?
For those of you who are parents you know where I’m going with this: you don’t worry when your child gets a good grade or when they score a goal in soccer; you worry when they get knocked down either socially or have problems in life. For me it was dyslexia and if you learn to come through that, then your child becomes a young adult.
So learning how to deal with setbacks I think is very important for all of us and knowing that’s where most companies get into trouble.
Scott Thank you very much. I believe we’ve got a question from.
Question from Aaron McArdle, YPO member, IllinoisI just got my copy of “Connecting the Dots.” I have it in my bag now. The first story about the fishing rod is amazing and so relevant to a CEO’s role. I’m struggling with how much to share with my team as we navigate trials. Any insight on that?
John I started with a near-death experience. At six years old I fell in the water rapids at Elk River in Charleston, West Virginia and I could have drowned. My dad was about 100 yards upstream and he had told me not to get too close the edge and of course, I got too close to the edge and swept away in the rapids. When I went in, he yelled at me, “Hold onto the fishing pole!” I’m getting plummeted through the rapids, getting knocked over, coming up for air and each time I came up I could see him running down the side of the river as fast as he could go, yelling “Hold on to the fishing pole!”
Finally, I got to a point where he could swim out and grab me and pull me back in and he sat me down — and he’s a great teacher and I try to be as well, but he taught me at that time — you can’t fight the current, whether it’s rapids, an outgoing tide, or economic trends. What you’ve got to do as a leader is know you’re going to have the fear; learn to control it and then look for how you navigate through the challenge you got yourself into. Usually by going with the current and then working your way to the side. People drown because they fight the tide, or they fight the current.
And then my dad did what any great teacher does — he didn’t tell my mom this — but he put me right back into the rapids and watched me pull myself out, then went back to fishing 100 yards upstream again.
I believe stories are the way that you convey this and as a leader, as a young president, you’ve got to let your team go through that as well. You’ve got to teach them. You’ve got to know when you need to do things for them, but also when you need to just give them ideas and empower them to do it.
That’s the lesson learned all the way through life and it’s one of the reasons I love being a leader — I love building great teams, but I enjoy teaching them how to handle their challenges, not just their successes.
Scott And working past the setbacks, you talk about reflection and many CEOs just keep going — moving from thing to thing. How have you created reflection space for yourself? How do you think about this or make room for reflection as you’re going through it?
John I try to learn from every experience. I believe you learn from everybody in life — nobody’s above you and nobody’s below you — but you learn from experiences. Then you learn how to share it and not just as a story. One of the reasons I wrote the chapters like I did is so you hear the stories and at the end is your takeaway.
The way you deal with setbacks, as I said before, is in the balance. You teach people how to deal with it. You also want people to take risks. The first time somebody takes a risk and they fail, if you fire them or smack them, you’re not going to have a company that takes risks. You want to create a culture where people dream and you want to get them comfortable for going beyond their comfort zone regularly and that’s what I now enjoy doing. I didn’t like it at first when my team pushed me outside of my comfort zone, now actually I enjoy it a lot.
Scott You’re touching on something that’s very important to YPO and the nature of our organization. We bring together really extraordinary people — they’ve had business success at an early age, so we’re taking people with accelerated success — and ultimately, we’re trying to help them accelerate even faster. One of the things when we bring them together is we try to make it safe so that people will actually share and feel comfortable.
John Sharing their successes and mistakes.
Scott Exactly. And then we try to stimulate the conversations to action. One of the elements in the book that really struck me as wonderful, using better vocabulary than we’ve been using, is this idea about the teenage mind. You’re talking about dreaming and thinking big … will you explain to everybody what that means?
John Part of this I got from Shimon Peres — he’s one of the greatest leaders I’ve ever met, a friend for 17 years and I miss him every day and I’ve met every leader there is in the world. He taught me more than anybody did in many ways. He taught me leadership was lonely and boy was he right. He also he taught me to think like a teenager. Much like your teenagers — those of you that have children that age — they do all kinds of things at the same time — eating, exchanging things on social media, doing their homework (sometimes), talking to you at the dinner table (you almost have to text and say, I’m ready for the next conversation), but having that process of gathering the data so quickly, I think is the future for leaders.
Then thinking like a dyslexic. Dyslexics can’t do things serially. You gather the data and you have to picture the outcome. And so, one of the chapters talks about the lessons learned around that and how to deal with your setbacks and then make a setback, a strength.
I used to be one of the worst public speakers imaginable and I realized that to be a good CEO, I had to get much better. I used to throw up before presentations, that’s how scared I got, but I learned to overcome those fears and then focus on how to communicate by looking somebody right in the eye and talking to them. It was important for me to never memorize a speech because I’d lose my spot; as a dyslexic, I read backwards.
And once you turn a weakness into a strength, you get stronger and stronger.
Scott We’re also realizing that the CEO is pretty lonely role. Where does one go for support? And who should they bounce ideas off? Who do they get honest feedback back from? Can you tell a little bit about your network of peers?
John I learned early on, whether from my dad or my mom or people I met, about lessons learned and so I developed mentors. I didn’t hesitate to ask for help. When I came out to Silicon Valley, I didn’t know the landscape. Lou Plant was the president of Hewlett Packard (HP). I called him and asked if he would spend time with me and he did. At the end the session I asked if he would do it again the next quarter and he coached me for three years. After that, I asked what we could do for HP because we were on a roll.
So I’ve learned how important coaching and mentoring was. I literally have people in very high positions that have been very good coaches and people that are individual contributors and are very good coaches. Whether it’s Bill Clinton — even though he’s a democrat and you and I are moderate republicans — or George Bush, Henry Kissinger or Condoleezza Rice, I’ve always tried to get mentors who can help me develop. I get mentors from customers who might be buried deep in the organization and really understand technology or security and then I build a trusting relationship where they help guide me.
I’m now trying to do that with the startups, because I realize as companies wait longer to go public, or some companies never do, how do you get mentors who have seen the movie so many times before? Because I’ve seen this movie. I mean, I’ve seen it going from mainframes, to mini computers, to PC to the internet, to digitization and to your points, all the peers that I compete against are almost all gone or a shadow of what they were before. Having been through that, it is so lonely. It is literally sitting out in this bush looking at the sky and asking, “How am I going to navigate through this?”
I know that my team expects the leader to be like a rock during this. So finding people you can trust to ask, “You have seen this movie before, what are the trade-offs?”
Scott That’s a good bridge into this theme we’re trying to emphasize around how important it is for CEOs to carry an air of authenticity and trustworthiness; but it’s a double-edged sword. Sometimes CEOs will get out in front on something and they will be afraid of that and yet at the same time, the only way they can be authentic is to actually to speak their mind. Do you have any views for us relative to that contradiction?
John I think the currency of a CEO, or the currency of the company she or he represents, is all about trust. It’s all about track record. It’s all about relationships. I think the currencies of the future will be a combination of those three factors. How you develop that trust and a track record of delivering on your commitments as well as how you build relationships and capabilities with it.
I did all my acquisitions on a handshake and it used to drive the lawyers crazy. I’d get a call Thursday night to talk about speed from the head of the NASDAQ and he said, “John, you’re an idiot.”
And I said, “Alright now, what did I do wrong?”
And he said, “You should be acquiring this company and your competitors have been in there six months now, it’s now public knowledge and somebody is going to buy them probably for USD3 billion plus here in the next week.”
I was embarrassed — I didn’t even know what the company did, but the good news was my business development person didn’t know either. When I headed over the next morning to meet with the CEO, we had a handshake for a USD3 billion acquisition, with both boards of directors, announced on Monday and had all the personnel situations and top contracts already worked out. Now that’s speed through process, but it is also a track record; he knew my reputation on acquisitions and that once I gave him my word I would not let him down. Your trust, your history of it and your ability to build relationships with a back channel very quickly are the currencies for your people listening today.
Question from Brady M. Kazar, YPO associateOrganizational culture is hard to change and it can take time for that change to become apparent. What are one or two things you think help kick-start change in organizational culture?
John The number one thing is that the CEO — she or he —must own it. This isn’t something a group can get together and visit once a year or you give to human resources. That’s the kiss of death and is unfair to the HR lead. The CEO has to own it and you’ve got to be realistic about what your culture is. You may not like the culture of Uber, but boy it is strong and you have to understand what it is if you are joining them.
It is important that if your culture gets off track versus what the CEO really believes, they’ve got to take a step back, share with the team why they’re going back to the basics and remind people what the culture is. Even my top executive had trouble remembering to make innovation happen, to treat people like family and customers first. Always. Just do the right thing. Change the way the world works, lives and plays. We’re not selling router switches, we’re selling the future with the internet and you’ve got to regain it. You also need to share with your group that you let it get away from you. You’ve got to say, “It’s my mission.” And then you’ve got to walk the talk. Your people see through it as well as your customers, if you say, “Here’s our culture,” and when you’re out there, especially under pressure, you go a different way…
One thing to keep all of you out of trouble, that basic comment about, “Just the right thing?” If you make that a core part of your values and culture, it will keep you out of trouble and will also help you make decisions.
Scott Moving into decision-making in an important space is artificial intelligence, AI. In some ways everybody’s talking about it. I’m not sure everybody’s got a handle on it, or necessarily what it means to them and their leadership, but I know you’ve got some views on this and I’d love for you to share with everybody a way to think about that.
John The space change with digitization when we move from 1,000 devices connected to the internet when Cisco was founded to about 20 million today on its way to 500 billion — that information is going to come at you with tremendous speed. Really what digitization accomplishes with AI, is it gets the right information at the right time to the right person or machine to make the right decision. A really simple premise; hard to really do.
Every company — I don’t care if you’re in health care, manufacturing, government — every company will become a technology digital company. That’s a nice way of saying that we’ll be a virtual and physical world going forward. You’ve got to understand the major trends. A lot of the buzzwords, blockchain, etcetera, are kind of interesting, but artificial intelligence with digitization will transform every company, drive huge productivity but also huge change. It will leave you exposed to disruption from big guys and smaller guys. Understanding how technology plays within all of this and how you can learn it yourself will be uncomfortable at first for most of us. I didn’t really like technology. In graduate school, I had a friend that helped me with the computer programming and I helped him with his business analysis and ended up in tech just by accident because I realized what it can do for you or to you.
The challenge for each of you is to get a confidante to help train you on technology, either within your company or outside. You unfortunately have no choice. If you’re not a tech company 10 years from now with digitization, you’re dead.
Scott That should make some of our viewers uncomfortable.
John It sure should! It made me uncomfortable!
Question from Toby Reid from British ColumbiaI took my first company public in 2015 and am currently working on my next startup. I have a question for both Scott and John: Our world is increasingly driven by business people who struggle with integrity — for example doing the right thing versus doing the most profitable thing — how do you deal with coaching those who struggle with integrity?
John Why don’t you go first?
Scott Thank you!
John That’s one of the lessons — whenever you get a tough topic you buy a little bit time to think about what you want your answer to be so I’m going to let Scott go first.
[Laughter]
Scott You’re teaching every step along the way!
So to me, we’re recognizing that the CEO’s role and obligation is actually to serve multiple stakeholders. When I grew up, it was solely about profits, but to be successful, to be meaningful and to be valued for more than the short-term time period is to be respectful and honor all of the different stakeholders of the organization.
That should put somebody in the mindset that we’re here to serve the stakeholders and all the impact of our organization. When you think about how we do that, are you really willing to short circuit a positive benefit for your stakeholders in order just to make a profit and have that come back and get you? Because as John shared, authenticity and transparency end up being true, everybody ends up finding it out eventually and it’s going to be part of your price; you’re better off working with integrity, acting with the purpose to serve all of your stakeholders and be committed to that and build a support network around you so you can stay true to it.
John I think it’s one of the top issues facing business leaders around the world, especially the larger companies. We’ve seen this with some social media companies who can lead and not execute. I believe, first of all, that it’s not just the right thing to do, it’s just good for business. Every place in the world where Cisco was No. 1 in corporate social responsibility, wherever we did a good job of being transparent and giving back we were number one in market share.
The second issue is only selling customers what they really need. I’m talking customers, citizens government … this is where, if you don’t fall into the trap of short-term profits, you can actually do much better and make more profits long term. I do think if companies don’t stay focused on doing the right thing and giving back and understanding that society has challenges for us, we will suffer the outcome. You won’t get regulated. It doesn’t matter if you’re in Canada, the United States, France, China … I think it’s the right thing to do and I think it’s very important for us to be role models. Right now, sometimes we are, sometimes we’re not. Silicon Valley is struggling with that at the present time.
Question from Paolo ErnestoHow do you see autonomous digital driving in respect to global, regional transformation?
John I think this is an example where all of us can take artificial intelligence and translate it to something we know. In the future, it will be like it is in your home — your music will just turn on, the steering wheel, you say where you want to go and it won’t be activated by a key or even AI, it will probably be activated by your voice. It will transform everything, safety, etcetera. It’s going to be huge, huge progress in terms of the approach. Now I occasionally dream too big too early. We did a demo at the Consumer Electronics Show 15 years ago in Las Vegas, Nevada. We showed what the cars of the future would look like, but I was a little bit ahead of my headlights on it.
I think that’s the example — you use chips from Nvidia, a really hot startup — and you’re going to use radar capability that’s coming down dramatically in price to be able to see things and then you’re going to gather data from everything around you that provides information. It’s just beginning. If you think what’s happening today is rocket science, it’s baby steps compared to what’s going to happen here. I think it’s the best example of how technology will transform automobiles.
I had the chance to talk to Ford and GM and many in the global automobile companies going back about seven or eight years ago and I tried to share with them that if they didn’t become a technology company, a digital company, if they didn’t move dramatically quicker and to different business models, they were going to get disrupted. While they were very polite and had a good healthy give and take in the meetings, the message was hard to get through. The message that Uber will be your competitor, shared assets will be your competitor, that Tesla will come from almost nowhere and overtake you … and just to give your viewers the data that goes with it and how fast things are accelerating: I was on the Walmart Board of Directors, the Walton family is amazing, it’s a great company, just does the right thing almost all the time. We saw Amazon coming; we could not get ahead of them. It took 21 years for Amazon to pass us in market cap but they did. Tesla overtook GM and Ford in 14 years. Uber overtook Tesla in seven. You know where I’m going 21-14-7 … that’s the speed of change each one of you has to deal with. You have got to understand that your competitors of the future won’t be your competitors of the past. What will get you in trouble is doing the right thing for too long. You’ve got to have the courage to dream, to disrupt yourself, create an environment for making mistakes, or you won’t survive. 40 percent of the companies watching this podcast will not be here in 10 years; maybe 50.
Scott Even more uncomfortable now…
John Good. That’s important.
Scott Absolutely. So thinking about change and what our viewers are paying attention to and what they’re going to do next, do you have a life hack — beyond reading the book and beginning to think big — about what can we do more specifically? Do you have a couple nuggets we can take away here?
John I have a couple of nuggets! The first is, you want an innovation playbook for almost everything you do and that allows you, instead of being bureaucratic, to move with tremendous speed.
The other thing is to get outside your comfort zone. Dare to dream. And people might be critical of me, saying I dream too big and try to do too many things at once, but after thinking about it, and it’s fun now that I can be independent … I actually think I should have dreamed bigger and taken more risks. I’m doing that now with my startups. I’m so far outside my comfort zone with startups it will shock you.
The other life hack is, take time to go to the bathroom.
Finish your meeting, summarize it, do the bathroom, make the phone calls, get the next meeting off to a fast start … it sounds basic, but if there’s one takeaway, it’s all about the ability to have a vision and strategy where you want to go, build a team around it, and know how you’re going to use technology and the importance of the CEO’s place in that.
Scott We were talking about a couple of the startups that you’re excited about now. I’d love to hear about those.
John I have ones that do social media and I have ones that do security, but two that might shock you and kind of give you an idea how far outside my comfort level I go, regularly:
The first one, which gets announced today, it’s a company called Privoro. Basically, it’s a secure case for all phones so we’ll start with the iPhone and then go beyond it, you slide your phone straight into this, you close it. It is nation-state hack-proof.
With your phones today, anybody with a little bit of expertise can, with a little bit of expertise … can dial-in, turn on your audio, actually run your cameras whether you’re at home or in a meeting, they become listening points in businesses, they download your email, watch your strokes that you’re using, etc., which is why most event agencies won’t even allow smartphones in their buildings anymore. The same thing is going to happen in business. This is a company of seventeen people. When I first saw it and a friend asked me to look at it out of Arizona, I said, “You gotta me kidding me,” and then once I got it, amazing of what it could be. That’s where the ability to dream and address a real issue with technology can be huge. And about the time you think that I’m taking too much risk?
[John pulls out a snack bag]
John This is perhaps the solution the world hunger. This might be where insects — especially crickets — become the next lobsters.
[Opens the bag]
John The first time I met Mohammed Ashour, he was out of a company called Aspire and was the winner of the Hult Award. 25,000 companies compete for this each year and he won. He said, “John, I do cricket farming, will you coach me and will you invest?”
I said, “No. I don’t understand this, that’s so far outside of my sweet spot.” But then I realized he wasn’t a farming organization — this was an internet of things — cloud, big data, raises crickets and the purest form of protein imaginable. It’s the easiest for us to digest, it does one seventh to one tenth the environmental damage of the meat that I love does to the world.
Typical me, I also said, “Let’s make this the lobster of the future, so we go to a three-star restaurant here in San Francisco — Saison — and had a seven-course cricket dinner with the press watching. So Scott, I’m going to test your comfort level-
[Hands Scott a cricket]
[Both of them bite into a cricket]
John It’s like a salty potato chip, I love it. Texas. BBQ.
Scott It’s fantastic. We have one last question before we go.
Question from Mihir Shah, YPO member, California, USACisco went though several transitions, how did you keep employees motivated when you had to make tough choices regarding refocusing employees?
John I think keeping employees motivated and part of the family is one of the things we did best at Cisco. Our attrition rate during the 25 years I was there, when only about five percent in Silicon Valley have attrition rates in the low teens. We were a family and I alluded to it earlier — I wouldn’t suggest doing that unless you really mean it. We were a family during the good times and bad and when you go through the tough times — and it isn’t question of are you it’s how do you deal with it — you’ve got to be honest, have trust, a track record and good relationships and say here’s how much of it was self-inflicted, here’s what we have to do differently and how much was external. Then you’ve got to go through how long you think it’s going to last, how deep it will be and you don’t say this to the employees, but you plan for it to be longer and deeper and you get your business plan in place. You then basically share with all your constituencies what you’re going to look like when you come out and then you treat people like you’d like to be treated yourself. Your leader has to be out there and has to be visible. While that sounds basic, almost no companies do it. When you do, then you can run the play with tremendous speed.
Scott We could go on for hours and hours and hours about this because there are so many things to explore, but we’re coming to the end of our time, so I’d like to turn it back to you, John. Is there one mistake or one learning, maybe a point we haven’t really kicked over relative to some of the other thoughts in and around the book that we could we could share?
John I think it’s important as a leader to have balance in life. One of the reasons so many people with Cisco stayed with me 20, 22, 25 years and will come with me to the new companies if they’ve left Cisco, is we make it fun. We’re a work hard culture and I don’t make any apologies for that, but we also have fun together. I take my leaders fishing in Alaska, at my expense … I think for you leaders out there, to realize your team will feed off your energy is important, especially during tough times, to show that you’re having fun and help them have fun.
You are the future of this world. You said it well in your introductory comments: without the businesses, there is no standard of living increase, there is no job creation, there is no chance to do many things we talked about so you’re our heroes. Have fun with it and if you take away one thing, remember, it’s all about trust and doing the right thing.
Following the conversation, John was generous enough to answer two questions there wasn’t time to get to during the video.
Question from Nicolas Tejerina, YPO member, ArgentinaHow do you help the CEO of a startup, transition to being the CEO of a large company?
John I think your basic culture and strategy vision don’t change, you just learn to run it at a larger scale. You’ve also got to realize that probably as much as half of your team may not be able to scale with you over the next five or six years. Getting them into the right spots is key. At Cisco, I had seven sets of CFOs, eight sets of business development and eight heads of sales while I was there; we still kept the people, we just moved them into different roles.
What you’ve got to do is realize that skill is important and the break points at small companies usually occur at 500 people, 1,500 people, 5,000 people. You, as the CEO, have to change your style at each of those segments as you go forward. Not your values — but the way you communicate, the way you empower people and work through organization layers.
Question from Frank Kenna, YPO member, Connecticut, USA Do you see any tech solution to health care expenses for companies and employees? Will some company or service be “the Uber of healthcare,” connecting people with existing resources in new ways?
John I do not. I do see huge movement in artificial intelligence and huge movement in areas of healthcare — my parents are both doctors, so I know this area cold — but you have so much regulation and it’s such a broad area that I think you will see a number of potential Ubers, or Fords, GMs, and BMWs re-inventing themselves. Those who don’t move into healthcare will get into trouble. I always follow the venture capital money and by that, wherever they start investing usually means it’s probably three-five years out from an inflection point. There’s been a huge amount of money going into health care in the last two years from VCs, which usually means there’s a change about to occur.
