John Chambers at Time Machine 2020
(Raw unedited)
Transcribed by https://otter.ai
Unknown Speaker 0:06
If I remember the audience, what benefit Can I get from it? Because it's easy to forget, it's been 12 years since financial crisis? And what have happy employees in the room? Well.
Unknown Speaker 0:16
So let me share what occurred over a period of 33 decades. Through the financial crisis. I've been through five major healthcare crisis situations in 32 years, I've been through multiple matching crisis, etc, in multiple job creation, including crisis. And so each time you go through it, you need to develop a playbook for how you handle it, you have a canvas, everything you have to do in terms of the playbook and talk about the
Unknown Speaker 0:39
stock on both we went back in the world, people say, john, can you rent a company after 10 years, so percent growth per year. And the way to deal with a crisis is you want to be realistic, how much? How much is external, you need to address those at the same time, you then need to put in place a plan A, B and C in terms of how long it's gonna last, and how spirit will be they usually last long you think and it will appear that you anticipate that
Unknown Speaker 1:00
Same place your action plan, if you will, your platform for how to navigate through the crisis as it relates to your expenses, your cash flow, your customers, your employees, as it relates to the new markets that you may move into, or protector this counter, you often get a word that I want your leaders into those areas to focus on. You didn't think your picture of university or what you look like when you're going to come out, and you get regular updates to your constituents weekly, is my recommendation for your employees, your shareholders, your customers, your partners, etc. And then you navigate to it. You've had to make all your decisions one time if you have to spend reductions, you don't want them to come out over a period of time, and then you get ready for the next day in your company. So that's kind of the playbook samples. You know, you got to make the 98 Asian financial crisis. Tiger economy slowed dramatically in Asia, most of my fears are out of Asia. A lot of the resources we dealt with failed anything much later. We were number one in market share in
Unknown Speaker 1:48
2001 surprised me. My mistake for not coming it was brutal. We made our changes not to make the changes in the evening and also to the market the next morning made all the changes in 51 days 52 we started gaining market share 2008 the Great Recession
Unknown Speaker 2:00
We saw coming over to you earlier, we prepared for it better than I did in 2000 2001. And we got to get through it very quickly, including extending credit to the industry and everyone can make people go bankrupt. And also when we're finished with our purchases, we develop the trust for those and we navigate through it. And once again a year later, we were number one in every automotive company around the world. So crisis we all wish we could have been a terrible thing about there's so many aspects of people's lives, better. Doctors, they can't be already on your world radio is not what you wish. Let's be realistic on the challenge. Get through the challenge in a position yourself with great advice. Thank you great suggestions as well.
Unknown Speaker 2:33
Talk about strategy and execution. Many of the leaders on the call are adjusting to the changes in nationally real time critical areas, thinking about
Unknown Speaker 2:43
two aspects and wrap it around my first innovation playbook that you run in terms of your focus on
Unknown Speaker 2:49
your customers, your employees, etc. and around the leaders in the room, the leaders
Unknown Speaker 2:55
or the groups around them. Nevertheless, asking for their company number two could help you integrate
Unknown Speaker 3:00
They change the leadership implementation vision. Third is communication. And fourth is culture, interesting crisis, the communication culture becomes as important or even more important than the safety ambition. So the leaders in the room, think about what are the key ones or programs, they're going to run to go through this process? What does it look like? And then begin to paint the picture for the next step. And then how you can make these with these. And how do you focus now more important on lifting more important on culture, because culture actually allows you to get through crisis more effectively. people haven't had
Unknown Speaker 3:30
brown candle yet the people and our culture, the way we change the world on it, but the areas that make people underestimated how much of a family we were, how much we were far from perfect, but we always try to do the right thing. We were betting and betting our goals. We were really customer driven. So now we didn't have it on your culture and make sure your employees know what wrote to them, right. Don't navigate through to go through the challenges.
Unknown Speaker 3:51
So how do you think the situation we're currently experiencing right now is different from previous crises?
Unknown Speaker 3:56
It's different in the magnitude and almost every category
Unknown Speaker 4:00
earlier about the power issues without saw any challenges. With the whistle indexing before this, there was the Berkeley pandemic rally actually in Mexico, with the president Mexico back in 2006. when it hit and they thought, they just nobody can get together for dinner that night, he had to meet with President Candace. That's where we got the idea of video conferencing and the telepresence at very different levels, so that people could communicate through crisis in a different way in terms of the ability to do that. In terms of the magnitude of the challenge 30
Unknown Speaker 4:28
quickest downturn in the Dow Jones stock market average, up at least pronounced the quickest recovery as well. But the magnitude going down, up dropping in the between too many countries around the world without seen before. And then employment, perhaps a striking part of all in terms of job, job creation. So I think it's occurring at a faster speed than before occurring on forex. It's not just one economic factor, supply changes or major issues. We all know that as well. And
Unknown Speaker 4:52
this is where leadership is lonely, and the leaders didn't get through the US. It's a natural. It's very human for you.
Unknown Speaker 5:00
And to realize that we want to wait us out. We want to get the best advice we can from our team and people we trust. And then you've got to have the courage to move. And this is where you actually if you do it right, we'll come out even stronger on every major company attack as an example, broke away, not during the good times, it's hard to gain a couple points of market share things going well, you break away during the tough times. That's where you develop your inner competence, your ability to lead as a leader, and they got a john, you have a good company in the mid 90s. And I just wanted to take you back to a company that had your death experience, probably at the end of 2001. He said, john, this was the best leadership you're ever and you down with a great company, and at the Jacksonville show was still valued avoid that question. Customers competition is struggling to know it's how you handle the crisis determine who you are as an individual and as a company. So I do think it's one that we all would have done, anything goes away. But once you're into it, you should have to navigate through it very calmly outlet where you're going to go, what should we do and not
Unknown Speaker 5:53
as leaders and corporate culture, how can leaders shape their corporate culture and manage evolvement beyond this crisis,
Unknown Speaker 6:00
Well, I think the most important thing, and this is where I work with all my startups, I got a huge lever other than Cisco as well. And we're all sort of covered with the culture has to do with the leadership, founding team. And you've got to take time to be articulate but culture is what is not, the leaders have to walk that talk more than ever. And you want to be realistic when you say this is our culture, you've got to stick to it and be fairly behind. I try to keep it as tight as you can in terms of component parts. If you don't already have that in your your group or your culture as much values that are reinforced there guys, let me distract them. I try to make them higher customer for example. It's just an employee family we do every almost every employee, every spouse, pretty child, there's like I think we were there for like no other company was we created 10,000 millionaires, which is one of the things you can do as a leader to show that your customers and your employees and then you want to just do the right thing that navigated through a number of problems. And if you think about your culture, and your values, you look at what that says, we learned how you always what you should do every step of the way. Well cultures you never have a great company that operational costs, you may like a Microsoft or an Oracle or or an apple we may not only have strong cultures or a culture of it.
Unknown Speaker 7:00
company and stay true to your values and recognize cheerleaders.
Unknown Speaker 7:06
So as you know, the customer trust is the currency of business. What can companies do to strengthen their relationship with customers right now?
Unknown Speaker 7:14
So I am a believer, as you already know that Sheldon, customers first employees first, your family, if you will, your currency of a leader, as you alluded to, is based upon three key factors, your track record, what have you done? What's your brand stand for? It's the relationship. And also people underestimate help when they aren't with your counselors, or with key people in the organization and externally. And then finally, if it has to do with the fact that they can actually learn more than you take, and you do your successes. That's it. That's my knowledge. There's never been a customer or a key government or business leader at any level, that I cannot go back to himself to again, because of that trust, the track record, that it developed into two relationships that are that is your currency as you move forward. So thinking about in terms of customers, the first thing you want to do is be empathetic. They're going through a crisis they're trying to survive, many of them had to layoff people. It's something that most leaders have not navigated to before the trainer. Thanks
Unknown Speaker 8:00
Do you want to understand what are their key priorities where you can help them with a few priorities? You build relationships and to contrast it with companies in Asia? And you think, how can I help you? And they will turn and say, What can they do in reverse. And so this is the time to really get because your customer is contrary to many people's opinion. But don't give a call to Andy does. He want to take your resume help you be realistic, it can help them currently with your products, or it can be a couple quarters out. And you also have to be able to take that to the customers will be ordering in most cases at a lower payment, you can have a lot more to fight lunch, get things off and opportunities. But this is where you build a great company. It's where you build your relationships very strongly with your customers and the brands that your company represents.
Unknown Speaker 8:35
I just wanna remind everybody to please input your questions in slider, which is right under the screen. We have a few more minutes with john chambers. So going to another question from the audience, john.
Unknown Speaker 8:45
For those who have already gone through the crisis management strategies that you've recommended previously, what are the next steps to keep in mind and how do you position your company for the future?
Unknown Speaker 8:53
This is okay. You have to complete your first set of steps and you have to get the programs in place appears to fit the goals the outcomes you want.
Unknown Speaker 9:00
In depression in any category, what you do with your customers, your employees that you're going to make. And once you've got your spending in line with a new normal, and you hope you don't, we don't want you to have your second or third time, just so quick across the chasm. And then take your Northstar I talked about earlier in eight years, but we can really accomplish here are the moves that we can make in terms of achieving that goal. And here are the key priorities we need to do to make that happen. What you do is you didn't bring your home employees or your customers and your shareholders and your partners with you on this journey. And you begin to move into here's how we're not only gonna recover, here's how we're going to go forward. And this is what the company is about to grow is going to do. Now let's be realistic 40% of the Fortune 500 go disappear. This is literally just probably already that
Unknown Speaker 9:36
50% in many of them sooner rather than later. I think they would start off with a larger percentage of startups will probably disappear in the next couple years than you see normally occur at all. In 2000. I think 50% of tech startups disappeared in two years. And 2008 I think it was 30%. This one's probably gonna be somewhere between the two. And one of the things you do to ensure your status and deal with the problem first, fix what was broken, be realistic on where you are in the market at hand today. Here's where I want to go in the future. not spending more money quickly.
Unknown Speaker 10:00
But literally applying your resources, your talent, ensure your business page is there to lift your customers to drop that. And that's how you lead to that how you map and you break out number one to number two to category three, that's that's one of the areas that very well you can spark cognition realistic on the challenges of industries, oil and gas, transportation, the aerospace desert and said, How do I get close to the customer during this time, but also as a limited future, what I'm gonna do in defense and security, and how we do this together and use it to get dramatically closer to customers. This is what I expect for the very good leader. And one of the ways to start conditional quick ways to go forward.
Unknown Speaker 10:32
So we have another question here about culture. I love what you said about having a strong company culture. Can you elaborate on what you did at Cisco and other companies to create a strong culture? And are you doing anything with your portfolio companies to do this?
Unknown Speaker 10:44
Might be
Unknown Speaker 10:45
a theme because they know I'm kind of a boom culture with the understatement it's important to realize your culture is not one that there's one right culture, everyone is not at all. She's Netflix's example, a great culture a great leader, but there is nothing out and they encourage you to get more money in the bank but one somewhere else
Unknown Speaker 11:00
Go ahead and do that they have very high expectations like why is the team realistic? Well, the turnover, understand what you are not, and you have to be open minded to, it can't be a consensus advice thing, you got to say, what are we going to do? And do you really make it happen? Putting the customer first that you Cisco
Unknown Speaker 11:14
in the industry for 20 years, I was there not a way to hide partner satisfaction, the industry channel partner of yours as well. And you've got to walk that talk and everything you do when your channel partners have troubles you're there for when your customers get problems you're there for not just do every critical count the world's 365 days a year, every night, we had a problem and the networks are going down. We were there for like no one else. And the CEO did that. Because through the organization, which meant to be when you call the customers don't pay john, that's when I can develop trust with Cisco and you as a leader. And the same thing with an employee has a goal. And I don't recommend this for everyone. You've got to be able to back it up as well. It is life threatening our culture rallied around them. We didn't care what the insurance that we did, let's get them the best medical care possible regardless of what the insurance is often very much involved with individuals and bills or with their spouse talking through the situation and what can we do within that scenario, and then just doing the right things.
Unknown Speaker 12:00
Don't, don't leave, especially during times of crisis. And you'll sell more to customers over time by doing it that way than you will the reverse. So really wanting to talk with the culture, it's about the CEO, he or he has to do more than anyone else in the drive through your organization. Right? And companies need a decision of do I want to do this? And here's like, what am I not what an artificial intelligence to the customer experience area
Unknown Speaker 12:22
in New York, that we talked about culture with their CEO Gustavo, for the first six months in boy, he's brilliant.
Unknown Speaker 12:28
Like the one I've ever seen, I think they got 55 that have a PhD in artificial intelligence and machine learning, MIT graduating class last year,
Unknown Speaker 12:36
as part of their teams communicator, I had trouble getting to understand how board culture was in terms of the direction and I almost gave up on it. And it asked me to join I want to do a new business presentation about next week. Of course.
Unknown Speaker 12:50
It's the best cultural presentations I've seen done by any startup. So it has to be embraced by the leadership team when they're ready. They learn how powerful he can be. He had two situations after that.
Unknown Speaker 13:00
Employees came up to the desk based upon what you said there, your follow up with us we had issues or customer issues. I don't need something with any other workforce. So don't underestimate the power, but also don't address like the damage you can do. If you don't want to talk with your doctor, yes, and you go a different way.
Unknown Speaker 13:13
Great. I see opportunities in particular for disruptive technology oriented companies innovate through crises to gain around on the other side.
Unknown Speaker 13:23
I think you'd hit perhaps the important issue for everybody in the audience today.
Unknown Speaker 13:27
We can't control what occurred, but we can't control what occur in the future. And this is where you have the courage to go for it, and to outline your strategy and vision for the future in a unique way to accomplish that goal.
Unknown Speaker 13:40
It is something that is so basic to becoming the number one and number two player in your industry segment. And it's one that having watched Mike started to work with regularly but also as an advisor to Prime Minister Modi in India, Germany, partnership forum, looking at how you handle the prices, how you leverage digitization, and how you improve the quality of life for all 1.3 billion
Unknown Speaker 14:00
We have people in India. The same thing with President McCrone in France, the FinTech ambassador, you mentioned America, and a French or German take a basket shows you how crazy and how fast our peers are moving. And there's no entitlement you just because you look forward and you lead later. And the number of startups, by the way, are out spot for just five years because three to five years ago, most people thought it was the worst in Europe to do this leadership. What did that indicate? And that is speed of change. How do you have the courage to change rapidly as you go forward to achieve these goals? This is when you will break away, you will gain more market share coming out of this than you'll ever be able to gain as I said earlier, it talks about global capabilities.
Unknown Speaker 14:34
We'll wrap it up with
Unknown Speaker 14:36
one key takeaway you want the audience to learn from.
Unknown Speaker 14:42
I think there is I can take a little bit liberty. I think leadership is lonely. And leadership is much more important during times of crisis than any other times and you're more a product of your missteps and your successes. The second is it's so important to be able to dream Shimon Peres like credit Israel taught me just so much. He was amazing all the way up to now.
Unknown Speaker 15:00
years of age. Also people would take on.
Unknown Speaker 15:03
Did you drink too much? Did you spread yourself too thin.
Unknown Speaker 15:07
I lost a few pounds. But if I had to do it, I would dream bigger and bit more granted. That's what I'm creating my startup to do. So the people in the audience, have the courage to dream. And then put in place the program. The playbook, if you will, the innovation riding this wave of digitization, which is going to occur remarkably quickly riding this wave for every company, regardless industry to come to technology, digital company, and dream what's possible, and then bring it home, at least efficient is one pound upon innovation. And so important is making changes regardless of country we're in, we have the courage to dream and then execute on those dreams.
Unknown Speaker 15:36
Thanks, john.
Unknown Speaker 15:37
I really enjoyed talking with you today. Hopefully we'll hear some more in the future. But coming up next, the Chief Innovation Officer of electrical with America. Thanks again, john. Thank you, Michelle.
Unknown Speaker 16:04
JOHN, because we have more questions coming in. So thanks for staying with us, john was
Unknown Speaker 16:09
with m&a activities. And
Unknown Speaker 16:15
we did a number of things, perhaps not as good as we could have at Cisco. But one of the things like people give us credit for what is our innovation engine and the engine was based upon doing it ourselves, acquiring strategically partnering with large companies and small companies to achieve the goal in that in when I left Cisco, we were one or two major product areas as a result of that. Yes, acquisitions are really hard to do. I believe that over 80 or 90% of them fail. In terms of the economic benefit, if you're acquiring a technology company, which means you're acquiring people and the next generation product. We did 180 of them at Cisco under my tenure. 12 of those were about a billion dollars in terms of capability. And we often use acquisitions in the way of moving into new segments of the industry. So just in terms, but we were largely a router company, and we did three acquisitions. We did the switching and integration acquisition that we did. We acquired three small companies and
Unknown Speaker 17:00
later became the fabric where $13 billion a year market man probably identity plastic content market share
Unknown Speaker 17:06
later in the categories in applications knowing they're gonna be difficult to get out of Europe just yesterday that showed that when they pulled the large companies across Europe 90% of them felt that their acquisitions a technology company to build that I understood that technology and digital companies needed to do this. And only even 90% felt their relationship, not acquisition, the proof of concept working with small companies. And so it's important to have a playbook here on how do you do both. So on the first part, point number one is not because you can you don't do it, it's gonna be really hard. You got to understand the role, the startup a play, it's got to be aligned with your vision, and there's definitely no scalar culture when you listen to their discussion. You don't acquire a completely different culture. You compare a company with a different culture, you're not gonna keep the people and all your various people next generation product. That's what you are. And you got to have a culture where the people feel comfortable. And it's just like if you're raised 5% voluntary for the entire 20 years total when I was there, it ran 4% on acquisitions, and usually acquisitions have an attrition rate of every 20
Unknown Speaker 18:00
camps, ethical camp festivals. And so the inability to keep those people in culture, and then you got to make sure that you keep the right leaders, the leaders with us for two year commitments, because they're the heart and soul of the company. And then we've run this playbook with tremendous speed, the ability to literally because we're doing the same place, every member of our team knew the role they play, whether they were in HR, legal finance, sales, bringing to the prior CEO of a company, we were talking about where it was, a third of our top leaders were from acquisition. So that was clearly the future on it. And we could get a idea of acquisition we should do on Thursday nights from a leader at NASDAQ that said, john, you're an idiot, you should already acquired this company, your competition in there. And I didn't even know the name of the company. We met with them. The next morning, we had a handshake at lunch for $3.2 billion acquisition without somebody more competition than even though we were there. So the speed of replication of a playbook.
Unknown Speaker 18:42
I'll go into relationship of a large company, how you would have a small company that would be okay, absolutely. Absolutely.
Unknown Speaker 18:49
You're not really happy with a proof of concept. startup, large companies, without needing to they do want to do things. They either kill the company with too much a lot of attention, go out process.
Unknown Speaker 19:00
Here's what I want you to do, I knew I distribution sector without making purchases to catch up in there. And learning absorbed this huge amount of the startup resources, time and money, or they ignore them, and put them down further and organization don't get the guidance on how you can make the difference. So if you believe that always all innovation will come in part startups, because startups have a future thinking 10 years out, if every time a startup goes work, there's not the metrics, they by definition, are motivated. And so they have a much longer horizon in terms of their planning than the large companies. We focus on this quarter this year. And the majority of young students were here in Polytechnique in France, and it in India, and Stanford or MIT in the US, Carnegie Mellon, just as examples, which affect the respect is often a good word for startup. So if you're getting talent, and the talent no longer wants to go to the large investment firm or the large automotive like they did before, and then you also have a much longer horizons to do your innovation or the VCs are committed to that innovation will come from the startup of digitization, etc. So my prediction for the next decade is you're going to see large companies partner with sloppy the ways you've not seen before. Amir has done this remarkably well as an example
Unknown Speaker 20:00
Here's organization with the ability to do that with a company like Boeing, or Ford, or some of the large oil companies, energy companies, I get some of that later today in terms of the direction. And if I look across my company, let's just use an example of a very large, very progressive company like Comcast. The playbook we're running with them is we had literally 20 of their leaders in this room, the fiscal room. And we had 11 of our startups. And we said, How can we work together, we very carefully pick the startup, we very carefully pick where we can make a difference with Comcast, only 11 of them are heavily engaged. The Comcast has a process and we have a process which one of my partners have episodes constantly for our team to keep all the projects moving ahead and to be realistic if if the project is not good for your customers, then you need to take it off. But it is the ability to take that hit rates
Unknown Speaker 20:42
in Europe and pick it up
Unknown Speaker 20:45
and bring the innovation with multiple moves on the cloud. I think more and more companies do Packard Enterprise plan to do that because doing they're currently we're small companies the way companies never done before with a company like Honda, and all that indicates the cloud moving to the edge and the ability for compute
Unknown Speaker 21:00
storage and security, ai processing power to occur there and give people choices between whatever combination of files they want to use, there's a chance to open up new markets in a real Win Win way and use the photo again, as an example. They partnered with them, they partnered with Goldman Sachs, a partner with Oracle, with equinix in their customers develop how they work together in a strategic partnership with enterprise, I think it's gonna be more than model for the future. I don't minimize it's hard, but this is where company to master innovation advantage can be a good companion to go with that. Thank you so much. And thanks for taking a few extra minutes of your time to chat with us. After the last break. We appreciate it.
Unknown Speaker 21:33
Alright, have a good day and stay safe. Okay.