Scaling tips from John Chambers: Part 1 - Spotlight on culture and talent
First Published May 29, 2019
For the leader of any fast-growing company, every day brings a new challenge. A CEO has to manage issues of strategy, culture, talent, customer service and reputation – often all at once.
At VivaTech this month, we got an insight into the first-hand experience of John Chambers who was CEO and Chairman of Cisco from 1995-2017, and who now invests in early-stage tech start-ups around the world, with a particular focus on mentoring emerging leaders. John was joined in a roundtable discussion by Joe Schoendorf, a former Accel partner who has held senior roles at companies from Hewlett Packard to Apple, and who served on the board of the World Economic Forum.
In this first extract from our roundtable, they share their experiences in shaping company culture and handling negotiations with top talent.
What is the secret to building a robust company culture?
Joe: A leader plays such an important role in setting the culture of a company and communicating it. Jack Welch used to say, “culture is nothing more than the length of the shadow of the CEO”.
In my time at HP, new recruits had a week’s training that concluded with a speech from David Packard. He would always say that, if your business gets into trouble financially, we will give you eight quarters to fix it. If you have people problems, we will give you eight seconds. That is culture from the top.
John: As a CEO (and/or founder), you have four areas of responsibility; Strategy and vision, management team, culture and the communication of all of the above. Culture is the one area the CEO must own completely and constantly drive through the entire organization. The CEO also needs to manage the evolution of culture as the company scales. With a small team, culture happens naturally and is mutually understood. But at scale, it gets diluted and you have to codify it, writing down what matters and making it memorable.
If you’re unconvinced of the merits of this, try testing your management team. Without any advance warning, ask each member to summarise the company’s culture and values at your next management meeting. I can guarantee you the results will not be tight. But it needs to be super tight to be effective. And if your management team is struggling to express the culture and values, so will every other employee.
Tech talent is always on the move. What do you do when an important employee says they have received a better offer and want to leave? Can you change someone’s mind at this point?
John: The first thing is to be magnanimous. Congratulate them on having received a great offer. Then it is time to collect your thoughts, get some water, and think carefully about what to say next.
The first thing I always do is to try to understand the reasons. There are usually several, and they will likely go deeper than money and title. Ask what they are. Most often it is their manager not making them feel appreciated enough but it may be something more fundamental as them not liking the direction the company is going in, or it could be as simple as the person having been in the job for too long.
Then, buy more time. I might say something like: “You’ve been with me for three years, give me three weeks to talk you out of it.” You should treat a significant leaver as you would a recruitment prospect. Make sure you have the time to run a proper process, leveraging all the resources at your disposal.
Finally, engage the troops. You need to use your team, getting a core group of people to work on the potential leaver and advocate the upsides of staying. This is something you should script carefully – for instance have one person to talk about the company’s future, another about how valued that person is in the company, and someone else to stress career and financial opportunities.
If all that fails, and it becomes clear that it’s right for someone to leave, treat them fairly and with respect. Equally, only expend your energy on this sort of process with talent you really value. If someone wants to leave after a week in the job, then let them go. They were likely not the right hire, and you should both move on quickly.
What do you mean by people being in the job for too long?
John: The point about people being in a job for too long is important. As a leader, you should be proactive about moving talent around the organization so that people can learn new skills from different sets of people. It is important never to demote someone title-wise but being flexible and finding new opportunities for people to grow is an important way of helping people to reinvent themselves. During my time, I reinvented myself dozens of times, while also reinventing the company several times to stay ahead of changing market transitions. I also had eight different CFOs, who over time all took on different roles in the business.
Joe: When it comes to headquarters, sometimes it’s right for people to move on. At a start-up, speed of execution is your biggest advantage, and if someone has lost that appetite to constantly push forward, then it’s time for them to go. But work hard to retain your sales people, because they are expensive to replace and can take half their pipeline with them out of the door.
In Part 2, we get insights from John and Joe on approaching M&A and handling crisis situations.