The head of Juniper Networks discusses his strategy for making the transition into the CEO role.
When Kevin Johnson took the reins at Juniper Networks, in September 2008, he left a role that was, by some measures, much bigger: in his previous position, as president of Microsoft’s platform and services division, he had been responsible for more than $20 billion in revenue, including the company’s lucrative Windows business. By contrast, the sales at Juniper, a provider of IT networking infrastructure, were $3.3 billion during Johnson’s first full year as CEO.
The timing of his start date didn’t make his transition easy. During Johnson’s first week, Lehman Brothers collapsed and the global macroeconomic landscape changed dramatically. This required some quick moves: a doubling down on big R&D bets, for example, combined with significant cuts in other operating costs. All the while, Johnson tried to follow a set of transition principles that he described recently in an interview with McKinsey’s Endre Holen and Allen Webb.
Johnson’s suggestions: Seek advice before day one on the job. Don’t come in with a new strategy; instead, use your first few months to connect with the organization, set the strategic agenda, and shape a talent plan. Bring your top managers and your board along with you. Be very deliberate about how you will effect needed cultural changes. And don’t underestimate the increased scope of your new role.
Learning before starting
My appointment as Juniper’s CEO was announced in late July 2008, and I went to work in early September. During those six weeks, I was wrapping up my responsibilities at Microsoft, but I also spent time with five different CEOs, asking them for their advice on the job and the transition. Each of them gave me an interesting perspective from a slightly different angle.
One message was the need to be thoughtful about how your direct reports and the executive staff would see the transition. Juniper’s previous CEO, Scott Kriens, had been in that job for 12 or so years, almost since the time the company was started. A lot of people had invested their careers in Juniper and wondered whether I was going to clean house. So one of the CEOs I talked with told me that it’s important to assess the talent quickly and then be clear with them—either you’re going to keep them or you’re not—but you shouldn’t leave it vague, which isn’t helpful either for them or for you.
Another point was the importance of having the former CEO there to help you when you need his or her ideas and input, but not making him or her extremely visible for the whole organization, because it’s hard for people to disconnect from the previous leader and establish a connection to the new one. A CEO I spoke with had recently succeeded a long-tenured CEO. That discussion helped me understand that the previous leader—especially one who’s still on the board or has some other role—may be going through an emotional disconnect from the organization, while you’re trying to engage with it. You have to be sensitive to that reality and figure out how you can make the best use of the previous CEO’s expertise, knowledge, and talent, but also how you can get enough room to establish your own leadership agenda and connection with the team.
In my situation, Scott Kriens was phenomenal: he gave me the breathing room to establish my leadership agenda—which I’m sure was hard for him because he had put so much energy into his work—but he was there for me as well. For the first few months, Scott and I found that having dinner every other week gave us two or three hours when I could share my observations and thinking with him and get his thoughts too.
The first few months
I was hired to scale up the company and take it to the next level. The status quo wasn’t going to get us there, and I didn’t have all the time in the world. One CEO I talked with emphasized that when you come in, you’ve got a certain period of time to put an agenda on the table, and if you haven’t made enough of the changes you need to make in the first 12 to 18 months, it’s going to be too late.
My personal opinion is that from day one, you should have a point of view about the business: “Hey, this is a good company; this is a good industry,” or “This a good industry, but our company’s in trouble.” That doesn’t mean that you translate your point of view into a new strategy on day one. But by the end of your first couple of months, you’d better have a basic idea of your long-term goals, the strategy to get there, and what you’ve got to do about leadership and talent over the next 12 months or so.
Before even starting on the job, I put together a plan of what I wanted to accomplish in the first 100 days: how I would invest my time and the key people I needed to connect with—the leadership team, employees, key customers, investors, partners, and the board. When I showed up on the first day, I used this plan to communicate with the team about how I would approach the transition. In the first week, I connected with my direct reports, sent an e-mail to all employees, and set up my calendar. But five days after I started, Lehman Brothers declared bankruptcy and the global economy changed dramatically. I continued to work on the 100-day plan, but in parallel I was trying to digest everything that was happening in the economy. That was probably a very unusual transition, but I’d expect all of them to have some serious issue—internal or external—that wasn’t anticipated.
My objective for the 100-day plan was primarily to connect with different constituents, listen and learn, start testing some ideas, and begin to shape the strategic agenda. In week one, I asked my direct reports to sit down together as a group and answer four questions: what are you most proud of about Juniper and why, what needs to change and why, what do you hope I do as the new CEO, and what are you most afraid I might do as the new CEO? Those four questions gave me a very quick read on the situation, opened up an interesting dialogue with my direct reports, and helped me to feel comfortable.
After I asked the questions, I left the room for an hour or so to let my direct reports work through their answers collectively. I wanted them to talk as a group without me because that would allow them to be candid and anonymous. They wrote down the answers on a whiteboard anonymously, so I didn’t know whose individual point of view each answer reflected. I also had the HR executive summarize the answers, which I then discussed with the team.
Then over the first three months, I took the top 100 or so people in the company and had a one-hour one-on-one session with each of them. I also did two-hour business reviews with every business group. And at the end of 100 days, I wrote a memo. It didn’t state specific solutions or actions but instead focused on my early observations about the company’s business, strategy, people, culture, and competition—issues that we ought to be thinking about. I shared the memo with the top 100 people in the company. The memo forced me to digest everything I had learned and allowed me to communicate my thoughts in a consistent way with each person who got it. People could think, “OK, Kevin did all of these one-on-ones and at least I get to see what he took away from them,” instead of, “Oh, wow, he spent all of this time doing these one-on-ones; I wonder if he learned anything?”
Four months after I started at Juniper, I had each of my direct reports conduct a people review with me on their organizations, their talent, and an assessment of their direct reports. That allowed me to learn what my direct reports thought about their people and where we had gaps. This review was the basis for a board meeting where I took our directors through an all-up assessment of Juniper’s talent. Three months later, I took the leadership team through a strategy review process in a very structured way, and that fed the next board meeting. These management exercises allowed me to take the organization and the board along on a quest for the right answers—our long-term goals and the strategy that would help us achieve them.
Particularly in the beginning, it’s important to look at the way you sequence decisions and actions. For the compensation model, especially, there was a very specific window of opportunity. Since I started in September and our fiscal year begins in January, I knew that if I didn’t do that by January 1, it would take me another year. So I did it within the first 100 days, which allowed me to communicate what I thought was important and how our rewards systems should reflect this.
By the end of the first few months, I had spent time listening and learning, developing our long-term goals and strategy, and made some important decisions on people and reward systems. This was the beginning of my journey.
Shaping the culture
As I’ve said, Lehman Brothers and the economy tanked five days after I took over at Juniper. I actually found the crisis somewhat helpful, because whenever you have a compelling event—an economic crisis, a competitive attack, a huge product launch—it brings teams together. It puts you in the battlefield immediately, and teams bond and get to know one another on the battlefield; that’s where relationships are created, tested, and strengthened. Besides bringing our team closer together, the economic collapse gave people a compelling reason to accept change. They now had a different mind-set: this is no longer business as usual.
Often you have to change not only the people and strategy but also the culture. For example, when I asked people what they were most proud of at Juniper they would say, “Our culture of collaboration and innovation.” When I asked them what they hoped I would change, often they would say, “We avoid conflict as a culture and try to get to consensus on everything, so sometimes we’re paralyzed in making hard decisions.” Embracing what’s great about a culture and at the same time injecting new elements into it can be challenging.
To tackle cultural issues, I put together a team of about 40 employees. Some had been with the company for 1 or 2 years, some for 12 or 14 years. They came from every discipline—sales, R&D, finance, HR. We got support from a consultant, Ann Rhoades, who had been chief people officer at Southwest Airlines and Jet Blue. Ann and her team organized a two-day work session with the Juniper team, where we talked about the company’s culture. I was able to listen, share ideas, and help influence the result, but the output of this session primarily came from these 40 people, who really understood the values that make us what we are. I took those values to the company’s top 30 executives and we massaged them again. Eventually, we ended up with five.
This process allowed me to embrace the great things about the culture of the past and amplify them, and then inject the new things we needed for our future. And those values have been translated into behaviors. For example, we now say, “Here are the behaviors that would demonstrate a given value for someone in a sales role.” The values are woven into the performance reviews too and into the way we recognize outstanding employees. The company never really celebrated successes as much as we needed to, so we launched an awards program. Every quarter, I give out three CEO awards. Each winner gets up to $100,000 of equity and public recognition. We use rewards to recognize people we want others to see as role models.
Adapting to the scope of the CEO role
I came to Juniper from running a really big organization at Microsoft. You might think that the new job was simpler, but that would confuse scope with scale. Some of the big-scale jobs I had at Microsoft—running worldwide sales, marketing, and services, for example—had a defined scope: basically, running field operations. One thing I noticed in running things at scale is that once you get to a certain point, the numbers are bigger but the challenges and responsibilities aren’t. Running $20 billion in revenue isn’t much different, by itself, from running $30 billion. The numbers are bigger, but the things that you do and the skills you need to lead a growing organization are basically the same. By contrast, expanding into different customer segments, adding new core businesses, and taking on a broader range of initiatives all increase the scope, complexity, and challenge of a job.
When I came to Juniper, all of the things that I learned at Microsoft about scaling up an organization were very applicable. But my new role at Juniper also expanded the scope of my responsibilities to new areas, including investor relations, managing a board, and allocating resources across a company. Now I had responsibility for an end-to-end business with multiple business groups and a wide range of products, services, and customer segments. I have to create the conditions so that these groups can innovate and create new products and technologies, to create the right environment for sales and marketing, to get enough time for investor relations, to engage with the board, to understand my role under Sarbanes–Oxley, to close big deals. The scope of the job is much wider.
This kind of expanded scope opens up new experiences. One new thing for me as CEO was communicating with the financial community. And I made some mistakes here. When the economic downturn hit, we decided that, strategically, continuing to fund R&D and customer satisfaction were the two most important things for the company. When so many others were laying off huge numbers of workers, we increased investment in R&D and customer satisfaction. Meanwhile, we cut operational expenditures in every other part of the business.
On my first earnings call, I stressed the importance of investments in R&D and customer satisfaction. I was less clear about reducing our overall operational expenses. All the analysts heard was the increase in investment. At a time when some people were saying, “Kevin, you should lay off 10 to 15 percent of your workforce today,” I was saying that we were going to increase investment in R&D. The analysts thought I was a coconut head. I had to communicate more clearly and completely so that people could understand how we would operate during the downturn. We did reduce overall operating expenses while still managing to increase our investment in R&D. We even exceeded our expectations on operating margins. I think that we earned a lot of credibility; it always has to be earned.
Dealing with a board as CEO was also a new experience. I had been involved with boards before, but as CEO I’m accountable to them in a new way. I faced the question of how often to communicate with our board and in what way—one-on-one or collectively? It’s important to stay connected with board members and to give them a perspective between board meetings. I use a combination of approaches. Sometimes I’ll call individual directors on certain topics and discuss them one-on-one. Other times I may ask the whole board to meet with the leadership team on a specific topic.
I also found that it’s very helpful to send periodic e-mails to directors on strategic topics and events. If there are significant things I want our directors to know about, I shoot them a quick e-mail: here’s an update on three topics—boom, boom, boom. When we get to the next board meeting, these e-mails have kept everyone up to date on important topics, and we don’t have to bring everyone up to speed on everything. This was very important in my first few months because it gave the board more opportunities to understand how I approach issues and engage with people than they would get from board meetings alone.