How to Commit to Integration Start to Finish

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Hello M and A friends. Welcome to the M and A Science Summer Summit. Hope your summer's off to a great start. Today's gathering of M and A practitioners is designed to share the best practices, techniques and ideas. A big thank you to all of our speakers today for sharing their knowledge and a special thanks to VRC and the HR M&A Roundtable for their ongoing support. We have some big announcements today. First, the M& A Science Academy is proud to announce a university scholarship program to introduce careers in M and A to those from diverse backgrounds. If you're interested in learning more about the scholarship program, visit mascience.com scholarship Second, we're launching a new book today called M and A Tactics Handbook. Be sure to join our happy hour to receive a free digital and hand signed copy. Third, did you check out the Academy redesign? The M and A Science Academy has an all new design. Check it out when you get a chance. Anyways, let's get the show going up. First, Kisan Patel, or who I would like to call my Daddy, will interview Karen Ashley about M and A integration. Karen Ashley is a VP of Corporate Development Integration at Cisco. So pay attention folks. Enjoy the event and as always, here's the deal.

I'm your host, Kisan Patel, CEO and Founder of M and A Science. Joining me today is Karen Ashley, Vice President, Corporate Development Integration at Cisco. Today we're going to talk about how to fully commit to integration from start to finish. How are you doing today Karen?

Great. I'm doing great, thank you. And I'd be remiss if I didn't say Shaila is awesome. She is at least the next CEO. Great to hear from her and it's great for you to have her included. So thank you. Thanks for the intro.

Can we kick things off, Karen, with a little bit about your background and M and A experience?

I've been doing M and A as the Vice President of Corporate Development Integration for the past five and a half years at Cisco. I've been at Cisco for about 20 years, actually 21 now. And I certainly out of that career. M and A has been definitely that spotlight and the best opportunity for me. I lead our Corp dev integration team that is a partner organization to our Corp dev team. We operate as peers within the organization, reporting into both of us, reporting into our CFO and really leading from start to finish everything around, and I like to call it the big I around integration versus integrating for integration's sake, but integrating to achieve the value of the deal and that huge value creation of why we bought the company in the case of an acquisition or divested the business in the case of a separation. And we do both sides. And one is not the opposite of the other, though some people believe it is. I would say divestitures are way more difficult, at least at Cisco, because of the way we integrate. But it is a great opportunity to see both sides of the house. And I've got a great team, so thrilled to be here.

So because you do such a great job integrating, these companies are even more complex to divesto.

That's what I would say. Not every acquisition you do, are you hitting it out of the park? I would say if you did, you're probably being too conservative and not taking enough risk. So there are definitely acquisitions that over a period of time may have not have been the right technology. The technology roadmap may have changed and we may exit a business. Yeah, that goes back to one of the thinking of the upfront part of the process is really thinking, is this a business that we want to retain before full business for an extended period of time or maybe other pieces of it that we may not want to fully integrate because they get harder to exit if we fully integrate them. So it's something we think about up front.

How do you commit to integration?

You know, I could start by telling you a little bit of my story about getting into M and A. And I did do a little bit of M and A before I got into leading the team in operations. So my background is mostly in product management, supply chain. And so when I came into this organization, I really had a very strong background in new product introduction on the organic side of the house. And as I came into the role I really saw, well, M and A is especially on the integration side, very similar to new product introduction, but you're buying rather than building the opportunity. I saw taking a lot of my experience on new product introduction and that level of commitment, at least at Cisco, that we make around a concept, commit and execute, commit first, customership, channel ga general availability, taking that and bringing it into my M and A role and the very, very first opportunity I saw and something that I really committed to work on is that partnership with Corp dev. The integration and Corp dev partnership is absolutely critical. So the analogy I made with MPI is you could have a great development team building new product from scratch, but if they throw it over the wall and just say go build it and scale it, you don't have a lot of opportunity to be able to design for manufacturability, design for scalability. And so that's something Cisco is actually really good at. We've been awarded for two years in a row the best supply chain in the world. And so taking a lot of that experience into M and A is that partnership with corp dev and how do we become part of as integration, how do we become part of the not only Corp dev strategy, but the business strategy? So when our business leaders are looking at their portfolio and looking at areas that they may need to buy in order to accelerate progress in a certain portfolio area, we want to have a seat at the table as those discussions are happening even before a target is selected. So one of the things I did was how I organized my team was around technology domains to start to build the expertise in the integration team. It's not good enough to be a great M and A integration team, but you need to understand, at least at Cisco, the technology, you need to understand who's buying it, why, and then what is the technology area Cisco's investing in? I don't expect my leaders to be technologists, but I do expect them to have a working knowledge of the technology so they can see sit a little bit of toe to toe with the business leaders and that's how we gain our credibility. It's not about the integration that's secondary, it's around the business and really understanding why are we looking at a particular technology area, why are we looking at a certain target and then really looking at the integration as how are we going to make it happen? So basically I took a page again from my MPI experience and say, hey, we need to work that way on the M and A side and particularly from an integration is that relationship with Corp dev where we're not negotiating the deal, but we are very much part of the deal modeling and having the input into what does success look like. Holding the business leaders accountable to have clarity on why we buy in the company, what do we want to go do with it, and then from there building out the integration plan and having complete alignment with the business leaders and with the corp dev team.

What's interesting is you're involved early in the process, it's really shifted where essentially as the strategy is developing, you want the seat at the table to have that clear understanding of the why. And then you also mentioned making sure yourself and the team has a deep understanding of the technology in your organization. And then after that the why and the clear understanding of it answer the how you can actually go about integrating it. Does that sound clear?

Yeah, no, that absolutely sounds clear and can't speak for that many other companies that I've been at. But clearly at Cisco we're a serial acquirer. We do 10 plus acquisitions a year of various sizes. So we pretty much know what we're doing. But I would have to say the area that we continue to hone and I think every company has the opportunity to do it, is the strategy. Because without a clear strategy, and it's at multiple levels, it's not just the strategy at the highest level, but really that double click into the sales strategy, the go to market, the route to market, the people strategy, the product and technology integration strategy, the back office strategy, really having clarity around all those elements of a strategy really allow us then to be on the road for success. Right from the beginning around integration, I feel the times that maybe we weren't as successful as we like to be is when a strategy is not as clear or the strategy is interpreted differently by different leaders, different functions. And the evidence shows when you go to integrate, because that's when things start to fall apart. When people say I thought we were going to integrate within these two product areas first and someone else thought no, I thought we were going to wait a year to do that. And so that alignment with really sets the stage for the integration strategy which you then need to go execute to. So I don't wanna move right into execution without really thinking through how do we take a strategy into a strategic plan and then how do we go execute to that.

Even the initial shaping of strategy, you're at that time even starting to shape the approach of integration.

Yep, absolutely. And what we've done is we've honed it a bit and it's not as Rigid as it may sound, but we've come up with the three things. They're not specific meetings, but outcomes we want to achieve over the course from that early engagement until we get to announce and then even post announce. We call them acquisition strategy alignment meetings that we're having with all of the business leaders. And some of it starts very early as we talked about, just sitting at the table. We may be listening a lot, but we tend to ask those probing questions as to why. Tell me more. What is it you want to achieve? And again, so we get that clarity. The third strategy session that we get to. And again, session one and session two are really refinements of each other. The third strategy session we get to before we close our goal is to bring in the target, the target leaders and have them sit down with our team, the business leaders, Corp Dev Corp Dev integration. And to have a strategy alignment session even before we close on the acquisition. And a lot of people are like, oh, we don't want to show all of our cards, we haven't yet closed. Sort of anything can happen. But what we found, what's really important, and we certainly stay away from things that we can't speak about, but what's really important is to get that alignment. They know their business way better than we know it. We are making our best view of their business based on what we've learned and, and extrapolating, what does that mean inside of Cisco? How do we make that business successful inside of Cisco? So the more we can get their validation whether our assumptions are correct and more often than not, they'll come in and say, why did you think that? And it was like, here's why, this is what we heard. And they would say, I understand what you heard, but that may not be exactly how it happens. And it actually allows us to get to that early alignment between the two companies, particularly around the product strategy and the go to market strategy as well as the people. We haven't yet finalized anything, but it gets us closer so that when we do close, we already have a head start and we're not starting from scratch. And the business leader from the target may say, what were you guys thinking? How did you ever think we were going to achieve that? We've actually had some earlier conversations that allow us to adjust our thinking and our planning before we get into. Because if any company's like Cisco, as soon as it close, everyone's into the mode of wanting to just get going feet on the street, start hitting the ground and moving pretty quickly. And that's when you start to lose control. And so the most important is getting that level of alignment between Cisco and the target company. And we feel the earlier we can do it, the better it sets us up for success.

Also, could you walk me through timeline? Because we talked a little bit about the strategy piece and then you mentioned before close. Can we validate these assumptions on how we're integrating this company and what the product vision looks like? But from the time you identify a potential target, at what point does integration get involved and how and what does that look like?

Yeah, so we get involved. As I mentioned sometimes earlier, before we even have a target develop, we may have a technology space that we want to go pursue a target in. And that's more of those strategy sessions. We have a seat at the table with the business leaders and with Corp dev as Corp dev starts to do the sourcing of it. And so obviously our engagement level increases as we get closer to identifying a target. As we identify a target, we work towards our internal commitment process within Cisco with our CFO and our business leaders. Corp Dev integration has. I have a new leader at Cisco, our new CFO who I report into. He is very clear that the integration strategy needs to be part of that commit process. So we're not only committing to purchase the company and this is our intent of why and what we want to go do with it, but he also wants in those commit meetings with all those business leaders around the table from the technology team, from the sales team, from whatever other functions are critical that we're actually committing to the integration plan also. Now it may be very high level, but it's still directionally we're committing to where we're going and what is an end state going to look like and the pace at which we're going to get there from like quarter type of perspective. So that's our role through the commit process. Our role is also around doing that reality check to what the value drivers are. So we do develop the value drivers for the commit process with the business leaders. So we typically focus around, as I said, the technology integration, the go to market route to market which shows up in the financials as well as around our people. Our people are absolutely. The talent that we're acquiring is front and center. We are an acquirer to grow. We are not a consolidator. And so retention of that talent, and not just retention, but an actual engagement of the talent to achieve those value drivers are absolutely critical. So people are part of the value drivers in terms of engagement and retention to achieve the Financials and the technology roadmap. So we own the value drivers from development, but the business leaders are the actual owners for delivering on the value drivers. So we work with them very closely to define what they are, how we're going to measure them, the metrics, as well as who specifically is going to own these value drivers. And that carries us through our commit process. And actually that becomes a thread, I would say if you talk about end to end life cycle, that becomes the thread, the value drivers from the very beginning stages all the way through. As we look at how our acquisitions are performing, we measure them back to those value drivers that we originally set at the early stage of the commit process. And that becomes our role through the whole process too is the governance and the accountability to holding those business leaders accountable to what was committed upfront around those value drivers.

Do you have some examples of metrics that you attract to measure success?

We tend to get pretty granular. So as I said, the three main buckets we look at are the technology integration or technology plans. And again, this is if we're doing a product acquisition versus an acqui hire or tech and talent, we have financials, so looking at revenue. And then thirdly, we look at talent retention. What I found most interesting is our evolution around the talent piece of it. So it initially started off as no greater than 20% attrition, maybe over like the three to four year retention period. Something along those lines. We have completely evolved that to say if we're going to achieve the technology integration and the financials, it's going to require people. You need salespeople to go sell it, you need engineers to actually go do the work. And so we went back and looked at, so what are we committing to for those two value drivers and therefore what is the talent retention that we need to achieve that? So it's not a blanket 20%, 10%, whatever it may be, it's going to vary by acquisition and it's going to vary by the specific talent categories. So engineers, what we need may look different than what we need for sales leaders coming into the company and how we need to retain that talent. That's a good example, I think, of the talent. And we look at early indicators, not just retention. It's too late. If you're looking at attrition, people are out the door by that time. So we've come up with early indicators for all the value drivers. And if you look at the people, one, we're looking at the engagement of the talent. We do like a pulse survey to see how are they feeling being at Cisco? Are they progressing in the organization? Do they have two feet in versus one foot out and one foot in? And again, we take it from the perspective of an acquired talent didn't choose to come to Cisco, they got acquired. Now, the business leaders, the decision makers may have made that choice for them. But what we want everyone to stay. Our goal is that we have more staying than leaving and we're pretty successful at it. So when we look at it, that engagement early indicator is what we tend to look at. So that's an example of one of our value drivers in the metrics.

That's a great example. I got my whole interview worth right here. What's the main role of integration in the diligence process?

It's a really good question. We typically buy companies that are much smaller than Cisco. We are not a merger of equals. So we're looking at companies, couple of hundred, maybe a couple thousand people. We absolutely are very conscious that we tend to overwhelm the targets as we come into due diligence. So we are very conscious around, first of all, our role as corp dev integration is to coordinate. We have five to six tracks around diligence, which are pretty typical around legal, finance people, technical operational diligence. We actually lead the operational diligence piece of it, but we also coordinate across all the diligence tracks to ensure that we are not overwhelming the target, that we are very focused in diligence because diligence is taking us to the final commit milestone. Are we going to move forward with this company or not? So it's taking us to that definitive agreement. And so that point in time, diligence is really focused around our thesis, around the acquisition, validating that thesis, to say, this is what we're thinking, this is how we're thinking about how we're going to achieve that. These are the metrics that we're putting in place. Are we able to validate that during diligence? It's not the point in time to go and find out everything you can about the company and ask them, what sites are you at, how many people we will get that information. It's right place, right time, right people. And that's what we manage around diligence is really making sure that's coordinated and that we're using the information and not asking the same question multiple times. So we're trying to share the information across our own internal teams. The next step after we complete diligence is that as the integration team, we run the executive diligence. Readout, which is really bringing in those deal sponsors. So our business leaders, our sales leader that is sponsoring the acquisition and bringing them together and having that highest level readout of our findings and our risks coming out of diligence. And again, this is not everything. Two or three things maybe bubble up to that level and that they need to make a decision about understanding not only what it was, but what was the risk that we estimate to the business and how are we suggesting it be mitigated. And again, that rolls back into the deal model even. Because if a mitigation is going to cost a certain amount of dollars to put in place, we've got to put that back into the deal model and making sure that those costs are included, because otherwise they're not accounted for. And then you're going to turn up as like, someone may say, I never got the funding or I can't afford to mitigate a risk and therefore we're not going to be successful. So we coordinate that executive readout also. And we've been owning this over the past two years or so. It gets better and better each time, I find with any acquisition, it gets better and better with each time that we do it. And maybe that leads a little bit into our whole philosophy around knowledge management and how we continue to learn. If you want me to expand upon.

That, yeah, we can jump into that and maybe get back into sort of how the planning unfolds as you're going through diligence. Because it sounds like you're uncovering a lot, doing a lot of the assessing risks, rolling it up into those executive readouts.

But yeah, absolutely, there are common things across acquisitions. And I'm not coming in and saying that every acquisition is different, there are differences in each acquisition. But we do start off with a common foundation from which we're working from. So we do have a methodology or a playbook, an approach, whatever you may want to call it. But what's really key to the leaders that I'm bringing into the team is they have the ability to work with that agility that is needed to understand what is required for each acquisition. You're not going to go in with the same cookie cutter approach, deal over deal over deal, but you are starting with an approach that allows us to have a common language and common how we're going to get started. But what I look for, my integration leads is if they learn and understand the business enough to understand where we have to modify or be agile on the approach that we're taking. So that's a key Part of our planning actually after we move out of our executive diligence readout, we go through our final commit process, we get to our definitive agreement with the company, we announce, we get going very quickly, post announce on as much as we can get done until we close. So my philosophy has been don't let a good crisis go wasted. And this is our former CEO at Cisco used to always say that I could give you a really good example of a recent acquisition that we've done that we went took us 605 days to get from announced to close. Going through some extensive regulatory and various other things. And what we took advantage of was those 605 days, we did not let that time go and say I guess we can't do anything. There were things we couldn't do clearly, but there are things we absolutely could do. And a big part of that was keeping the mind share of the targeted employees engaged and keeping them engaged, engaged. So they understood Cisco better and better as each month, each day went by. Because that extensive period you could actually lose a lot of mind share from the talented employees you're looking to acquire. So we very much focus on that time between announce and close to get done as much work as we can. So we get into a much more detailed discovery, we start to build out as much as we can our joint integration planning so that when we get to close we could actually start executing to that plan.

What does the planning process look like? I guess with this is how do you strike that balance between a rigid follow the checklist process to giving your leaders enablement to be agile and have that flexibility to make the quick decisions and really tailor the things to the current situation and the changes.

I wish someone had a great answer for it. I think I have an answer for it. But we learning every time there's no perfect way to approach it. It's an art, not a science for sure. But our approach that we take is that we are focused around that value creation above anything else. So when you look at that value creation that is defined through those value drivers. So we allow the value drivers to be front and center and really guide the integration planning. Now that said and those three value drivers as I talked about around product, around our financials or the go to market and the customer side of it and the employees. Right. The talent that we're acquiring, that said, there are set of, we are a large company, there are set of compliance areas that any company our size would have to comply with. We are very clear on things that are not optional things you can't opt out of what may be negotiable is understanding the wedding. So the timeline around it. So there are a lot of fiduciary compliance areas, there are a lot of legal compliance areas and some things around people that we do have to comply with. And so we have a team that goes in with that mindset and sometimes those are contradictory to the value creation. And that's when the conversations happen. And that's when you usually get in a discussion of it's not if we're going to comply, it's more when and when does it make sense relative to again, that value creation goals that we set out. We also have spent time with all of our functional groups within Cisco. So whether it be our head of people, our head of sales, our head of customer success and understanding for that function, what are the functional requirements? So these are like a step below the compliance areas where they're really not optional, but these are the functional requirements that allow Cisco to scale. So if you look at why most companies want to get bought by Cisco is because we have the scalability we bring to bear our sales team, our partner team, and we can help a smaller company actually excel and grow. But it does require certain alignment within the functions within Cisco in how we do things. So, for example, Cisco has a very extensive partner program, channel program. We have direct sellers, but we also have channel sellers. So when we look at an acquisition, we're really looking at how do you align with that partner program. So you can scale, we can help you scale your business. That would be a functional requirement. If I just go back and summarize, we lead from the value creation goals, but we also have a set of compliance areas and then we have a set of functional requirements that we bring to bear when we're building out that integration plan. So for each one of the value drivers, we have a value driver plan. For all the compliance areas, we have a compliance plan on how we're going to achieve those. For the functional areas, we have a similar plan for those. More often than not, there are some things between the functional areas and those value creation that we have to elevate up to the executive level to say, is it this or that? How are we going to make sure it's a win win and that we're not hindering the scalability in order to achieve a value driver. That's where we come into play. That's really, if you look at the higher skills in our team, is that coming in with a point of view, coming in with options and helping the executives make the right decisions for the company. We track all of this in our M and A hub. So we have a single source of truth for everything M and A that we have built. And we track all of the compliance require requirements, the functional requirements and the value drivers for every acquisition and how we're performing to those in a single source of truth.

Does this tie back to knowledge management, what we briefly touched on earlier?

It absolutely tries back to knowledge management. We have grown the single source of truth around an M and A hub, as we call it. And it started as we had data everywhere. And the unfortunate thing, if someone left the data went with them because it was in their head, it may have been on their laptop, wherever. So what we built is a multi year plan. It's honestly taken us about four years to get to a place where data is all in one place. We use it for our workflow. So it's not an incremental thing. You have to go fill out off to the side somewhere. And where we're moving to around knowledge management is to get to a state that I want to be at is predictive so that we can be more predictive around the risks that we may incur on future acquisitions based on our past performance. Now we are lucky that we've done over 220 acquisitions. So we have a pretty robust data set and we're able to curate that data by type of acquisition, number of people, location, where it is, all different ways we can cut and slice it. And honestly, that's where the knowledge management comes in play. Because a part of our M and A hub is a repository for each deal that we are collecting. What are those knowledge articles that have made a difference in that deal. So there's a lot of things people learn around integration. I'm sort of up leveling these to what would become a risk on a future acquisition. For example, we've done acquisitions outside of the US and just understanding, understanding what tax implications there are, how does it affect where we locate people? Those are learnings that we curate and we put in the M and A hub so that when you're going to do your next deal, the rigor is that the first place you go to is the M and A hub and you pull for yourself what are those learnings from our past acquisitions. So you go better educated into those very early meetings with the business teams. And that's a value add that we bring. Because we've done 220acquisitions, a business leader may there be their first one that they're doing and so we bring to bear all of those. What made it successful and what was a risk that we weren't able to mitigate. And maybe you need to consider that. Why do you think you're going to be successful? In the past five acquisitions we did like this weren't. Why are you different? It makes leaders really think about it when we're able to pull up the data, hey, you want to do an acquisition in this space that has this kind of revenue synergy? The past five acquisitions we did like that. Unfortunately, it took us a year to get to the point that you think you're going to get to within six months. Maybe you need to relook at how aggressive you're being, and maybe you need to be a little more conservative. Unless you could tell me why you're going to be more successful than the past five acquisitions. That's the goal around our team with knowledge management. And it takes you through the whole life cycle of the acquisition. As I said, you're collecting these knowledge articles through the whole process. And what happens as we start the next deal? The rigor is going back in there and using that knowledge. And it really goes back to my first point around data. Because in the past, the person that did that acquisition was the person that had that knowledge. And they were the only one that had that knowledge for the next acquisition. They're doing through the way that we are communicating those knowledge articles. Everyone has access to it. So now we get the power of the team.

I know we can turn a whole presentation of how do you organize that much information at a high level? How do you organize it so it's usable? Because I feel like that's a challenge where I've heard other folks have an idea of building a center of excellence for M and A or things of that sort. But then you amass all this data and it's just people's heads spin around.

It's not easy. And I'm not saying that we're perfect by any means. We're continuing to refine it, to really decide what is good to know. And maybe functionally it makes sense as a knowledge article, but really doesn't bubble up to at a deal level. That's really what's going to make a difference. The work that we're doing around knowledge management is not something that we're handing off to an IT team to go develop a tool. This is something actually that you really have to curate yourself because we're the only ones that know it. We've gotten a lot of support in pulling the information. But I think what is helping us is that again, at the beginning of the next deal, we're making that more rigorous that you have to like, did you go back and look at what those knowledge articles are and what are they so that we can make sure that that discipline is in place. To be honest with you, I hold a lot of reviews with my team and I go through the data myself with them. And I said, okay, pull up your deal. Like we all use the M and A hub. I want to pull up your deal. I want you to take me through how your deal is performing. Take me through where you are in hitting your value drivers and let me look at what the lessons learned are. What is also helping us, I have to say, is recently our board level, at the Cisco board level, our acquisition committee has been asking us a lot of these questions around acquisition, performance and different slices of it. So show me all your acquisitions below a certain price point. Show me your acquisitions just in a certain technology area. How are they performing? What have you learned from those so that you can make the next ones better? Now, that's my interpretation of it because I wouldn't go to a board and just say, well, look how we're performing. Well, how are we performing and how we learning from that to make the next ones, you could always get better. So it's coming from the top down and the bottom up that is helping us build that rigor too.

I got a couple of questions here that want to know what's under the hood in the M and A hub, if you're using any commercial tools or what does that look like?

It's actually not a commercial tool. We have built it ourselves and it's built on some commercial foundations. But when I started in this role about five years ago, that was the first, honestly, aha. I had, besides the life cycle, looking like mpi, I came in as like, where's the data? And it was like, oh, so and so did that deal, so you need to talk to them. And I was like, this is ridiculous. We've got to leverage this for how we can get better. And so we built it from scratch because we went out there and really queried a lot of consulting companies, a lot of peer groups, and we didn't find anything that was readily available for the scope we're looking for. We're now adding in legal data, we're adding in HR data. So it's really between our team, Legal, hr, Tax Corp. Dev, we want to make it the single source. So all of our NDAs go through the M and A hub. So it's not just integration, but what makes me so happy is when I hear another function talk about, oh, I pulled it from the M and A hub, like, oh, that makes me happy. Like, other people are using it. As more people use it for what it's intended for, the quality of it improves. And of course, we get some extra funding to help us invest in it, too.

Outside the M and A Hub, have there been other techniques or approaches utilized to help foster continuous improvement?

I just want to make a point. The M and A hub is a tool. It's not a philosophy. It's not the process. So you first have to start with one I believe is the mindset. First of all, I took my team through a very big journey in a mindset change in going from a bunch of checkers on tasks to we're about bringing that value creation to life and how do we make sure that's the number one focus on why we bought the company? And that was a huge shift, I have to say. Some people come along on that journey and some people don't. And then you realize the talent you need in order to deliver on that actual value creation. The M and A hub was running in parallel, so we knew we needed a repository for data. But what really led that philosophy around continuous improvement is really focused on that mindset shift, is around value creation, being able to use data to inform future success. So let's use all the information we have to be able to go in educated and be able to educate other leaders on what has our past performance looked like. Honestly, every company has areas they're really good at and areas they may not be so good at. Stay away from these because we're not the best at these kind of deals. So vector more towards these and I could show you the data. And I think that just brought so much more credibility to us as individuals and who we are as a team to people thinking. Again, I talked about that big I. It's not just the integration team, but it's integration in how we're going to achieve that success.

These are really good. I like how you started with the alignment on empowering ownership for value creation.

Now I'll tell you this secret. We have found the hardest part of this and this is learnings that we've had as we've continued to look at the data and readouts that we've done on our acquisition performance at our board level. One of the hardest things that we have is really making sure that accountability survives leadership movement. If we could tie why we bought a company to a strategy. We find it more successful than if we tie it to a leader. So sometimes you have a leader that is they just want to buy a specific company for some reason and sometimes we do that. But if that leader leaves or moves into a different role, the likelihood of success, at least I can speak for Cisco of that acquisition, is not as high if we tie it to a strategy that stands the test of time and stands. Leaders changing success is higher. Accountability and governance are things that we continue to get better at. We're certainly not perfect, but we found is that we've got to have that cadence and that rigor in order to make sure that we're actually achieving what we said we would. Because it's not us. We are a corporate function. We're not the ones actually physically doing, say, development work. We're not out there selling. But we have to hold those leaders accountable.

Yeah, definitely keep them focused on the strategy and benchmark against it. As you continue other thoughts around how Cisco's evolved, I'm curious because we work with a variety of different corporate development teams and it seems like there's this evolution and it's always funny because it's in the early stages. There's just so much to evolve and continuously learn. I'm curious if there's just certain things that really stand out to you, especially even the most recent years, you've seen a lot of changes at Cisco that you think are pretty compelling that other corp dev teams should take a note of.

One of the things that has really changed that has driven the change in approach, both corp dev and corp dev integration is the companies we're buying are different. They're very different companies than the companies we bought more than five years ago. Five, ten years ago. As Cisco has evolved around SaaS, cloud first recurring revenue, more software. The companies we're buying are leading that charge at Cisco and that's been honestly a big shift than buying businesses that you're already in and that we call you would lift and shift them into an existing business model. We're using the acquisitions to help us create our new business models, our new capabilities. And so when you think about particularly leadership talent, expertise that we're bringing in in areas that we're building that are not native to us, the talent retention, the engagement of that talent and how that talent feels, they may not be running their business end to end like they used to when they were a standalone company, but they are had the ability to have a much larger impact on a larger company because of the experience that they bring. And so we're spending a lot of time looking at how do we really engage the leaders beyond what we have done in the past. It's not just good enough to lead the business you were in, but it's really what is your contribution and how can we leverage your experience to the bigger Cisco. And we play a big role in that, in making those connections. And I would say carrying the flag for them and what they bring besides what we bought. So we bought the company for a particular IP technology, maybe a new market we wanted to get in. But the leadership experience, the knowledge is this additional asset and how do we bring that to bear for the larger Cisco? And as an integration team, we are the ones helping connect them with the right people at Cisco and carrying the flag for them because we know where they need to insert and where we as a company could get a much larger impact beyond just what we acquired. So that's been a big change.

Yeah, it's almost thinking of how you scale out the leadership after close.

Yep, absolutely.

I have one more question for you. I have one around. Does Cisco use earnouts and does that play into your integration strategy?

It does play into it, but that's an area that I don't get as involved with, so I'm not in the best place to speak in detail about it.

The good thing is we had a course tomorrow of all about earnouts. Karen, I got to ask, what's the craziest thing you've seen in M and A?

One of the craziest things I already told you about is 605 days to close on an acquisition. That's a hell of a long time. And that was right from the very beginning. My philosophy here was, yet, don't let this crisis go unused. Let's figure out how we can make the most of the time that we have, because it's easy to say, oh, we can't do anything until we close. And in this case, there was a lot that we could do around the people and the engagement of the talent. And we were very creative on things that we brought to the acquired company in the very early stages. So they got acclimated to all the goodness of Cisco and the culture. And we got more insights into the culture of the company also. So that was pretty crazy. I would say, personally, the craziest thing I was involved in was pretty early in my career, five year tenure in this role. Probably one of the larger deals that we had done at that point in time. We were running side by side with the target going ipo and literally within hours before they were going to be ringing the bell on nasdaq, we actually came in and bought them. And that was obviously stressful through the early diligence process that we were doing, the early discovery process because their leadership team was on the road. They continued with all of their roadshows while we were trying to get as much information as we can about the company. Crazy hours. We were up against a clock for sure. Couple of all nighters there. I think our corp dev leader at the team slept on the floor at the legal office. Lots of pizza. One of those crazy things. But the most crazy part of it is when we privately announced to the company the emotion on people's faces. It wasn't what they expected. I think the craziest thing is how do you recover from an emotion of what just happened to we're super excited you're going to be part of Cisco and how do you help people go through that change? It's a huge change from something they've been working on for years and very aggressively in the last couple of days and months. And it's a big switch. So I think that was the craziest part is how do you sort of understand people go through that whole change management before you even start anything else so that you can actually shift that mind share and mindset around, hey, this is the path that we're now on. So that was pretty crazy. It was fun. Those types of things are always exciting and fun and you're living on the edge a little bit. It was a great experience. There are things I would never do again and there's things I'm like, okay, that worked.

That was really cool to hear your side of story. That was one of the craziest moments of the year. That pretty much turned a lot of heads across Wall street in terms of what the hell just happened.

Yeah, yeah, exactly, exactly. So yeah, it's fun to be behind the scenes on it. And I just always love every announce because we do a private announce almost parallel with the public announces. And it's probably the best part of the job is just being there and seeing faces, individual faces and people and how they're responding and gives you a view of what's in front of us when you see the emotion and what are the things that come up immediately after that that are top of mind.

I think that's a good example too of why strategy's got to make sense. Because I feel like people understood pretty quickly. It was a big shock but then they got it shortly after. Why? This makes sense.

Yeah. So if you didn't have a strategy, imagine that. Because then people would leave their own. So the clarity on that strategy was really important. Yeah.

Awesome. Karen, thank you so much for your time today and enjoying your expertise and all your M and A experience.

Thank you to you for being part of this. I always love to tell a story and share some of our learnings and I'm looking forward to the rest of the summit and learning from the rest of your guests.

Hey, thank you so much, Karen. We'll look forward to it as well.

Thank you. Thank you. Absolutely.

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