Upstanding. Frank A. Calderoni

with me through today. I even met my wife, Brenda, at IBM, where we were colleagues growing our careers in the finance organization.

      However, I recognize that during that era, for all IBM's strength of character, the company had accepted norms that by today's standards were biased against diverse people. While women and Black team members were not uncommon, my colleagues were predominately white men, especially in the more senior positions. And an uncomfortable truth during that time was that people of color and women were systemically disadvantaged. Thankfully, the IBM culture has evolved, as has the mindset of most leading businesses around the world, but we still have so far to go on inclusion, which I discuss further in Chapter 7.

      This year alone has confirmed without a doubt that when you make character the foundation of everything you do, and when you're more inclusive of diverse people and backgrounds, you're a much more effective business leader. You benefit from different perspectives that result in far more equitable and innovative products. You develop trust, relationships, and partnerships on a whole new level, which in turn, drives loyalty and growth in your business.

I joined Cisco in 2004 as Vice President, Worldwide Sales Finance, when the company was in its heyday, and was promoted to CFO in 2008. Profits were soaring, business was great, and some of the best people I have ever worked with were joining in record numbers. During my tenure, the company more than doubled business revenues and profits. But then we faced major adversity in the wake of the global recession, which hit in 2008–2009 and affected Cisco for several years. I will never forget the day in 2011 when we received 11 analyst downgrades, lost billions in the marketplace, and suddenly had a lot more adversaries.

      This was a time of significant company transition. Cisco had more than 66,000 employees globally and a very strong company culture. We had to quickly implement a cost-savings plan in excess of $1 billion—leading to heartbreaking rounds of downsizing and layoffs—while at the same time trying to maintain a positive culture. It was probably where I learned the most about how important culture can truly be when the worst happens all at once.

Throughout it all, our Chairman and CEO, John Chambers, set a remarkable example for others in the company to follow. During an earlier downturn, he had reduced his own salary to $1 a year.⁵ And while other employees volunteered to take pay cuts to reduce layoffs of their coworkers and help save the company, John declined—deciding that morale would suffer.

      As CFO, I both felt and observed up close the pain that the downturn was causing my colleagues on the executive team, and how difficult it was for us to make hard decisions that affected people's lives but were necessary for survival. But I could also see our collective character that was the foundation of the Cisco culture. It would have been easy for all the pressure—both internal and external—to bring us down, but we stayed above it. And while it's normal to react to challenging circumstances, you shouldn't let that change who you are as a person.

I learned a lot about character from the entire Cisco executive team. It was a learning experience for all of us as we made and implemented the hard decisions required to get the company back on a firm financial footing. One thing that helped was that the standout trait of the Cisco culture was optimism. In fact, a Businessweek article about John Chambers published six months before I joined the company described him as “irrepressibly optimistic.”⁶ Regardless of what was happening in the world around us, we knew we were going to persevere; we were going to win in the long run. Leaders didn't have to threaten or badger people to work harder. Everyone seemed extremely self-motivated. We understood that we needed to lift ourselves up and continue forward, so that we could get ourselves back on top.

      We had a common purpose that came from our strong core character. My time at Cisco demonstrated how the strength of company character provides an unwavering foundation to carry a business through the hardest of times.

As we all know, growing sales and profits are essential for sustained financial performance. But leaders who focus narrowly on financial results without a parallel focus on culture and organizational health may be surprised when they hit the inevitable iceberg. As job markets have tightened in recent years and great employees are harder to recruit and retain, companies have had to put the focus back on people. Competition for talent is one factor forcing a return to the importance of character to business. Many more realities at play require leadership teams to build culture for sustained advantage and resilience: intertwined global markets, the power of social media to make or break corporate reputations, digital transformation, and the imperative for cross-functional connectivity and collaboration.

      As business leaders, we implicitly know the importance of strategy—of setting goals and then developing plans that help us achieve those goals. This is very much a “hard” science—we can measure and quantify the results of our strategies and determine whether they have been successful. For many, the focus on creating a positive organizational culture is a “soft” science—something much less quantifiable, perhaps impossible to measure. The result is that leaders typically default to emphasizing strategy over culture, hoping it will lead to the results they seek.

      Of course, it's not that easy, especially if you are going through the kind of turmoil we experienced at Cisco back then. While there's no denying that strategy and “making the numbers” are essential, research overwhelmingly shows that an organization's culture significantly affects employees' engagement—their passion and commitment to making the company successful. I have learned firsthand that employee engagement flows directly to the bottom line. As numerous studies have shown, organizations with high employee engagement perform better in almost every metric compared to organizations with low levels of employee engagement. More on those studies is offered in Chapter 1.

      So, if it's not all about strategy, and it's not all about culture, then what really drives performance? Making culture instrumental to your strategy.

      Competitive agility, hypergrowth, and customer loyalty require combining culture and strategy so they're two sides of the same coin.

      After more than 10 years with Cisco, I left for Red Hat, where I became EVP, Operations and CFO. While I was at Red Hat, I learned valuable lessons too. The culture at Red Hat was considerably different from the more structured IBM and Cisco cultures in which I had built my career. Like the open-source software that is its hallmark, the Red Hat culture was also very open to an extreme—in a good way.

In an open culture, I learned about the power that comes from cultivating an openness to feedback that is not curated or reviewed in advance. To allow employees to ask any question, and to allow yourself the vulnerability to answer in a way that is authentic and unscripted. It generated passion and heated debates like nothing I have ever seen before in an organization. It was refreshingly different and something I knew I was going to adopt as I moved forward. These key learnings from Red Hat were what I brought along with me when I became President and CEO of Anaplan in 2017.

      Anaplan, the company I lead today, makes cloud-native SaaS software for global enterprises to orchestrate successful business performance. But more than that, it's an organization that I've had the privilege of shaping using all of the insights about character, culture, and leadership I've gained throughout my career.

      On my first day at Anaplan, I thought to myself what an honor it was to become the CEO at this up-and-coming startup. Our headquarters was in an industrial part of San Francisco—in a building with retrofitted brick walls, little enclaves everywhere, and a hip vibe throughout. What I learned in the interview process to become CEO was that Anaplan had an incredible product, a large greenfield opportunity, and loads of potential. It was everything you wanted in a startup.

      However, it seemed like Anaplan's culture and character were not well developed. Employees enthusiastically supported customers and were clearly passionate about the product, but values were individually defined and culture was fragmented with competing