#286: John Donahoe, Former CEO of Nike, Director of Athletics at Stanford – Create strategy from the outside in

23:20But in a way, they're in exchange for a service that is building their career and building their relationships and building their network for post-playing days. And so, and our athletes love that. They, you know, it's interesting. We do have some, we've been a pilot with our women's gymnastics team. This is another way of making the same point. And around how they can build their personal brands on Instagram and TikTok and the social networks. and one of the student athletes was so great because she said to one of my colleagues, you know, I'm not doing this for the money. I want to use this in my application for med school to show I'm taking initiative.

24:07Or another said, I want to use this when I interview for jobs to demonstrate that I understand how influencer marketing, social media and marketing is going. And so the Stanford students, you know, I think they have maybe a little more focus on their longer term careers in addition to the desire to make some money while they're here.

24:29David Novak:I hope you are loving this conversation between David and John. As always, stay tuned to the very end of the episode. David and I will be debriefing his conversation with John so that you leave this episode with something really tangible to apply right away to your leadership and to your life. So stay tuned to the very end of the episode and I will see you at the debrief. You know, I've heard you say, John, and I couldn't agree more that in every company that you've led, you've never thought of yourself as the boss. You know, you thought of yourself as the head coach. Say more. David, you know, it's funny.

25:06I'm sitting in my office here in the Stanford Health Department and literally 100 yards away is the Stanford Business School. And I graduated from the Stanford Business School literally 40 years ago this spring. I was 11 years old at the time. And one of the phrases I heard when I was in the business school was this concept of servant leadership. And it just lit me up because the notion of servant leadership is the job of the leader is to serve the purpose of the organization that you're part of, to serve your teammates, to serve your customers, to serve the society and community in which you operate.

25:48And it just resonated with me because service was something that I could really connect with. And I feel like service is what I've learned over the years is an incredible source, not only of inspiration, but also of resilience. Because so much of leading is about having the resilience to work through the inevitable ups and downs. And relatively early in my career, I was looking around for servant leaders that I thought, I admired or I wanted to emulate. And you and I were both raised in the era, you know, the Jack Welsh era, where the CEO was kind of the dominant top-down figure. And for me, head coaches, the light bulb went on.

26:31It's like, wait a minute. I was, Phil Jackson was one of my early muses on this. And the job of a head coach, it's not about the coach. The job of the head coach is literally coach, make their teammates better, make his or her team better. The head coach gets to define who makes the team, gets to define who starts, gets to define what plays they run, gets to define who gets to substitute who has to come out. But then after doing that, it's all about the players. And so head coaches have always been my muses. In fact, when I was at Nike, I had Phil Jackson, Coach K, Tara Van Devere, and John Thompson on my wall behind me.

27:12And every Zoom I did over the five years there had them over my shoulders because the organization knew I called myself head coach and my muses were over my shoulders. And I've learned such amazing lessons. We at some point have loved to share a couple of Coach K stories and as well as Tower of Endeavor stories, whose office is now next to mine.

27:33David Novak:What would be your most impactful Coach K story? Coach K story, first time I met Coach K, I'll tell two that happened right one right after another. I met him. He was one of my heroes. I met him when I was at ServiceNow. He came to do a talk to our top customers. And he said, you know, I want to meet with you ahead of time. So I make sure I'm on target. Can you have lunch ahead of time? I said, yes, I'd love that. He walks into the conference room where, and he shows me the phone. He says, he says, think about my life. He said, I spend my life recruiting 15, 16, and 17-year-old boys to come to Duke increasingly for one year.

28:11He said, I have to understand how they communicate, what music they like. He said, I've had to reinvent myself 10 times in the last 20 years. Now, Coach K, by the way, at this stage is 72. He said, I'm currently texting with the number one high school sophomore in the country. And he barely uses words. He uses emojis. And he said, I didn't even know what an emoji was a couple weeks ago until my granddaughter taught me. And he just thought it was hilarious. So this notion of reinvention, that here's the winningest male coach in college history. A second example, I said, you know, Coach K, and this just gets adaptability.

28:53I just love Duke basketball. I love the values of Duke basketball, the fundamentals, your focus on defense and teamwork. and he kind of rolls his eyes. He says, yeah, Duke basketball culture. He said, you remember when the three-point shot came in? And I said, yeah. He said, remember it was Rick Pitino in Kentucky who sort of made it famous, the run and gun, that team. He said, you know, at first I thought three-point shot was inconsistent with the values of Duke basketball and the culture of Duke basketball. We pass the ball three times before we shoot. We try to work it inside. So we didn't adapt the three-point shot.

29:32And then we started losing. So I had to figure out how to incorporate the three-point shot into Duke basketball culture and values. He said, you remember one and done when that came in? He said, that was absolutely antithetical to Duke basketball values and culture. Our athletes graduate. Our seniors teach our freshmen. We want people who are going to be over time. So we did not embrace one and done.

29:54David Novak:Yeah, I remember Coach Calipari, who was leading the way of one and dones at Kentucky, said Coach K called him and talked to him for an hour or two just on the whole one and done and what's working, what doesn't work. But he was a seeker of knowledge and one that wanted to adapt. That's the point. He figured out how to embrace it. And I think that's what these coaches, you know, every year they have different sets of players. They have different competition. So they have to be incredibly adaptive and curious. They can't just depend upon what got them there. And so Coach K was such a wonderful example.

30:33I'll say one final thing. He said, then NIL comes along and I decided to retire.

30:39David Novak:He's leaving that to you to figure out, okay? You know, as a servant leader, you know, I'm sure one of the things you want to do is support your coaching. So I would imagine one of the big roles that you have is to do the business stuff so that they can take time to focus on the players. Is that a fair assumption to make or is it too simplistic? It's both. Back to your end. So we had a head coaches meeting this morning. The head coaches know I came in on day one and I said, here's how I think of organization structure my whole career. Most people think an organization structure is a pyramid where the quote unquote leaders on top, everyone else is underneath.

31:21I believe in an upside down triangle. I believe the people at the top of the organization chart are the people for whom you exist. So in a business, it's your customer. In our case, our student athletes. We exist to serve our student athletes. Then the top of our internal organization chart are our head coaches because they are the ones that recruit our athletes and help them perform. And then everyone else in the athletic department exists to help our coaches help our student athletes. And I'm at the very bottom as the servant leader. And so I treat our coaches as my boss. And they know that.

32:03I learn from them. I support them. It turns out that, by the way, David, each of them are mini CEOs. And you know, guess what? Being a CEO is a lonely job. And especially after some tough losses, our men's basketball team lost yesterday in the first round of the ACC tournament to Pitt. On a tip-in, we were up one. And with less than one second to go, Pitt tipped the ball in, we lost. Like those, Kyle Smith and Eric Revenue and that coaching staff, or our women's basketball team lost in overtime, you know, last week. And so the coaches were building community of support for one another, because it's a lonely job.

32:47Now, many of them have won NCAA championships and high highs, but you also have lows. And so one of the more enjoyable parts of this role thus far has been the engagement with our coaches, building communities, sharing experiences. They're some of the most extraordinary servant leaders I've ever seen, but it's also really heartening to see how they reach out and help each other through what is inevitable, the ups and downs of sports.

33:12David Novak:Did that culture exist or are you driving that culture of collaboration and support? I think I'm re-enabling it. But, you know, some of them said that it existed before, but they were sort of missing it. And, you know, David, I think that's probably a little bit a symptom of COVID. You know, you just got, you got into, we all got into patterns and it was sort of the, maybe it was the before when work from home was still the thing. When you got back together, you know, in a company or in an organization, It allowed a more spontaneous interaction, more in-person engagement. And now what we're doing is each coach says, by the way, here's, we call them our gold games.

33:58We have so many events going on. Like this weekend, I literally think we have 15 different games going on. Many of them at the same time, Saturday and Sunday. But our coach was saying, this is the most important, you know, our lacrosse, our women's lacrosse coach, Danielle. fabulous leader. She's playing, she's undefeated. They're undefeated thus far. They play Notre Dame this weekend. She said, please come out to the Notre Dame game. You don't need to come to the game the next day, but come to the Notre Dame game. And so our athletes and our coaches are also showing up for each other, which is really inspiring.

34:30David Novak:You know, when you have to humble yourself to be a servant leader and, you know, what advice can you give people on just how to keep the ego out of it where, you know, so many times, you know, leaders, they want the ball, you know, when their real job is to actually coach, you know, not take the shot, you know, but a lot of leaders, they want that ball. They want to get the credit for taking the shot. I mean, what coaching can you give others on that? You know, David, I guess that gets to be such a personal thing, I look at it and you sort of say, well, why am I a leader? And why do I exist? If you're, if you're, if a head coach is your, is your muse, and you think about, oh, yes, I want to be the head coach and keep the attention on, on my team.

35:20I think a second thing that you and I both know is there's nothing like getting your ass kicked really badly. The ego, you know, you can have a great season where you win, but you can also have some losing seasons and losing streaks and losing games where you're the goat, the bad goat. And those are humbling experiences, but those are also, they remind us that it actually has far more to do about us, or far less to do about us and far more to do about the preparation, about luck, about circumstance. And so anyone that feels like the ego is starting to creep in, just remember there's, you know, at some point, something's going to happen and you're going to fall flat on your face.

36:07Your day's coming. And probably quite visibly. And that's okay, too. By the way, those are great learning experiences. They're painful learning experiences, but they're important ones. And then, you know, the last thing I just say is ask yourself, if you're a young leader, ask yourself, who are the leaders you wanted to follow? You wanted to, that inspired you? Odds are that in many cases, it's going to be a servant leader, someone to put your interest before theirs, someone that you trusted. And I would just make the observation over time, I think the most talented people, the greatest talent follow authentic leaders and servant leaders more than they follow self-centered leaders.

36:56And so it's also just, I heard Colin Powell, I'll never forget. I was lucky to get a chance to interact with him multiple times. And he used to say this publicly. I remember him saying it to me. I was at eBay at the time. He said, John, it's not about leadership. It's about followership. Your job's to build followership. So when you think about it that way, all of a sudden, the focus is not you, the leader. That was his way of talking about servant leadership, right? It's not about you. It's about followership and how you enlist, in his case, the troops or the people at the State Department to follow.

37:36And almost always, that's by values-based, principles-based servant leadership.

37:42David Novak:I want to shift gears a bit, John, and I want to take you back. You know, what's the story from your childhood that shaped the kind of leader you are today? You know, I'd say two things, David, come to mind. One is my father had a profound impact on me. I didn't think of my father as a role model, but I now realize he was in some ways. He was a senior person at Pricewaterhouse in Chicago. He spent his entire career there, ended up being one of the top two or three people in the firm. And a couple of things I realized in hindsight, I learned from my father. He used to take my sister, I have two sisters, one that's two years younger, one that's 12.

38:23The sister is two years younger. And he would take us downtown to his office in downtown Chicago on a weekend where he had to do some work. And we'd play in the typewriters back in the days where typewriters have hot chocolate. but this would have been the late 60s. And I remember we'd pull into the parking lot, parking garage under the building. He'd say to the weekend parking attendant, hey, Billy, how you doing? How's the family? We'd ride up the escalator and the guy would light up, Mr. D, travel Mr. D. There'd be the receptionist, you know, hey, Marge, is your husband's, is he out of the hospital yet?

39:03Why don't you know I've been thinking of him? and my dad just had this way. He treated, oh, then we'd be walking down the hallway and it'd be the governor of Illinois, Governor Ogilvie. He'd say, governor, come meet my children. And my dad treated the parking lot attendant the same way he treated the governor. He treated everyone the same. And I didn't notice it. I wasn't conscious of this as a child, but people would light up when they saw him because they saw that he was treating them. He treated everyone with the same kind of attention and kindness. And that brought the best out of them. And then I would say the second thing I learned from my dad is he didn't, it's to what we talked about earlier, he didn't have the word I in his vocabulary.

39:45And so we'd go to some dinner or whatever, and I'd be the young person that was brought to the table. He'd bring me along to learn. And he would immediately launch into, tell me about yourself. What's going on over here? David, you've got this gift too, right? It's always asking curious questions about others. And the focus is on the other people, never on him. And I didn't, as I said, it wasn't until many years later that I heard the phrase servant leadership. But in many ways, my dad, I had this beautiful role model of what a servant leader was.

40:17David Novak:That's awesome. You know, John, while I was doing my research, and I obviously know a little bit about your career, you know, it's pretty decorated. But, you know, I thought about it. I don't know if there's anybody that's really made a bigger dent across more significant categories in business in the history of business than you. I mean, you've really, really covered the gamut of great companies. And I thought it'd be interesting if I just went through some of your experiences and just got your single biggest leadership lesson from the places that you had such a huge impact on. And, you know, you stepped into the CEO role at eBay to turn that business around.

41:00David Novak:Tell us a story that would represent the biggest leadership lesson you got out of eBay. Oh, so many, David, so many. I learned a ton from Meg Whitman. I got to work for Meg for a couple years before becoming CEO. And I learned about courage. Meg had courage, still this date, courage about making hard decisions, bold decisions about owning up to mistakes. I think, you know, the lesson that I may have been the most, stayed with me the most around eBay was just the role adversity plays in our lives. And eBay, you know, for me was a very stressful time at the beginning of it. It was very, was a turnaround.

41:44I was getting skewered in the media and there was a media back then. I was, I'll never forget. It was the first year Glassdoor came out in the New York Times business section. It had lowest rated CEO in Silicon Valley. It had my picture. And that's back when people actually read the newspaper.

42:03David Novak:Well, I hope it was a good picture anyway. It was not, you know, I've run into people in the grocery store and they like go into the other aisle because, you know, that happens is what they read about you is what they think is your reality. But I, you know, I came to the realization, I had some friends help me do this. And frankly, my therapist helped me do this. Often moments of adversity, phases of adversity are often the phases that in hindsight, we look back on with most fondness and pride. And she had me think about what were the things in my career when I look back that I was most proud of in hindsight?

42:38and what were the things that, and I look back in my life, in my personal life, that I was most proud of in hindsight. And she'd say, was that when things were going really well, John? I actually said, no. Were those periods of adversity? And I said, yeah. She said, so just remember that it's periods of adversity that give you the opportunity to have the most meaningful moments and the moments you in hindsight are most proud of. And it was a powerful shift for me because I hate adversity. Like I want it to all be going well. I want people to get along. And I was living in this world. I was fearful of future adversity.

43:21And when I was in adversity, I was so anxious to get out of it. And it helped me realize that that's just not a sustainable model. And so what I learned at eBay and I still try to do today is I don't like adversity. I don't want adversity. No one does. But adversity is a fact of life. It's a fact of life in our personal life. You and I have talked about that. It's a fact of life in our professional lives. And so now when adversity avails itself, I just say to myself, all right, I don't like this, but all I can do is put one foot in front of the other and carry myself in a way that I will be proud of in hindsight.

43:59I don't know how it's going to turn out. I don't know when it's going to change, but I do know I can make myself proud by carrying myself in the best possible way through this difficult circumstance. And eBay really taught me that.

44:13David Novak:That's a great learning. And you've also been the chairman of PayPal for almost a decade. What's the key leadership story there? PayPal was one part consumer product, one part payments, one part technology, one part consumer product. and it was a very ill-defined market. And so you always had to be doing, we did these constant game boarding, what we call game boarding process. A mutual good friend of ours, Dave Dorman, was on this board and he's now chair of the board. And our annual board retreats, I was chair for a number of years. We would do game boarding and industry game boarding because you couldn't predict what was gonna happen exactly when.

44:55So you had to think through it was the ultimate in having a dynamic approach to strategy and outside in view of the market and how the industry chessboard, I guess that's what we used to call it, industry chessboard. And that, you know, you could never be too confident in your short-term success because we'd have these periods of intense success. We'd get a network effect, things would happen, but you always had to be conscious that you can be getting disrupted while you're having success.

45:26David Novak:Yeah, that's a great lesson. How about ServiceNow? If I've learned one thing from ServiceNow, there's nothing like a good tailwind. With the old phrase, when a good manager meets a bad business, a bad business wins every time. When a mediocre manager meets a good business, a good business wins every time.

45:49ServiceNow and Fred Luddy, the founder, deserves credit for this. and my predecessor, Frank Slootman, and now my successor, Bill McDermott, has just done amazing things. But it's a born in the cloud platform that just had unfair advantages by being a modern technology platform. Now, I think we did a good job of not growing too fast. Fred, the founder, Fred Letty, really wanted to build an enduring company. And so making sure that customer success and customers getting real results and that we were taking care of our customers, not because we were the hot technology that everyone needed, but because our technology had the power of helping them achieve tangible value.

46:40I learned that. And then, you know, I had another leadership lesson there, David, that was totally unanticipated. I, my direct report team, I inherited three or four of them that had been there for the long term, at least in ServiceNow language. I had two or three of them that joined a year or two before I got there. And then I hired two or three. And we did this offsite that was going to be a storming and norming offsite to build team. And I said, I really want to develop a set of operating principles or collective operating principles. And I had a facilitator there. And we had a break. And the facilitator, we come back after the break.

47:19Facilitator says, John, the team would like you to leave. I'm like, what? Like, I'd like you to leave. And so I leave the room and I'm out for three hours. I'm like, Jesus, I think there's a coup going on. And I come back in and the team said, we have built a social contract with each other. We want to share it with you. And it was important to us that we didn't do this because of you or for you. This is for us. And the first phrase of their social contract is, we commit to work east-west before we go north-south, which is to say, we're not going to run to you, John, to fix all of our problems.

48:00We commit to try to work with each other. We commit to have each other's back. We'll debate freely when we're in the room, support each other when we're out of the room. And there were seven or eight of statements in the social contract. They said, we want you to know this is what we're signing up to. And next week at our all hands to the company, we're going to tell the entire company they can hold us accountable for the social contract. And it was so much more powerful than anything that I could have helped create or encouraged that they create. It was a true case in a team, self-organizing and doing it in a way where it had real grit and meaning for them.

48:42David Novak:I love that. And I love the idea of going east-west before you go north. I think that's fantastic. And how about Nike? Oh, I learned so many things at Nike, David. I, you know, obviously I got exposed to one of the greatest brands in the world and how the company thought about brand and advanced the brand. And by the way, kept the brand contemporary. That's one of the, I think, real hidden secrets of Nike. It's still a young brand in its 53rd or 54th, maybe its 55th year now. I learned a lot about innovation and just a company that really puts innovation in front and center. I also learned a lot personally through COVID, through leadership.

49:25And, you know, I learned a lot in a very humbling way. I, you know, I got my butt kicked toward the end and both very publicly and also, also, you know, learning where I, I, you know, lost the locker room a little bit. And, and so the, and had to just sort of confront that. And, you know, we did certain things very, very well. and then toward the end, our results weren't what they needed to be and we weren't living up to our promises. And frankly, it was time for me to move on. And so that was a, you know, I learned a lot through that experience, both personally and professionally.

50:05David Novak:Where did you learn the ability to do just what you did, which was be vulnerable, you know, and be so open about that experience like that? And, you know, I mean, that makes me want to get get on the John Dono team. I mean, but, you know, people talk about the power of being vulnerable and open all the time, but you don't see it. I've never thought of it that way. I've tried to. You know, be always try to be honest. My my I think my father is that way. It's what a good coach does, what worked well in the first half and what do we need to fix? And then I don't know, David, I want to tell you a story that comes to mind.

50:43when I was right after I was named CEO of eBay. We were at the beginning of the turnaround. I announced on my first day as CEO, this is a turnaround. And everyone knew it to be true, but everyone hated that word. The employees hated that word in Silicon Valley. No one wanted to be called a turnaround. And we had our, even our, I'll call them customers. We had this, once a year, we'd have this conference. It was called eBay Live, where 25 ,000 eBay sellers would come together. This would have been in 2008, spring of 2008. 20 ,000 eBay sellers come together and share experience. And the eBay security team says, and it was at McCormick Place in Chicago that particular year.

51:32And the eBay security team comes to me and says, I don't think we can let you get up on stage because they're so angry at you. Because we'd announced some changes that were for the good of the community. And I said, no, I have to stand up in front of them. And by the way, my parents are going to be there. I grew up in Chicago. So I fly to Chicago, I land, and the head of comms tells me, you got to check YouTube because one of the eBay sellers threatened one of our employees at registration. Like, uh-oh. So I open up my laptop. I go to YouTube, which I, at that point, never went to. I type in eBay.

52:06And the first 10 YouTube search results or hate videos about me. And the number one video was, and it had over 100 ,000 views, was an eBay seller had taken scenes from the movie Schindler's List and had the scene of a German guard shooting a Jewish prisoner and superimposed Donahoe on the forehead of the German guard, an eBay seller on the chest of the Jewish prisoner. And I will never forget, talk about adversity, being in my hotel room that night, just thinking, holy cow, this is real. This is how these people feel. This is, yes, we're making changes that are good for the community, but it's painful for some to go through it.

52:59And the next morning I went on stage and I just shared that story. I just said, let me just tell you what I, I said, I almost don't know what to say. and you know what happens in these things, people are paying attention, whatever, but I shared that story because I didn't, I was literally speechless knowing what others say, and I said, I'm here for the good of the community. I think of myself as a mayor, head coach, servant leader, and I care deeply about this community, and I want you to know I have a better understanding of your pain than I did 24 hours ago, and you should know I feel that pain as well.

53:38And it wasn't intentional. I didn't use vulnerability for an outcome. But by being vulnerable, it began us, I think it was the beginning of a turning point of, all right, we're in this together. How as human beings can we move forward together?

53:57David Novak:That's a great story. And one thing that I know you did at Nike, which was very, very challenging is you led a digital transformation. You took Nike into the digital world when they were falling behind there. You know, what did you learn through that process that would save other leaders some heartache as they try to deal with AI? You know, David, it was a great learning experience. And let me, I'm going to frame good learnings and then bad learnings or learnings of things that I would say were good in hindsight and ones that were less good in hindsight. So the principles I had coming in was, and I learned this at eBay, that in today's world, consumers want to get what they want, when they want it, how they want it.

54:44We consume our media. It's no longer just about newspapers or magazines. We want media or watching a TV or in a movie theater or on my iPad or on my laptop, or I want to get the media I want when I want it, how I want it, where I want it. and commerce is that way. So there's, I want to get when I want it, how I want it, where I want it. There's no such thing as an online shopper versus a physical shopper versus a multi-brand shopper versus a model brand shopper. Most consumers, and I would say this about Nike, my guess is, David, the last 10 things you bought in Nike, you probably bought, you don't even remember, a couple online, maybe one or two in the Nike store in New York or one or two would add Dick's Sporting Goods.

55:29So one was the principle of giving consumers choice. The second, and I think that is a good, we should all keep that in mind in almost every business. Consumers want to be able to get what they want when they want it, how they want it. The second is you have to know who your consumers are in this day and age. And we sold exclusively through retail and when we sold through retail, we didn't know who the consumer was. And that's dangerous in this day and age because otherwise others can come in and give more targeted, personalized offerings. And so part of the goal of going digital was to establish their Nike account.

56:01And then we did shared membership with Dick's Sporting Goods, with our JD Sports, so that it wasn't, we only learned about the consumer's choices when they came directly to us, but we also can learn when they came through our third-party partners and then gave the consumer's choice. Those two things I think were right, and I think they continue to be important things. What I didn't get right is it was labeled as Donahoe's direct-to-consumer strategy. And the presumption was I didn't care about offline retail. I didn't care about a retail partners. And although I was in their boardroom saying I did, the perception and therefore became the reality is that Nike was less committed to the retail partners.

56:50and other competitors came in and took shelf space. And then I would say the second learning I had is I didn't understand that by saying we were measuring our digital growth, we were measuring our monobrand-owned stores growth internally, our organization was optimizing to that. And so we were actually making some non-consumer friendly choices to tilt the playing field. And it was a case where I didn't have enough of a balanced scorecard. And I wasn't fully cognizant that part of the reason our online sales grew as much as they did was because we were saving some of our most scarce inventory for our own online only.

57:39You know, I think that the importance of being balanced as a leader and thinking about, okay, great, we're going in this direction. how might I or the organization be perceived as going too far? And what do I do to make sure we don't overdo it? Was a painful lesson. Now, the risk, of course, is it goes back now and says, oh, digital is bad. It's all about our partners. Neither are we true. Consumers, as I said earlier, consumers, we want to be able to get our Nikes and the next purchase, however I want to get it. And I think my successor, Elliot Hill, is doing a great job of ensuring it gets back to more of a balanced marketplace.

58:17David Novak:So how do you think about that and the learnings there as it relates to how leaders should deal with AI and go forward there with their companies or with their teams? You know, a little bit similar. The word AI is just a, I don't think it's that useful a word in this moment. It promotes fear. Everyone has a different definition. everyone. The question is, where can technology enhance your customer experience? Where can it enhance your employee experience? Where can it enhance or shift your business model and your economics? And if you simply think of AI as another advance in technology that allows us to it should be delivering more consumer friendly, or if you're an enterprise business, customer-friendly experience, whether it's more self-help, it's faster service, whatever the value is, more enhanced value added, more information for your employees.

59:18It's the same thing. It's, you know, I think about when I was at ServiceNow, what was then born in the cloud enterprise software, we could deliver a better onboarding experience for new employees or a better ask a question, get an answer experience. Well, now with AI, you can just do it. It can be even better. Don't call it AI. It's simply the focus shouldn't be on the technology. The focus should be on the customer experience, employee experience, business model, efficiency.

59:50David Novak:Makes so much sense. And, you know, one of the things that you talk about is just what you call the inner journey of leadership. And, you know, what does that mean to you? Where are you at on it? your listeners don't know when we're, when we're together, it's what we spend most of our time on. And you and I both know it doesn't get talked about enough. It's, it's the, you know, how I could say life is hard and life is so beautiful. Leadership is hard. Leadership is so beautiful. Yeah. There's all the external stuff and all the external successes and failures and ups and downs and skills you want to build and capabilities you want to build.

1:00:30There's also an inner dimension to life and to leadership. And for me, at least, the inner journey, I think, has been as important or maybe even more important to my success or my growth, my enjoyment. I'm still learning. I'm Catholic. so learning how to enjoy the moment in the moment is still one of the things I'm working on and but it is um and it's messy I mean I still to this day I I you know I've had different practices over time I get up every morning and I did this this morning now and my current morning practice is I take 10 10 or 15 minutes and I have a little black book and I have a a chair in our home where I sit and have my coffee, you know, quietly in the morning.

1:01:27And I write three things in the book. I write, I try to check in with myself and say, okay, let me just reflect on the last 24 hours. Is there anything that stood out? And I just, I just write it. Don't not, not, you know, oh, I had this interaction or wow, I had this tough meeting or wow, I had this surprisingly nice experience. And then I write gratitude. What am I grateful about in the last 24 hours? And I write out, I'm grateful I had this experience. I'm grateful I get to be at Stanford, which is in what has been the most nourishing role I think I've had in the last 40 years. I'm grateful for my wife and I had a really nice conversation last night.

1:02:10And then I write, what are my intentions for today? How do I want to, and my intentions, I said, today I want to be, I get to be with David on his podcast. I want to be present. I don't want to be in my head. I want to be present. I want to be calm with my team. I want to be positive because I know I'm going to be with a couple of our teams that had heartbreaking losses over the last couple of days. And just each more, it's not fancy. It's, you know, it's 10 minutes. and over time, it, I think I'm, I think I'm, it helps me be more grateful. You know, it just helps. It's just a little bit of consciousness.

1:02:51It's not every day. I have bad days, but it, and that the inner journey, making friends with our shadow, making friends, whatever, with, with the inner parts of ourselves, I think is, and then the last thing I'll say about that is it opens up the capacity for relationships, right? You and I, right? We had one round of golf where it took a very nice relationship we had. We had a friendship, whatever we had. All of a sudden, it was almost like we were soulmates four hours later. You were incredibly open and sharing some very vulnerable moments in your life. And I was so drawn in. And then I shared mine.

1:03:35And all of a sudden, our relationship went from, hey, David, what you shoot yesterday, how's the weather, to how you doing? And now every time I see you, my heart feels that and my sense is a little bit vice versa.

1:03:49David Novak:Absolutely. That's part of our shared inner journey. Yeah. Couldn't agree more. And I love it. And just having this conversation has meant so much to me. And I value it. And it's been a lot of fun. Now I might have a little more fun with my lightning round of questions. Are you ready for this, John? Okay. All right. The three words that best describe you. I'm tall, I'm gray haired, and I have a loud voice. If you could be one person besides yourself, who would it be? Oh, it's got to be Coach K, Tara, Phil Jackson, Coach Thompson. What's your biggest pet peeve? Politics. I don't know, not national politics, but it's, you know, building, being part of a strong team is like so fulfilling and rewarding and it's very hard to do.

1:04:40And so a pet peeve is when it seems so hard to build a team. Who would play you in a movie? Christian Bale, because like whatever character he gets into, it's like, wow, how did that guy get into character so well?

1:04:51David Novak:Who's the best athlete you've watched up close? Michael, Kobe, LeBron, Steph in the men's basketball lineage, watching Caitlin and Asia Wilson in women's basketball, watching Serena in tennis, watching Tiger, today Scotty Scheffler, Rory. These exceptional athletes, what they do is just, and I'm just picking a few, it's just remarkable. What's something you've been curious about lately that has nothing to do with work? I think part of what we talked about is AI and the impact on society. And how do we move from, it's provoking fear at the moment. Am I going to have my job? Will there be any jobs?

1:05:35Is it a good thing or is it a bad thing? And how do we reframe it in a way that we have, there's something called here at Stanford, human-centered AI, that you start with the fact that we're humans and now AI is a technology and a capability that I think we need to be committed to make sure it's enhancing the quality of our lives and of life itself.

1:05:59David Novak:Besides that 15 minutes you spend in the morning with your black book, what's one thing that you do just for you? Working out, I think, is sort of the only sport I can do anymore is really golf. I used to play basketball, but I have no more cartilage in my knees. So I enjoy working out and it's kind of for me. And then, you know, I would say my wife and I are enjoying watching. There's so much good, the quality of content, these shows, you know. So, you know, a great, we just finished watching The Pit. It's like, wow, this is really high quality and I can lose myself in that. And so there's really high quality content being produced these days.

1:06:47And I think we enjoy that.

1:06:48David Novak:Besides your family and friends, what's your most prized possession? I don't think there's anything that comes close to those two things. That's fine. If I turned on the radio in your car, what would I hear? Well, A, I'm probably the only guy using radio. But B, Ben Morrison. Ben Morrison is my favorite musician. I've probably seen him 15 times, including two or three weeks ago in San Francisco. he's 80 years old. Every time I listen to a Van Morrison song, it evokes something in me. What's something about you a few people would know? No, I would characterize myself as maybe more spiritual than people realize and spiritual with a small s, a little bit what we talked about.

1:07:30That, because people project a lot onto us and assume that, oh, if you've had success or if you've had, that you care about things that I don't really care that much about.

1:07:41David Novak:All right, we're out of the lightning round. Great job now. I got a few more questions. I'll let you go. I know you've got something to run to, which is not a big surprise. You know, you and your wife, Eileen, you have four kids. What's something about leadership that you've carried home with you? I mean, how do you try to lead at home? Well, it's almost the opposite, David. We had our youngest, our oldest child's now 40. He'll be 42 this year. So we had him in my first year at Stanford Business School. I had my first child at 24. Arlene was 25. So we had family before career. And I would say I learned more about being from being a father and a husband to being a leader than the other way around.

1:08:22And so it's like your friends don't give, I'm sorry, your family, your kids don't give a shit what you do. They don't care about title. They don't. It's the ultimate humbling, you know, humbling experience. And it's the ultimate lesson in resilience. like a marriage over time, you know, that it's a marathon, not a sprint. And so I feel lucky that my personal life has taught me about leadership. Every time I try to lead at home, I fail miserably. And my kids and wife tell me that.

1:08:57David Novak:You've accomplished so much in your career already. And now you're in your ultimate servant leadership role. That's how you got in it. You know, So what do you see as your unfinished business, John? Enjoying the moment in the moment. I remember it was about 10 years ago. I took a sabbatical 10 years ago. And I remember watching Steph Curry play. And I'm like, he plays with joy. And he plays with the same joy in a night that he's one for 10 that he does in a night that he's 10 for 10. And I feel like, you know, I've accomplished a lot, but I didn't play. I dove on every loose ball. I fought really hard.

1:09:29Maybe we won. But at like the end of the season, like, dude, did you enjoy it? And so learning to play with joy, to love the discipline, love competing, love being on the playing field, but try to enjoy the moment in the moment is my current highest mantra. It turns out it's a lot harder to do than it is to say.

1:09:50David Novak:Fantastic. You know, last question. What's one piece of advice you'd give to anyone who wants to be a better leader? Embrace yourself and keep learning. And those both are true. Everyone has the ingredients to be a great leader. And you do that by embracing your authenticity. You've got to never stop learning. And those two, both being true to who you are and keeping learning, the combination of those two things, I think, is what differentiates the best leaders that are able to keep a strong balance of both. You know, John, one of the things that I'm really trying to work on now is just, it's called the precious present.

1:10:30David Novak:You know, just recognizing that the present is precious and, you know, don't get ahead of yourself. Don't get in the future. The now is really what matters. And that sounds maybe a little spiritual. I don't know, but it's so true. And enjoying the moment in the moment is really incredible. And I'm so glad that we did have that round of golf at Fisher's Island and Fisher's Island. And it was fantastic. And I'm so glad we got to know each other. And I've certainly enjoyed this moment. It's been very special. And I appreciate you taking so much time out to share it with you. Thank you, David. I feel the same way.

1:11:13David Novak:David, what a fascinating conversation. I love that John has had this incredible career at the very top of companies like Nike and eBay. And now he's navigating all of these insane changes that are happening in college sports as the athletic director at Stanford. This conversation was just fascinating to me. Yeah, well, I think John has demonstrated that he's capable of going into any kind of business and making a significant difference. And I'm sure what he's going to do at Stanford will become textbook over time. He's a tremendous leader. He really understands the importance of knowing his business cold, knowing his constituencies cold, and then putting together a strategy that's going to take whatever business he's leading forward.

1:12:01David Novak:And I'm sure he's going to do a great job. I also love the fact he's enormously vulnerable, constantly learning about himself as a leader and views himself as unfinished business, which I think is great. David, as we do in every debrief of our episodes, we're going to give our listeners some real practical tools that they can apply right away to their leadership and to their life. And so I want to break down some of these concepts that you and John discussed in the episode. The first one being kind of this main theme that I recognize throughout the entire episode, and it's the importance of John's outside-in approach.

1:12:39David Novak:John talks about how important it is to first look at external forces like customers and culture, instead of starting with internal numbers that you just want to beat when it comes to building out a strategy. And I'm curious, David, how would you coach your team on how to be more outside in in their thinking? Well, I think the first responsibility of leadership is always to define reality. And the only way you can define reality is to see the world the way it really is, not the way you want it to be. And that means you have to look at the world, you have to look outside of your own domain and look at the world and see how you fit within it.

1:13:18David Novak:And when you do that, then you can really define reality. And then you're at the beginning stages of being able to develop an effective plan to cope with that reality and change the game for your company or yourself. So, you know, I'm a big believer in being externally focused. And in my world, it was always customers. And, you know, one of my edicts was listen and respond to the voice of the customer. What's the customer telling us? What's the customer want? What problems are we trying to solve for the customer? You know, if you do that, you're focused on what really matters. And people will many times say in business, you don't exist without customers.

1:13:58David Novak:And that's true. So, you know, how do you act that way? Well, you act that way by being focused on the customers, not the way you see yourself internally or how you want customers to think about you. You start by understanding how they think about you and then you get them to think about you the way you want them to because you've addressed their needs. He also reiterates the importance of doing that on a continual basis because at the rate that things are changing so quickly in our world today, especially in his world with college athletics, He says, you know, what happened six months ago sometimes is irrelevant today.

1:14:36David Novak:So I love this notion of not just one time looking externally, seeing what the market is doing, seeing what your customers are doing, and then creating your strategy based on that. And then never looking at the external forces again. It's a constant input of knowledge and information about what's actually happening in the world that continues to shape the strategy on an ongoing basis. Yeah, one of the guys that I really admire on that front is Jamie Dimon. He's constantly got his ear to the ground. He's constantly listened to his customers, his clients. He's listened to his people. You know, he's listening to world leaders.

1:15:14David Novak:But he really develops a perspective that's grounded him in what's really, really happening out there, not necessarily inside. Of course, I'm not saying you put your head in the sand in terms of what's going on internally. You need to understand your people just like you understand customers so that you can take them with you to address any kind of change initiative or any kind of project that you really want to get done. So, yeah, you got to know what's going on inside your company and how people are thinking. But you want to make sure that what you're doing is you're driving the people inside of your company to address what's happening out there with your customers.

1:15:49David Novak:And that's really the key. The next topic that I found super interesting that John talked about was this idea of the inner journey of leadership. Everyone knows the external journey, so to speak, that a leader experiences, the challenges that come along with being the one in charge, all of the different tasks that you're up against every single day. But what I love that he focuses on, too, is this inner journey of leadership. And he talks about some of the ways that he tends to that in his own life. And David, I want to know, what do you do to listen to and tend to your inner journey as a leader?

1:16:25David Novak:Yeah, well, I think John talked about his journal that he writes about what he learned and how he's going to put it to use, you know, as he goes forward into the day. And he does that on a daily basis. What did I learn yesterday? And, you know, how can I how can I evolve? And I love that. I think all leaders have got to find a way to find that that quiet time that they need to reflect on their leadership. One of the things that I'm really focused on this year, which I put in my three by five card, which is always like, what am I today? How do I want to be more effective tomorrow? Is I'm really focused on evolving from being someone that has spent a little bit too much time thinking about the future in terms of what I want to have happen as an outcome.

1:17:13David Novak:And too much time looking back at, you know, what I could have done better, which I think you can learn from. But, you know, the one thing I can tell you is the past is over and the, you know, the future you can't predict. So I'm really focused on trying to be in the precious present. I call it the precious present. Really being focused on what's happening in my life right now. Like right now we're having this podcast. We're having this discussion. I'm engaged 1 ,000 % with you and doing it with whatever skill I have. And but I'm really focused in the mornings. You know, I like John, I really try to journal.

1:17:54David Novak:I have three things that I read every morning and, you know, and write in. I have my gratitude journal. I write down three things that I'm grateful for at least three things. Then I have a devotional that I read, you know, that tells me how Jesus led. And, you know, I, you know, I write down a prayer every morning. And then, you know, I'm reading this book on stoicism. And so I'm reading what happened this day. You know, I read not what happened this day, but I read like, you know, if it's March 29th, I read that passage in March 29th and I learn from Stoicism. So I'm just trying to constantly learn and evolve, but get my mind ready to attack the day and to make the most of each day.

1:18:38David Novak:David, we recently had an event here in Nashville where we invited a group of educators that are part of our Lead for Change program. And in some of the program that we delivered to them, we talked about the importance of having a practice, a morning practice, and it doesn't matter what it looks like, but just something that you can return to every day that grounds you in the present moment and sets the stage for the rest of your day. And so, you know, we've done over 280 of these podcast episodes, and I think every single leader that we've interviewed says that they have some sort of morning practice.

1:19:14David Novak:And it's been unbelievably impactful for my life as well, just to have something that I know is going to set the stage and get my mood and being right for whatever the day has to offer. Yeah. And I think tomorrow morning when I wake up, I'm going to write down to my gratitude journal that I'm grateful for all the Lead for Change teachers out there that are teaching students how to be better leaders. And, you know, this is a program we started years ago where we have thousands of teachers signed up, teaching millions of kids, you know, how to be better leaders. And, you know, I think that's so exciting.

1:19:53David Novak:And I'm so thrilled that we as a team were able to bring the teachers into Nashville and spend three days developing them. And, you know, that's very, very gratifying. So shout out to all the great teachers out there. Absolutely. And by the way, if you are listening to this and you're an educator or you know an educator who could use some free professional development, send them to leadforchange.org and we'd love to serve them. David, the last point that I want to bring up is this idea of role models. And John talks a lot in the episode about his leadership muses. He says when he was CEO of Nike, he had pictures of Coach K, Phil Jackson, Tara Vanderveer, and John Thompson on the wall in his office.

1:20:39David Novak:And I want to know, David, who's going on your wall of leadership inspiration? Who are your muses? I don't have a wall of leaders that have been inspirational to me, but it's very easy for me to think about who would be on it. Number one would be Andy Pearson, person I co-founded Young Brands with. I mean, he taught me, you know, so much about business, great decision maker, great, great leader. You know, great inspirer, coached me, helped me believe myself before I even knew what I was capable of doing. Those would be Wayne Calloway, the chairman of PepsiCo. So wise. I tell many stories about him all the time on this podcast.

1:21:24David Novak:but Wayne was really the one that helped me realize that I was going to have to evolve from being a marketing person into a general manager before I could run a division at PepsiCo. And he gave me great coaching to that end. And then, you know, I just love Ken Langone, the co-founder of Home Depot, the guy who, you know, made NYU Langone what it is today, number one hospital in the world, working with Bob Grossman. And, you know, but he's really taught me the power of just a kind gesture. You know, this guy is all about kindness, as tough as he is. And he is tough. He's tough-minded. But, man, there's nobody that can love on you like a Ken Langone.

1:22:08David Novak:And he's taught me the power of that. So those three, right off the top, would be on my wall. You know, stepping back, I think we've talked about three things that are pretty important. Number one, as leaders, we got to keep looking on the outsides, see the world the way it really is, not the way you want it to be. Number two, constantly reflect on where we are at in our journey of leadership. And number three, be inspired by those that have come before us and invested in us and have those heroes that we can think about. Not just think about them, but emulate them and the kind of impact that they've had on our life.

1:22:47David Novak:Let's do the same thing for others. David, thank you so much for another excellent episode. And thank you to our listeners for tuning in to How Leaders Lead. We will see you next Thursday.