Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York city, you're inside the ICE house, our podcast from Intercontinental Exchange on markets, leadership and vision and global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism. Right here, right now at the NYSE and at ICE exchanges and clearing houses around the world. And now welcome inside the ICE house. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
New York Stock Exchange ticker symbols were born in the mid 18 hundreds as an easy way to abbreviate the trading data being generated on the floor for broadcast on Edward Callahan's newly invented newfangled stock ticker. The early tickers could only transmit 150 characters a minute. So symbolic brevity was the key to this earliest form of high speed training. The symbols have endured long beyond this technological necessity involving into a way for companies to express something about themselves to the market. Harley Davidson, for example, is known Hog, H-O-G, to traders AT&T the Old Mabel is simply T. And one of our newer listings, the direct listing for Slack in 2019 is Work, W-O-R-K. That's what the cloud-based instant messaging platform allows you to do after all. A good ticker symbol is a pretty powerful method for brand recognition, letting the public easily identify news from their investments, as the letters crawl across the TV screen.
Josh King:
It doesn't get simpler than the coveted single letter symbols like C for City Group, F for Ford Motor, or K for Kelloggs. That's why our guest today, Jacobs Chair and CEO Steve Demetriou knew that changing his company's ticker symbol from J-E-C to simply J, would be the perfect capstone to his complete overhaul of the firm's business and values. Founded in 1947 as a one man engineering consultancy in California. Jacobs has grown into a global technology driven with over 52,000 employees, advising clients on urbanization, mobility, water scarcity, climate change, digital proliferation, and cyber security. Steve was named CEO in 2015, just the fourth person to hold the title in the company's 73 year history. And the first to be brought in from outside the firm. At Davos this year, Steve was named co-chair of the world economic forums, infrastructure, and urban development governor's community.
Josh King:
That role, as you'll hear syncs up perfectly with the focus on sustainability and ESG, that Steve has brought to Jacobs during his tenure. Steve recently sat down with my colleague, Betty Lou, for an episode of her show, Slice, part of the ICE insights platform. Their conversation was condensed for the Slice broadcast, but today we're pleased to bring you their exchange in its entirety. The next voice you'll hear after the break will be Betty's. Her talk with Jacob's chair and CEO, Steve Demetriou on how Jacobs re-imagined its future and why the firm decided to embody that change with the new name and ticker symbol that captured the future of sustainability and diversity. That allows Jacobs to plan be beyond today. That's all right after this.
Speaker 3:
And now a word from Calvin Choi, CEO of AMTD, NYSE ticker, HKIB.
Speaker 4:
We are the first Hong Kong independent investment bank to list here. It's so unique coming here to list because we want to embrace internationalization. We want to go global. This is a global change. We want to embrace global connectivity. A is a venture, M is actually mission, T is actually teamwork, D is a destination. NYC is our destination. MTD now list on the New York Stock Exchange.
Betty Lou:
Steve, thanks so much for joining us here on Slice. So kicking off the conversation. Look, Jacobs has been on quite a transformation, transformative period over the last several years. Describe what was the impetus for it?
Steve:
Yeah, well, I was brought in from the outside to be the first CEO hire from the outside, back in 2015. The company was back in the 1940s, founded by Joe Jacobs and I was only the fourth CEO in over 70 years. So it was quite the decision by the board of directors and it was all driven by the fact that this great company had run into a wall with regard to the way they were integrating acquisitions and lacking growth and concerned about the culture. And so the whole thing got started by focusing on the culture and that's been the journey for the last four and a half years with that being a consistent priority. As we've transformed the portfolio, we've restructured our cost. We've initiated a whole host of other initiatives, but I can't overemphasize the cultural transformation of the company.
Betty Lou:
Culture first.
Steve:
Right.
Betty Lou:
And I don't know who said it, but someone famous once said culture eats strategy, right?
Steve:
Yeah. Drucker.
Betty Lou:
So yeah, exactly. Peter Drucker. Tell, describe to me the culture, where was it before and where is it now?
Steve:
Yeah, the culture was a bit of a heads down, do good work and the future will take care of itself and lacked inspiration. And we were also lacking a bit of accountability. We had several hundred offices around the world, all fending for themselves, just trying to maximize billable hours. And we wanted to transform that to be much more purposeful, client oriented solutions rather than billable hours. But most importantly, engage every employee to where they feel inspired. They feel like they belong and they feel connected to our strategy. And so that's where we started back in late 2015, we actually did an organizational health assessment with a third party consultant, very unique. And it got us tremendous feedback on what was going well. And where were the disconnects that was leading to this environment that I just described.
Betty Lou:
Yeah. Describe to me more tactically, like how did you go about changing it? So, you know the problem.
Steve:
Yeah.
Betty Lou:
You're being told where it needs to get to. So how do you execute on that?
Steve:
Well, the things that we did very early on after we got the survey results is that we reorganized the company from this regional structure where sort of every office was in charge to a global line of business structure. And at that time we created actually four lines of businesses with four global leaders and started cascading that accountability of the culture change to that structure. And so we became much more globally focused collaborative across these big businesses, rather than everyone kind of fending for themselves.
Steve:
What was noticeable when I first walked in that a hundred percent of the leadership were all men sitting in Pasadena, California headquarters. So it lacked not only gender diversity, but it lacked geographic diversity. And it was sort of an ivory tower type mindset, that everything centered in Pasadena, California. And so we did a series of other initiatives to change that culture. We actually relocated the headquarters to Dallas. It's a new day. We started diversifying the leadership. And today I'm proud to say that over 60% of our executive leadership are women. And 75% of my executive leadership team is diverse.
Betty Lou:
That's great. Not a lot of companies can say that, so that's a huge change in the last couple of years. Curious, what's the biggest lessons you've learned or lesson you've learned in this transformation? I know everyone probably has learned a lot, but I'm curious what you've learned.
Steve:
I grew up in Exxon and then a series of other companies, and was actually a CEO twice before this journey. And it was all in the area of manufacturing where companies like those and others always said, people are our greatest asset, but in reality, people were important. But, these big mega manufacturing facilities were also pretty important. What I learned coming to Jacob's service industry is that it's all about people. It's a hundred percent your asset. In our case today, 55,000 people. And so, what I've been learning along the way and adjusting even my own style is that it has to be a hundred percent people focused. It is all about our talent across the world. And unless they're inspired, they feel like they understand exactly how they fit into what we're trying to do, the purpose of our company. And they buy into that, meaning that it can't just be what we as leadership want. It has to be holistically what's important to the masses.
Betty Lou:
Right.
Steve:
So we can drive the company in that direction. And that's a big change for leaders like myself that need to adjusts from the old school business mindset to a much more dynamic, innovative, diverse. And recognizing that if we're going to be innovative, sustainable, all the things that everybody wants to be, you have to have age diversity and bet on different generations that maybe we were slow to react to in the past. And I'd say those are some learnings.
Betty Lou:
Steve, do you feel like some of the things you've put in place have helped with recruitment, particularly for the younger workers?
Steve:
Yeah. Great question. Another thing I learned in this business is that retention is not easy.
Betty Lou:
Right.
Steve:
And you take all the great technology companies and service companies. I was of find that, 12 to 15% attrition is normal, voluntary attrition. And what we've set out to be the company like no other is that's not going to be acceptable. And so by focusing on culture and focusing on diversity, mental health is an area that we've invested heavily in. Today, we have 1700 mental health champions across the company. We've committed to our employees that they matter. And we recognize that it's a stigma that people are that need to kind of turn into like any other health issue. And these are the type of things that our cultural focus is driving down our attrition and the talent war we're winning because of that, it's not just going in recruiting great people, it's holding onto your great people,
Betty Lou:
Mental health champions, what's that?
Steve:
So, just being aware of that mental health could be a reason why an employee is struggling in their performance or behaving in a certain way. Is that we need to train people and especially leaders on not jumping to conclusion on people until we really understand their whole self. And one of the big things was to create champions around the globe that can help offices and organizations at Jacobs around this whole discussion. And make sure there's a dialogue, provide experiences around what to look for. And then when people do come forward and say, okay, I feel comfortable at Jacobs to reveal that I am struggling with anxiety or depression or sleeplessness or whatever it is that we can be a company that reacts to that, like any other health issue would we react to, rather than turning it into a negative with regard to a bias against that employee.
Betty Lou:
Yeah. I mean, removing that stigma basically is so important these days and pretty forward thinking for a company that's traditionally, you think of that for Silicon Valley companies or startups, but, for one that's existed for so long. I know you've transformed it. But to put that, to recognize that I think is pretty forward thinking. How has all of that though translated into top line and bottom line growth?
Steve:
Well, I think it's directly correlated and we've actually done a lot of work researching best in class companies around inclusion, diversity, culture. And what's clear is there's a huge link to the most diverse leadership teams. The most diverse companies translate into the best shareholder returns. Over a five to 10 year period. And I mean, it's pretty remarkable that data's there and it's been there and companies haven't, embraced it like other things. And so for us, it's not only the right thing to do. It's good business. It's what we need to be doing as a leadership team to drive shareholder value. And so our board of directors, or it starts at the top. Again, when I arrived in 2015, we had one female on the board and we had one African American.
Steve:
Today, our board is our independent directors, excluding me are 50% diverse. We have 30% of our independent directors are women. And now we're expanding our diversity beyond just gender to be people of color, LGBTQ, and most recently, where we've put a big focus on the disabled. Focus of around diversity. And we just joined Valuable 500, which is an organization that is totally focused on disabled diversity. And how do we encourage opportunities like any other employee? And I'm proud of Jacobs. We have one of our senior vice presidents that fits into that category. And I think it's opening up that we're a company that walks the walk, talks the talk as it relates to diversity.
Betty Lou:
Yeah. And also expanding as you say that definition. Cause I think people immediately think of the gender diversity. That's kind of the most visible perhaps or the most easily accessible way to change that diversity. But then you move beyond that. Branding. So the transformation also involved a rebrand.
Steve:
Yeah.
Betty Lou:
New colors, new logo, single letter ticker symbol at the NYSE. So why was that so important?
Steve:
Well, let me first say it would've never happened if we didn't have diversity. If the group that I was leading back in 2015, I guarantee you that a hundred percent men sitting around that table, all engineers.
Betty Lou:
They would've said, no.
Steve:
They would've said that's a waste of time. That's just all fuzzy stuff. And, I think the fact that we have diversity of thought inclusive leadership that listens and reacts to each other is the reason why we even initiated a new brand. And the new brand is powerful. It gives all of our employees an identity. If you look at Jacobs, we're a company that's made up of 70 acquisitions over 20, 30 years. And there's very few people that hired into Jacobs. I mean, the majority of the people.
Betty Lou:
They are all from the outside.
Steve:
Came from acquisitions. And, yet we had this, Jacobs blue brand, or it wasn't even a brand, but it was basically a focus that we've now transformed into something that a hundred percent of our employees can identify with. It's more dynamic.
Betty Lou:
Yep.
Steve:
It has a purpose. We realigned our values, our values used to be the traditional words, profitable, growth, all of that. Today, our values are that we do things right, which is all about execution and all the way to treating people the right way. It's that we aim higher. So, aim higher means profitable growth, but it also means the way we want to innovate the way we want to challenge the accepted, et cetera, which leads to our third value of we challenge the accepted, which means we're not just accepting what our customers ask us to do and go bid against competition. We're challenging their thought, their ideas to say, there's a better way. Don't build the highway. Let's use digital solutions to avoid concrete and steel and optimize what you already have and create a smarter environment. And then it's, we live inclusion, which is all about what I've been talking about, our culture.
Betty Lou:
Yeah.
Steve:
And making a hundred percent of our employees feel valued. And so the whole brand, which is now, Jacob's challenging today, reinventing tomorrow has caught hold with our employees in a very exciting way with much more dynamic colors and font and our new J symbol, which is shifting to our, the new Jacobs with the top of the J pointing upward and onward mm. Around where we're taking the company. And yes, the New York Stock Exchange when I first called him, called the CEO, Stacy that, and asked if we could have the letter J that was available. We weren't surprised to hear that. Well, that's being reserved for startup IPOs or some new the next Google or whatever it is. And we were relentless and we came back and said, well, we want to tell you why Jacobs is like it's a company like no other, and shortly thereafter we heard the board approved it. And we're very excited about being a unique company with the, with our powerful J stock sticker symbol.
Betty Lou:
Well, it is very unique and we're happy you're able to do that.
Steve:
Yeah.
Betty Lou:
And well deserved. So we just talked about your branding and just the, really the huge transformation as you say, since you came in 2015, so there must have been some resistors. It's very not, everyone's going to get on the train. How do you convince those people? Or what did you do to try to convince people who were saying, well, we actually like that color blue, like we liked it before.
Steve:
Well we've been very careful, even if you go before the decision with the brand recently around the strategy change and all the massive transformation we've been through was to continue to reinforce that 80 to 90% of the core of Jacobs were preserving Jacob's strength. And historically starting with Joe Jacobs and Noel Watson is I call him the co-founders of the company for many decades in two integrity, safety, quality, client focused. These truly were differentiated versus the engineering construction, which we were used to be. And so we wanted to reinforce to the employees that a lot of we're not going to tamper with. It really gets down to employee engagement, inspiring employees, winning the hearts and minds and getting the power of tens of thousands of people, all working to a common goal.
Steve:
That's hard to argue. So then it becomes, all right, how do you do that? And do you have a right leadership to do that. And, and at the end of the day, there were leaders at Jacobs that were working in the old way for decades, that immediately jumped over to the new way, saying, it's time we've been waiting for this. There were others that you just could tell were never going to get across the finish line. And we parted ways. And there were leaders that had left that didn't like where Jacob was going, and they were highly talented leaders that I didn't know about, but I heard about, and we went and got some of those people back. And one of them is now our chief operating officer, Bob Pragada, who was highly talented. I heard a lot about Bob. I kept hearing about him and he, young dynamic leader that was, went off to be a CEO of a construction company.
Steve:
And I went and met with him and said, and quickly realized this was someone that would be perfect for our journey. And, and he jumped at the opportunity and came back. So it was a collection of those kind of moves that put the right leadership team into place. And as I mentioned, as we made those changes, it was not your typical leaders. As I mentioned, we went outside, we got more women involved. We got diversity as part of the whole equation. And that started the cascading, because it, I think where some get it wrong is they think the CEO can get out there and say, we will do this and everything will happen. But unless you have a cascaded leadership culture, which by the way, we're still working on and we still have breakdowns and we call them different things. I still use the word clay layer that somewhere in the organization, this leader is blocking this culture from breaking through and we're breaking those clay layers and making continue to make changes, helping leaders change or replacing them.
Betty Lou:
Did you say clay layers?
Steve:
Yeah.
Betty Lou:
Is that an infrastructure term?
Steve:
Yeah, that was a civil engineering term being an infrastructure, but I'm saying it's a block.
Betty Lou:
It's a blocker.
Steve:
Something that's blocking and we don't sometimes know exactly where it is, but we know that it exists based on employee feedback, et cetera.
Betty Lou:
So, well then what do you say when CEOs or others? This is on the diversity side of things. When they say that they can't find enough qualified candidates, it's hard to women or minorities or others, for our board or our leadership team. You've been able to clearly find that talent.
Steve:
Yeah.
Betty Lou:
And also by the way, find that talent outside of one of the east coast or west coast cities.
Steve:
Right.
Betty Lou:
So how are you able to do that? What do you say? What do you say to a CEO who says that to you.
Steve:
That you're not making it a priority. You don't really believe in it. You're copping out and taking the easy route and delaying what you need to do to create a great company. And, by the way, it, I don't, this, isn't an issue of talking to other CEOs. This is sometimes the coaching, the mentoring, the counseling that I'm doing, even with leaders in the company is, it times up. And, so I, today we have a conscious behavior around diversity that when there is an opening, we're not just saying you will go hire a woman or you'll go hire a diverse person, but you will look at a diverse set of candidate you will pick the best, but, and you will have a truly diverse process. Meaning the people that are interviewing those candidates are also diverse. And guess what highly talented women and other diverse people are coming into this company and droves because of that and elevating the decision making, the creativity, the innovation, and the things that we've been doing over the last couple years wouldn't have happened without a diverse executive leadership team.
Betty Lou:
Now, Steve, along with the transformation of some of the initiatives we talked about, you also have some targets and one is the net zero target. So talk to us about that.
Steve:
Yeah. I'll take it back to even most recent Davos that for, I'd say Davos over the course of the last 20 year has had a bit of a questionable reputation from a standpoint it's where the elite all get together and...
Betty Lou:
Right.
Steve:
It's a feel good meeting and. Yeah, a few things come out of it. This Davos was transformational for the whole world economic forum and the group that was there in that climate change, sustainability was elevated to be now we're behind. It's we got to get at it. There was a clear consensus across government officials, CEOs, whether it's in the commercial sector or the government sector, that this has to be a top priority. And so I'm right there with them. And it's something that I've been behind in pushing in my, this is my 17th year as a CEO that sustainability non-financial focus areas like that zero carbon renewable energy, and it has to be a priority.
Steve:
And so we've made it a commitment at Jacobs to put a climate change plan that gets us to net zero carbon. So we have that plan completed this spring and at that point, we'll define milestones and commitments. But for Jacobs, if where we are and innovative solutions provider for sea level rise, all kinds of flooding and storm surges for infrastructure around the globe, clients look to us to solve their problems. We need to first be proving that we're best in class in net, zero carbon as a company. Now that for us as a company like Jacobs. It means the way we travel and the way we run our offices. And so, it's something that's in our control and we're making it a priority. About a year ago, we launched what we call plan beyond, which is really our Jacobs approach to ESG. And the UN priorities where some of these topics we've already talked about.
Betty Lou:
About diversity.
Steve:
All fit into that. So we're a company that's focused on that and the way we operate as well as the way we serve our clients.
Betty Lou:
So maybe one reason I hazard to guess for public companies, at least why they are behind generally speaking, or they appear to be is that maybe their investors are not pushing them for that. If the investors are not putting the money in because of that then there must be other things that they are, and that's where you have to focus on, as a public company CEO. So what do you think has changed? Has there been more investor push?
Steve:
Yeah.
Betty Lou:
Or is it actually the companies themselves leading the way? Cause it's the right thing to do.
Steve:
I think employees are leading the way. I think the demographics and the makeup of employees today, the millennial generation has been very vocal pushing, and you want to retain your top young talent it. And for Jacobs, that's about 40% of our global talent sustainability climate change, these type innovation, diversity, mental health it's...
Betty Lou:
Employee led.
Steve:
Employee it's employee led.
Betty Lou:
Yeah.
Steve:
And so I'm proud of Jacobs says, there's a lot of talked the last 12 to 18 months about, the business round table on the purpose of a company being far beyond just shareholder and financial and...
Betty Lou:
Larry Fink wrote that letter. Yeah, exactly.
Steve:
Larry Fink wrote that letter. I was proud that at our last board meeting, one of our board members stood up and said, that's interesting, but we've been at it at Jacobs for the last four years. Well before investors started locking in on it. And I think our culture and our belief is that if you go to your shareholders and tell them, you need to invest in something around culture and diversity or brand, or sustainability climate change. And you lay out the reasons. And it goes beyond just financials investors three years ago were loving that from Jacobs.
Steve:
And I just think that a lot of CEOs and a lot of companies hadn't been bold enough to do what they really wanted and believed in because they thought all investors wanted was reduce your cost, drive revenue growth, and make more money. And that'll is long as you drive the share price up. And so I think that's why we've gotten out ahead of the curve and have outperformed in the last four years. But now we're paranoid. People are getting into the game. I told you about Davos. I wasn't like the lone Wolf. It was if there were CEOs that were actually ahead of us and some of their companies, and so we've got to now take it to a new level.
Betty Lou:
And do you feel like that's where do you see us then a year from now? Let's say you go back to Davos. Cause that was your first year, right?
Steve:
Yes.
Betty Lou:
That you went to Davos.
Steve:
Right.
Betty Lou:
Last month or in January. So where do you think we'll be January 2021?
Steve:
Yeah, I think there's going to be, is going to be momentum. This is it's going to be a, there was a lot of come to Jesus type conversations at Davos a couple weeks ago. I think it's going to be sharing best practices building on each other's momentum, just like a lot of things that happen in the business community where people feed on each other. And I think that there's going to be a lot more linkage between innovation and climate change and net zero carbon, meaning that people are going to realize the only way you're going to get there is to take risk around adopting and adapting to new technologies. Whether it's artificial intelligence, use of data, big data to drive decisions and execution around getting to net zero carbon. And so I think it's going to be fascinating what, and it's going to happen fast. It's like anything else change used to happen in decades and then years, and now it's happening in months and.
Betty Lou:
In months.
Steve:
Weeks. And I think that's where we're going to be year from now.
Betty Lou:
Well, speaking about change, I'm kind of curious, Steve you've been CEO for many, many years. What's the biggest difference in your eyes, in your experience being a CEO today than it was, let's say 10 years ago.
Steve:
Yeah. I think 10 years ago, I mean, my first CEO job was in 2001 and you go back to that era..
Betty Lou:
Okay. 20 years.
Steve:
Think about it. It was the GE success, Jack Welch.
Betty Lou:
Yeah.
Steve:
Which hard driving. And remember the one thing Jack Welch had, even though he was hard driving and a bit feared, he was passionate.
Betty Lou:
Yeah.
Steve:
And if you were on his good side, you were inspired. The problem was that it was a culture, it's a culture today that wouldn't work because you got to have a hundred percent of your people aligned. But I just think that was the norm back then where the culture was just drive the results. And accountability, and all these things that we were talking about, they were on the fringes. We've been talking about diversity and equality and those sort of things for decades, but there was no one holding anyone accountable.
Betty Lou:
Right.
Steve:
And I think now it's...
Betty Lou:
Oh, it would never even make it in the news.
Steve:
Right.
Betty Lou:
Yeah.
Steve:
And I think it's working both ways. It's a ground swell revolution and you've got leaders now, as diversity is starting to happen, that's proliferating to come together and really make great things happen.
Betty Lou:
It really does seem that way.
Steve:
Yeah.
Betty Lou:
I'm curious, in five years time, how do you think being a public CEO is going to change?
Steve:
I think the whole need to empower and is going to be massively different. I see in five years from now that boards and CEO boards are going to need to be made up of in a much more age diversity. I think we're going to need to see some of these major corporations around the world have 20, 30 year old board members that come from a whole different industry to bring the culture into these companies. I think leadership teams are going to need to have similar makeup and you're going to need the balance of experience and know how and domain knowledge with these sharp, innovative, where it comes natural, change makers that come together. And I think that's going to be the demographic of leadership and boards are going to change significantly.
Betty Lou:
Absolutely. Well, it's good to hear. A hundred percent. Thank you so much, Steve.
Steve:
Yeah, thank you.
Betty Lou:
For joining us.
Steve:
All right.
Betty Lou:
That was great.
Steve:
Thank you.
Josh King:
Thanks so much for joining us inside the ICE house for a special uncut recording from the Slice episode with Jacob's Chair and CEO, Steve Demetriou, which appeared on Cheddar and is part of Intercontinental Exchanges insights that can be found at the ice.com/insights. If you like, what you heard, please rate us on iTunes. So other folks know where to find us. And if you've got a comment or a question, you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us @icehousepodcast. Our show is produced by Pete Ash with production assistance from Ken Abel and Ian Wolf. I'm Josh king, your host signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified, neither ICE, nor it's affiliates, make any representations or warranties express or implied as to the accuracy or completeness of the information and do not sponsor approve or endorse any of the content hearing. All of which is presented solely for informational and educational purposes. Nothing here in constitution offered to sell a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portion of the preceding conversation may have been edited for the purpose of viewer clarity.