He
is a neo-traditionalist in the true sense of the word. Staying focused,
respecting the abilities of others, taking lessons out of history…what else do
you call a man who actually talks about these philosophies seriously in the days
of the Internet?
Yet, he is someone who has built a company that has created stock market
history and, more importantly, has made the most aggressive technology company
in history, go defensive.
Scott Kriens, CEO of Juniper Networks, shares his thoughts with
Voice&Data. Thoughts that are old, or should we say ancient, and yet so
fresh.
How do you succeed?
We have a very specific and consistent practice. We focus, we execute, we
learn and we repeat. We focus on our customers. We execute as the customers
direct us. We learn a tremendous amount when we do that. Then we repeat it by
putting it back into other products.
We are in a marketplace where the challenge is to connect more than a billion
users together in the next couple of years. That presents unique problems that
no one has ever solved. And solving those problems has created the opportunity
for us. That is not found everyday. That is not something that every company has
the opportunity to do.
If the problem you are solving is truly unique, and if it has never been
solved, then the company that is built from scratch to solve it, has got a very
good chance of succeeding. We have complete focus, in this case, on solving a
very difficult problem.
But still, it is very difficult to understand what reports after reports
say–the way you gain market share in short periods of time–about seven to
eight percentage points in each quarter. That too, when your competitor is
Cisco, a company that is believed to do all the right things at the right time.
What I mean is that there must be some practical reasons apart from the core
philosophy that you believe in.
Often, when people talk to me about Juniper, there is a search for some magic
or secret. And the secret is…there is no secret. It is the fundamentals.
And having said that let me tell you that we are watching the market grow
very, very quickly. So, the percentage of market share any company has at any
point of time is very, very subjective. A better way to look at things is to
draw a line taking three to four quarters. Some dots will be above the line and
some will be below.
We actually measure our performance in absolute dollar terms, not by market
share. Neither do we determine our success or failure by the market share that
we have at any point of time.
That is probably because you have been the new kid so far. Growth has been
more important than market share to you. But with new companies like Avici
entering and challenging you, will you still look at things in the same way?
The size of the market that we are in was zero just three years ago. In the
next two years, estimates are that it will become of the order of $12-15
billion. And when the opportunity is of that magnitude, it certainly attracts a
lot of players. At the end of the day though, if history is any teacher, there
are going to be just two successful companies in each segment. I don’t mean to
say that it is the current two players, it maybe two different ones.
Because customers bet their networking systems on a product, you add a second
product and the complexity of using the two of them goes up. And when that
happens, the reliability goes down. Maintaining it becomes harder. When you add
the third, it becomes harder yet again. If the value to the network operator is
not substantially improved, it just becomes more complicated. Still, adding a
second one makes more sense because there is diversity and choice.
So, any company that comes after this market, whether large or small, will
have to occupy one of the top two positions. We are in a position to be one of
the two companies.
A great company is more than just a market leader. And for growing
rapidly, it is difficult to do that, along with staying so focused...
The evidence on the table thus far–i.e. over nine quarters of existence–proves
that we are a revenue producing company. And focus has produced the fastest
growing companies in history, measured by pure results, quarter after quarter.
Any great company that I can think of has grown by innovation–by developing
products, inventing value and delivering it to customers. And that is the model
we intend to follow. Look at the great companies–Intel, Microsoft, Oracle, Sun–all
these companies grew because they invented technology and delivered it to the
market by staying focused. We are completely comfortable with our strategy of
producing a growth model that will meet the market requirements. I have
absolutely no concerns about focus being able to produce rapid growth.
People still think your focus is the product that you grew with–the core
routers… How do you define your focus?
The market that we are in is building and delivering the intelligence that
delivers information. There is a transport market, which sets up capacity for
packets to move in. Then there is an information delivery market, which concerns
itself with where the packet comes from, where it will go and who needs to know
what for the purpose of billing. We also call it packet processing or address
processing. Then there is a third market which takes the data out of the packet
and concerns itself with how it is used–that is the application market. So,
broadly, there are these three markets–transport, processing and application.
The market that we are in is processing. That is our focus.
And that is not going to change...
Yes, that is right. Today, we have three distinct markets. Two — we are
serving and the third — we are building. The core backbone market is, of
course, where we started. Then, there is the access market, particularly the
high performance one. Dedicated access is a market that we have grown into with
lower end products. And the announcement of the joint venture with Ericsson is a
move towards serving the mobile Internet market. And that market–the wireless
IP market–will bring hundreds of millions of subscribers over the core and
access infrastructure that we have built in our first two markets.
Today, the politically correct "ism" is to challenge tradition.
Cisco, your main competitor, never fails to accuse the traditional telco
equipment makers–the Nortels, Alcatels and Ericssons–of not understanding
the new challenges. Yet, you partner with the same companies…What value do you
get out of that?
Well, it has served us very well to be respectful of the abilities of others.
We are very focused and, we believe, very capable in the area of new Internet
infrastructure. We do not have all the solutions for all the problems of all the
people. And by partnering in a complementary, compatible way, we can build
relationships, which when measured in totality are very powerful. To compete
against all the companies is to believe we will be better than everybody in
everything. We do not believe that is the way to build Juniper. The partnerships
help us a great deal and, more importantly, the reason they work is because they
help our customers build ‘best in class’ networks, using the best of all
building blocks available–networks without compromise.
You talk of listening closely to your customers. And all companies claim
that. How is your "listening" different?
The concept of listening to the customers is not new. One of the reasons that
customers are interested in talking to us is because we have shown the
commitment of spending time in understanding their needs because of our
philosophy of learning. In fact, our products have been developed based on the
learning that we have had through this understanding. So, the next time we go to
them, they are interested in spending more time.
What new market are you targeting next?
Well, another mantra, if I can say so, that Juniper believes in is not to
make forward-looking statements. Our opportunities come directly–based on the
needs of our customers. So even they know that when we are talking about
something, it is for real.
Yes, of course, one answer to your question is new markets not just measured
in products and technologies, but also in terms of geographical markets.
Eighteen months ago, we served only one market. Today, we serve more than
thirty. And from a total business of $670 million that we generated last year,
thirty five percent came from outside America.
We look at India as a great opportunity. It is going to be a very explosive
market. But our philosophy is learning first. This visit of mine to India is for
learning. It might result in some marginal changes to our products to make them
suitable for the Indian market.
You also talked of execution as one of the four steps. Apart from the
execution of delivering a great product, it could also mean the way you execute
your entire business process. Look at Cisco. Apart from the technology and PR,
it is also fairly strong in the way it manages relationships, the way it
leverages the Internet for business...that has nothing to do with how good its
switches or routers are.
When I say execution, what I mean is what we call relentless execution.
Execution of delivering value to customers. Followed by execution. Followed by
execution. The use of new network infrastructure to build a business is
something that is very natural to us. When Juniper was born, the Internet had
emerged as a strong medium. So we do not know any other way. Everything that we
do in our company is virtual. The order process, the manufacturing, the
outsourcing of our IT systems, our partner relationships, internal systems,
everything we do is through the network. Today, here in Delhi, I can dial a
local phone number, get on the Juniper network, go to the assembly line of a
contract manufacturer, and then I can tell you at what time a system is going to
rollout and when it will be delivered to a customer. That is possible not
because we are very smart guys, but because, the time we were born, it was
possible to do that. We did not have to disassemble any legacy system. In fact,
we see this as very analogous to India building its infrastructure. India has no
legacy to protect.
So, if someone says that they run eighty percent of their business through
the Internet, we see that as if they are twenty percent inefficient.
How do you see the new start-ups that are trying to enter the telecom
space?
As history has taught us, there will be more losers than winners. The losers
will lose severely. Earlier, losing meant that you get bought out for a good
sum. In future, losers will lose all their money. That is the bad news. The good
news is that the winners are going to be worth more than the combined value of
all the players playing in the context, because there is no decline in
opportunities.
Ibrahim Ahmad and Shyamanuja Das