Verizon Communications Inc. (VZ) Earnings Call Transcript & Summary

Okay. Cool. Hi. Thanks, everybody, and welcome. We're going to talk about leveraging data to identify and act on new business opportunities. And I'd like to start by introducing the folks on my panel. One of them is Jim Swanson, who you just got to see anyway. So Jim, do you want to just quickly introduce yourself?

Yes. Hi, I'm Jim Swanson, the Enterprise CIO for Johnson & Johnson.

Okay. Thanks. How about Sol? Are you there?

I sure am. Hey there. Good morning, good afternoon, good evening. My name is Sol Rashidi. I'm the Chief Data and Analytics Officer for Merck Commercial. Prior to that, I was the Chief Data Officer for Sony Music, and prior to that, Chief Data and AI Officer for Royal Caribbean. Happy to be here.

Awesome. Welcome. And my buddy, Lesley, you're out there?

Hi, everyone. I'm Chief Information Officer for NSF International. And just like all of you, I'm working from home. So you're going to hear a whole fleet of crafts and landscaping behind me. I apologize if you can hear that.

Yes. It seems like whenever you start a video call, the landscapers all show up together, right? And if they don't, the dog's barking. So I'll probably have some of that coming up pretty soon. And then last but not least, Richard?

Hi, everyone. Good afternoon. Richard Entrup, Managing Director at Verizon. I'm in the Enterprise Innovation and 5G Solutions group. I have responsibility for -- kind of an evangelist, if you will. I spend most of my time meeting with Boards and CIOs and CEOs of companies, helping them understand what all this new technology means to their respective business. So happy to be here.

Thank you. Welcome, everybody. Very impressive group. I'm very happy to be here myself.

Richard, since you were last up and you were talking about Verizon and all the opportunities that have come up with COVID, can you talk a little bit about how COVID has changed Verizon or how it hasn't changed it?

Sure. I think internally, the organization has done an amazing job at maintaining communication with the employees. 135,000 of us were quickly shifted to home. An unprecedented scenario, right? I mean we built disaster recovery plans to manage 1 or 2 sites being out. But the entire organization being shifted the way it was, was rather dramatic, as I'm sure everyone's was. I think the organization really stepped up internally but also, more importantly, externally to our clients in maintaining service levels from our enterprise clients, our consumer clients, really coming together as the leadership team really excelled, I believe, from my own experience as an employee as well as a former client of Verizon. I think it did an amazing job of maintaining security but also availability of systems. The demand on Verizon during this time has been dramatic. Our clients are the Amazons and Microsofts, the largest cloud providers in the world who needed more bandwidth to support their own organization's demand. So we did a great job at maintaining that but also, at the same time, maintaining our 5G rollout and our commitment to being first. We have not let up on our capital investment of rolling out infrastructure to support 5G infrastructure. So I think we fared quite well.

Well, you packed a lot in there. I got to think that not only the quantity of the demand but the pattern of demand had to have really shifted in the last months. And it's really -- how are you predicting? Are you using data analytics to predict the continued movement of demand?

So I'm not in the traditional IT side of the house, right? I'm more on the forefront supporting our enterprise clients. But I do know -- I'm positive that, internally -- again, we went from maybe 20% to 30% of folks coming in remotely to 100%. We're 135,000 employees coming in. So VPNs and infrastructure was definitely tested from a scale perspective. But again, as an employee and a consumer of the services, I have not felt any downturn whatsoever.

And we, of course, are a consumer of your services. And we appreciate that as well. Lesley, NSF International, can you tell me a little bit about what NSF is and its mission and how you use data?

Sure. NSF is a 75-year-old [indiscernible]. What we do is specialize in the TIC industry. So that's testing, inspection and certification. And our mission in life is to protect human health and safety and as well as to protect the environment. So you can imagine that the clients we serve are in the food or water or health sciences industry. All have a lot of need for preserving their brand. And so in helping them in their inspections and testing and setting up certifications for them in that industry, we definitely collect a lot of data. So we're -- our job is to ensure that their brand is protected and that it's trusted by everyone. And in that regard, data is absolutely essential to everything we do in our service delivery.

Yes. I love the quote that you had about data being the new oil. Really fascinating way to look at it as the resource. Sol, you had an interesting point about using -- getting the business to take a leap of faith in trusting the data. And in retail, sometimes, our users consider it to be more of an art than a science. How have you managed the user migration in that?

Yes. I mean if anyone's perfected it, I really want to have a conversation with you. I refer to it as a slow drip method. I think, oftentimes, in more creative companies, retail industries, where original content is sort of king, there's a very creative, subjective and qualitative process towards it. They tend to rely on instinct and experience and what feels right as means of a commercial strategy. And so the concept and the notion of just introducing people to the mix. Not to say it's overwhelming, but there is lack of trust in it, if you will. And I always thought -- I mean data is not meant to replace critical thinking or common sense. But you got to come to the table informed. And with the competitive landscape that's ahead of us, it's really around having the right information at the right time. And so take that leap of faith. And with the relationships that you build over time, some are more willing to kind of take a look at the information and make more well-rounded or balanced decisions, while others are still waiting and kind of seeing how things turn out before they take a leap of faith. And at the end of the day, it comes down to their P&L and then their ability and their wanting us to take that risk and impacting their P&L. So I usually call it the slow drip method, at least that's what's worked out, is don't overwhelm them with it. Don't go into tech talk with it. It's around understanding their aspirations and their visions and pain points and solving one problem with them. And so I would say, think big, start small and then you can scale quickly. But without having the relationships in place and solving a small problem for them, that leap of faith will never take forward. But once you have it, you're good to go.

I love that focus on having a relationship and credibility because I think we may be in a tech field. But having credibility in your personal relationships is so critical to change management and moving the ball down the field no matter where you are. But it sounds like underneath that, there's some insight on some maybe lessons learned or opportunities, if you could share those.

Yes. I think when I started my career earlier in the days, everything was very systems focused. And it's what I call sort of the defensive playbook or the back-office stuff, the unglamorous things. It was really around data ingestions and ETL pipelines and building a data ecosystems and platforms and structured data tables and governance and lineage. That just -- that's alien talk for the business, for the commercial strategy. And so I took a pivot and went from being systems focused to really being product focused and empathy focused. And just learning their vernacular, learning the business, sitting in their meetings with them. And I may not have anything to say, but understanding how they measure the health of the business, what triggers, what events, what gauges are they looking at and speaking with. And so it's kind of putting on the business hat almost as if you sit within that business unit and you own their brand. And then from there, you can start doing problem solving. And you just sort of connect the dots back from what they talk about, what they experience, what they're frustrated with. And then you become the problem solver for them. And then you start connecting the dots across the systems and the ecosystems and the landscape. So that pivot definitely helped. And then I always over-index on the relationship and try and uncomplicate the complicated. And that seems to be helping as well.

Yes. I love that approach. I find the one -- the thing I like best about being a CIO is having that vision across the enterprise, understanding how all the different functions work. And I think sitting in meetings quietly and learning how they really use the information you provide and where the pain points are is so useful. Jim, I wanted to give you a break in talking because you had that long opportunity to chat with Hunter. But I'm curious at Johnson & Johnson, what kind of insights your organization has gotten recently and how you're using data during the pandemic especially?

Yes. We -- I co-lead or cosponsor a data science council with our Head of R&D. And that really is to bring data science -- and I actually call it Decision Science because it's not data science. Data science takes what decisions or insights you're trying to drive and do that across the enterprise. So how are we looking at it in our consumer health business to provide the right products to the right patients at the right time. How are you in the pharmaceutical business? When you think about the customer journey you're trying to affect or helping a health care professional guide around the right options as you're looking through care or our digital surgery business or medical device business, hips and knees and other things, and how we're applying data and data science to improve health outcomes. And so there's a number of examples. And we're trying to grow the maturity of that capability across the whole company. And that includes the data component of it. That includes the change management component of it. I think Sol highlighted a number of good examples. And I used -- I did a tenure at Merck so I know Merck very well. And what's similar -- what's amazing to see as you work across multiple companies is you still have this kind of change management you need to do. And you got to know your audience. How you work with R&D scientists and explain the leverage of data science is different than how you work with supply chain and engineering. It's different how you work with commercial. And you have different challenges as you look at these different groups and focuses. But we've had a number of examples of applying data science. And since you asked a COVID example, I'll use our vaccine work as one great example, which is near and dear I'm sure to all of our hearts, is we've actually applied models that took data from multiple sources. We had our supply chain data. We had our early clinical data in R&D. We had our forecast data for commercial and combine that. And our goal was how do we improve the scale-up of our vaccine. And we were producing 1 batch of vaccine product about every 2 weeks. And we knew we had to drive efficiencies and to scale up a number of batches. And so we had a goal to do a 4x improvement, go from 1 batch every 2 weeks to 2 batches every half week. And we were able to do that by taking the models and looking at the digital twin of the supply chain process, pulling -- putting that into a platform, in this case, our email books that the scientist is working in, using data from multiple sources, using that on a scalable compute and cloud, in security, so we can do it in real time. And we were able to achieve that goal, so a 4x improvement in a relatively short period of time using all those layers. And then change management with our R&D and supply chain colleagues was being able to learn how to leverage that now to how do we continue to advance it. But then I would also say that would be impossible without the tremendous support we have with our business leaders. Mathai Mammen as our Head of R&D for pharma is a great example, absolute champion of applying data and data science. Or if I'm looking at consumer health, our Chairman for Consumer Health or -- as a champion of using data. Same thing with our chairwoman around medical devices. So that executive leadership and then demonstrating the learning of it and then how do you change the organization, knowing the different phenotypes you work with are all the secret sauce you need to really invest in. But this -- you got to play long ball on this one. You got to continue to work at it. You can't give up after a few trials. But we had really good examples in the COVID experience. And the vaccine is just one of them.

That's great information. And we really appreciate the focus that many companies have been putting on vaccines at such an amazing time to be living through. I want to pivot to Richard as we've been talking about relationships. I think everyone's mentioned the importance of relationships. How are your relationships with your CIOs that you deal with evolving now, looking at coming out of this year and looking towards '21? How do you see this impacting priorities and budget decisions going forward?

Sure. I think the consistent themes that I'm sensing are definitely investment in capital infrastructure, for sure, being able to maintain the large volume of remote users coming in. So all the plumbing, if you will, is now at the forefront. So we're seeing it as a large demand in our products and services around infrastructure and scalability. Cybersecurity also is clearly equally important now that everyone's home and people's home devices are being used much more for business. There's concerns there. So those 2 are top of mind. The others, from a budgetary perspective, digital transformation and demand for it hasn't slowed down, right? I think those organizations that were further on in their digital transformation journeys before COVID have fared quite well during this. And they're continuing on the path and reaping the benefits of having the foresight to transport their businesses to more of a digital storefront versus brick-and-mortar. And now those that weren't unfortunately now are behind the 8-ball having to catch up. So the investments, I think, are also going into that to ensure that digital transformations are maintained, if not expedited. So the demand has actually increased [indiscernible] . And last but not least, as I mentioned, cybersecurity is -- some of the key concerns around [indiscernible] was to ensure that the new environments are protected quite well. There was one point I wanted to mention from a governance perspective. I do want to just say that I think -- the technology is there, right, whether it's in a data structure, data modeling. Having your own data initiatives at the license [indiscernible] specifically, I think the challenge is, as Sol mentioned, egos and folks who believe that they know best on what the numbers should be, especially in media and also in our auction and art sales. There's no way data can be more predictive and more precise than a human who's been doing this for 30 years. I think you could prove that wrong. But I think someone mentioned that it's critical to take tiny steps and quick, short wins to show them that this doesn't replace them. It augments their value proposition for the organization for sure and that this data can only help them get things decided upon. Whether it's a price for a piece of art or whether it's a price or cost for drugs, it can help them get there quicker. And -- but they're still yet making that decision. So the data, the modeling, the AI and the machine learning is not replacing those thought leaders and experts. It's augmenting their capabilities to do things faster and more efficient.

That's a really fascinating way to look at it. As I think about all the changes in data patterns that have happened in 2020, just thinking -- leaving aside human cost, of course, because it's just staggering. But when you think about the shift in workspace, the shift in live entertainment, the shift in server industries, it's just a -- it's really interesting to me to think about how everyone will model this going forward and how you interpret history as a path to model the future. Lesley, I wanted to talk to you a little bit about your data strategy, how you went about implementing one and how you communicate what a data strategy is. And to Sol's point, that doesn't make you seem like you're from Mars.

Yes. Absolutely. That's a great point. And so I was fairly new as Jim was in the role when COVID hit. So in the short time that I've been here, it just became more and more relevant that we have to really put stakes in the ground in terms of the data strategy. I mean I think it was -- people believe that, yes, we'll use data in our production of work and in helping our clients. But there really wasn't a very purposeful statement of what we wanted to do and what we wanted to achieve. So things like responding to COVID really quickly with supply chain visibility and predictive models to help our customers really kind of kicked us off when the business found value in being able to provide this kind of consulting to their current customers and be able to look through the supply chain data that we have. Maybe no of that specific client, but we had enough globally to understand the patterns that were happening in -- not in real time but in very close real-time fashion to be able to provide that consulting expertise. And that really sort of laid the groundwork and the foundation for people to pay attention to, hey, we are sitting on something here. And we really should proceed in a very calculated manner. And so we set out to really put the thoughts on paper and say, "How do we look at all aspects of it?" And I think it was mentioned before as well. It's the culture. It's the relationships. It's the trust in our technology and our direction. But really, I think these real-life use cases where people can relate to what is the problem that you're really trying to solve is -- in business speak, right, is going to hit home. So this building that great partnership and that trust and really listening very, very carefully to what is the problem to be solved, I think it's all the normal stuff that we do in the course of the day but applying it to really what is this asset and how do you want to manage it and -- I was on a Harvard Business Review call earlier in the week. And it was -- somebody said there was only about 50% of those CDOs surveyed that organizations are treating corporate data as an asset. I was shocked. It was like, wow, only 50%. I thought it would be way more than that. That really should be paying attention to this.

I definitely agree with that. I think companies talk about people being their biggest asset. That's true. But I think data and information and the ability to leverage that information is probably the second-biggest asset. I want to go back to Jim about -- you've been talking about the impact of the pandemic on the kinds of pivoting that you've had to do and the speed that you've had to respond with. What do you think are the lasting effects that are going to come out of this experience once the pandemic has passed?

I think it's certainly in the telehealth space. It's not just within J&J you're seeing that taking a huge uptick. And then how do you lean into that to actually -- everything from how patients are better served, especially in remote geographies where it may be difficult to actually visit a physician, doing telehealth is being much more embraced. How we communicate and educate with our health care professionals. We do webinars now that are much more effective because you can get a broader audience with more interaction. You start thinking about how you show up with your customers. We've done a lot in data science and we've done a lot with communicating with our health care professionals, where it used to be all in person. Latin America is a great example. We went from 3,000 visits a day in Latin America with those sales reps to 0 because hospitals shut down. They weren't allowing these discussions -- these important discussions that we're having, everything from procedures to advancements in science, to over 3,000 digital interactions and growing. And now you think about how that then works its way into supply chain, how it works its way into R&D and kind of this feedback loop of data or a data flywheel and how that changes really early out with more insights early on. How does that change your pipeline? How does that change your -- how you distribute and make products? How do you interact with your customers? And then really using this technology, digital underpinning of data and data science, great platforms that are highly connected in a secure way to reimagine your business processes, reimagine those interactions, reimagine how you invent and how you sell and how you market and how you produce. I think it really is the tip of the iceberg. And we've got to lean in really heavily now. And I would also encourage everybody, how do you educate your executive committee? How do you make them champions? So it's not, "Here's my business strategy. By the way, here's a technology strategy." It has to be one. It has to be integrated. Them talking about data -- or decision science, them talking about technology is part of how we are going to deliver innovation. And again, I'm blessed with the Executive Committee that we have at J&J and they're leaning in. And it's amazing. I can move 5,000 people in my organization. They can move 140,000 people across the company. So when your words are in their mouth, it's amazing what can happen. So we're just beginning. I mean I think there's so much opportunity ahead and I'm excited to be part of it.

Great point. I always love it when somebody else repeats your idea back to you like it's theirs because then you know you're aligned and you've won. I want to move -- some of the things you say really tie nicely to Richard in your role, Richard, in these new technologies and all these emerging technologies that you're directly responsible for. How do you see that moving forward through COVID and then beyond it for things like edge computing, 5G and those other new areas that you're in?

I think the opportunity now, AI and machine learning, AI and machine learning, AR/VR, cloud and software-defined, cloud-native and IoT, these 4 things have been on a trajectory over the last 5 years in kind of a hockey stick curve heading upwards in adoption and what have you coming out of the trough of disillusionment, if you will, as Gartner coins it. But I think with 5G and with wireless connectivity, attaining the bandwidth and low latency of edge computing, coupled with the ability to maintain a high density of IoT devices, I think 5G will enable these technologies. Looking back at them 5 years out, looking backwards, that hockey stick will continue on a trajectory upwards and the adoption is going to just continue to grow quite rapidly. Things like contact tracing and other new things coming out, telemedicine and telehealth for sure and many other new client and more patient experiences are going to emerge as a result of that. But I think couple those emerging technologies with 5G, high bandwidth and low latency of edge computing, I think there will be new products, new services and new revenue opportunities for all sectors. Health care, let me just pick one, and I can give you countless examples of how they will leverage this new technology on top of 5G to enhance the client experience, to generate new revenue streams, retention, attraction of new clients and what have you and, ultimately, enhance the client experience. So it's a very exciting time for the IT infrastructure folks, believe or not, at this point, because infrastructure was always kind of back-office plumbing, if you will. Now it's at the forefront of truly supporting this digital transformation now, as data and other things are as well. I just also would mention that cyber still needs to be top of mind in all of this. Whether it's data initiatives or infrastructure, what have you, cyber will become a more important issue. As we advance into the future, as more folks are working at home, as more devices are connected and as more devices out there are densified as a result of 5G, I think cyber becomes that much more important.

That's a great point. I want to pivot now to Sol's point and say, but based on the background of what you were saying, so what's next?

Can you help me narrow that one down?

Where do you see the biggest opportunity for data analytics to inform your business moving forward materially?

Yes. It's interesting. I think I got really lucky because what was a field that was really not glamorous and completely unsexy 20 years ago, because I was what they considered an MDM expert, has swung the pendulum and now it's front and center. So you got these back-office geeks, and I'll raise my hand, I was definitely one, still am, who now are sort of the rock stars of the new age. The stuff is not easy. It's not a silver bullet. And I think, unfortunately, a lot of great hype, a lot of great marketing. So the businesses that are leaning in, they do fundamentally still think it's a silver bullet. "Well, AI is going to solve my problems." And that's not the case now. What these people fundamentally find is it doesn't matter what organization is represented and how amazing and marvelous they are, is we need to master the basics so we can lean in with innovation. And sometimes, we just kind of want to skip over that process and go straight to let's solve the problem. And I think part of my conversation is it's not that I'm a realist. It's just to set expectations though of we're going to get there. But we've got to be maniacally focused on A, B and C so that we can together hit that northern light. And so I think in terms of the opportunity, I really loved what someone had to say about educating the executives, knowing that they have very minimal time to spend on this. It's just kind of like you solve their problems for them. Sort of percolating the message of you've got to master the basics before leaning in with innovation. And it's a bit of flying the plane while building it at the same time. You can't spend the entire time on cloud option infrastructure and InfoSec. You've got to start providing value really quickly. But I think the other aspect that's really important to the business and one that I'm starting to lean in on really more is like ROI isn't necessarily related to finances only. So yes, there's top line growth. And of course, there's efficiencies and cost optimization techniques you can take. But in the space that we're in right now, there's a cultural ROI. There's a relevancy ROI. And yes, of course, there's a monetary ROI. And everyone tends to lean in on the monetary ROI for the commercial strategy. But there's also a cultural component around funding the mindset within the organization. Technology is a dual responsibility. There's too much to do for it to not be a dual responsibility. And then from a relevancy perspective, if we don't make these investments right now and use these capabilities that are available to us, where are we going to be in a year or in 2 years? And does it support the competitive landscape that we're competing in right now? And so I think there has to be a paradigm shift. You may have a business question and they want an answer or a silver bullet. And that's just not how this world necessarily works. It's a shared responsibility. I think there's multiple ROIs that are at stake. And yes, I do always try and balance the messaging of we're going to do great things together. But let's not forget the foundation or the fundamentals.

I love that. It's sort of a new take on the balanced scorecard that they do. I love that companies are now considering sustainability and cultural and giving back values as part of the mission and it's not just bottom line. I think we are running out of time. And I assume Hunter is just going to burst in and interrupt me if that's the case.

It's great to see you. Hey, what a rock star panel here. One last question -- and by the way, Michelle, you win like the all-star award for the year of best facilitator ever. Thanks.

I love that. And I'm so excited that my cat and dogs did not help me as they normally do in these things.

Oh, that would have been fun. That would have been interesting. I just would love to hear final comments by everyone. Although it's incredibly challenging and it's insanely difficult, is this the best or most exciting time ever to be a tech leader driving a digital data agenda? Sol?

It is but the expectations are high as well. They want it done. And they wanted it done 2 years ago, even though we just started talking about it 2 months ago.

So the pressure is on, right?

Yes. I personally enjoy it. I thrive in it. To quote an old leader of mine, the pace of change is the slowest it's ever going to be. And every day, Moore's law is in full effect. So personally, I'm loving the space and I'm thriving in it. And you never grow up and saying, "I want to be a data expert." It kind of chooses you. You don't choose it. And then you naturally fall into paradigms and areas that you fall in love with. And it's a great time.

Great stuff. Lesley, final thoughts?

Yes. I mean for sure, it's fun. I think every CIO probably feels it. This -- every company is an IT company now and data is at the center of that. So very exciting.

Excellent. Rich?

Nothing to add to both comments. I think IT has always been -- had the opportunity but now more than ever to really demonstrate the opportunity to support the business in new ways. It's just very exciting time.

Excellent. And Jim?

Yes. Absolutely, yes. There's no better time to be. The other thing that was interesting is just listen to this great panel you have. It would be hard to tell the leaders that were talking, whether it be Sol or Lesley or Michelle as she was asking a question, or Richard, were they technologists or businesspeople. This blending of the domain of the businesses that we're in, coupled with that technology, is the power. And you put those 2 things together, it's extraordinary value you can create. And I really appreciate everybody's comments. But it was just amazing listening to Sol and Lesley and Michelle's question and Richard. They're business leaders. They happen to know technology. That wasn't the case 10 years ago, right? You were a technologist for technology's sake. We're in a different world. And what a great opportunity to be a technology leader.

Thanks, everyone, for coming on the summit today and being part of the program. Really, really appreciate it. Great to see you, Jim, Michelle, Rich, Lesley. Great job.