John Chambers joined Cisco in 1991, it had 400 employees and $70 million in revenues, when he left in 2015 after 20 years of being CEO, the company had $47 billion in revenues and Cisco is the backbone of the internet. Along the way, Cisco acquired 180 companies and beat out its competitors. How did he do it and can you learn something from Mr. Chambers? The answer to learning is yes and reading his book Connecting the Dots by Hachette books, NY, 2018 will help.
In Chapter 3, Mr. Chambers discusses one of the biggest mistakes he sees is people do not dare to imagine a bold outcome and understand what they need to do to achieve it.
Before Mr. Chambers makes a move, he plays out the game in his head, then replay it under different scenarios, forward and backward, in order to anticipate not only my moves but movers of others in the game. This helps in learning to anticipate the hurdles and see different ways to achieve the outcome you want. You also learn to recognize when an outcome is no longer achievable and make a decision to either change your strategy or even to concede the game and move on to another opportunity.
The first step is talking to customers and if your customers are interested in something new, you become very interested. For example, Cisco was very good at switches but Ford mentioned Fast Ethernet, which they were not. When Mr. Chambers was at Boeing they mentioned the same thing. Next was to investigate the companies and buy one as this was a market transition.
Rule No 1 in acquisitions – Understand what you are acquiring and protect it at all costs. In the tech industry , it is talent, the next generation of their products and the leadership team to make it happen.
Execution is tough. It is even tougher when your vision and strategy are out of sync with the execution. In the acquisition protecting the team was important and Cisco agreed that no one could be fired in an acquired company without the permission of leaders on both sides of the deal.
To break away from competitors and catch market transitions, you have to be bold. If you make the moves one or two steps at a time, your odds of success are low. Your competitors are watching you, they will offer the same things and your will not be able to differentiate yourself from the competition. Your competitors and you are trying to understand each other’s strategy – what moves you typically make or the patterns the company’s typically undertake.
When examining your competitor’s the key is to focus on what the other player is likely to do (based on your research) not what you would do in their situation. Understanding the cultural and strategic differences of your competitors, customers, peers, and partners to success. You look for pattern of behavior from your challenges, anticipate all the different scenarios of what could happen and plan your moves in response to what is happening in real time. The more confident you are about how things will play out, the more ambitious your bets can be.
The sound bites of leadership
- You grow or die.
- Disrupt or get disrupted.
- Most companies fail from doing the right thing for too long.
- Every company and country must become digital.
On one trip, Mr. Chambers was sitting next to Henry Kissinger and put aside his briefing books to ask Mr. Kissinger what he had learned about leadership over the years.
Mr. Kissinger stars with 3 scenarios – most likely, favorable, and least likely. He maps out probable outcomes for each. This helps him understand the mindset of the person he is negotiating with, he tries to find common ground. The process helps achieve better outcomes for both sides.
Focusing on the outcome makes it easier to get people aligned around a strategy. If there is disagreement which is okay, but if it miscommunications it can be fixed. If it is cultural or a personality problem, you might need to part ways.
Most of the time in negotiations you are not looking for a winner and a loser, you are looking for a outcomes that offer shared success and enlist the help of those who stand to benefit.
Linking to dividend paying stocks, profit companies have money to do acquisitions and many do not work. Trying to understand why and the bold vision will help you decide to keep the stock or look for other alternatives.
There are more questions than answers, till the next time – to raising questions.