Dividends and Connecting the Dots Chapter 11 What Entrepreneurs Want to Know

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.

You may notice some chapters were jumped not because they tend to be about internal operations of the company rather than seeing the company from afar.

In Chapter 11, Mr. Chambers asks a number of questions of entrepreneurs to see if the information he expects and if the fit he is looking for happens. After the great idea, it moves to the market, then what?  The following questions come from an investors point of view:

  1. What do you believe the job of the CEO is? – 4 components (1) responsibility for owning and developing the vision and strategy of the organization; (2) Develop, recruit, retain, and when appropriate change the management team to implement the vision and strategy; (3) the leader must own the culture and walk the talk; and (4) constantly communicate all the above.
  2. How do you build trust? – It starts with the basics. Never sell something that is not right for your customers or tell them things that you really do not believe or you are not going to be able to deliver.
  3. Where do you spend your time? – where does your time go towards top priorities or squeaky wheel or things that you enjoy doing?
  4. What do you do when you have a member of your team who is failing? Do you coach them or remove them? – loyalty both ways.
  5. How do you deal with multiple cultures in different locations, functions, or the companies you acquire? Mr. Chambers view is simple – one common culture and set of core values across the company.
  6. How do you set targets for your team and do you use stretch goals? – the targets are important, if set there is an expectation of meeting them. Mr. Chambers is a believer in dreams, but to reach them you have to encourage and team people how to make dreams happen.
  7. What are the 3 most important things for success and what the biggest mistakes? – Success – clear visions of and strategy for where you are going, the priorities to achieve that, and setting measurements. Power of the internet to be a digital organization and getting market inflections right. Mistakes made – everyone having different goals and targets, operating in your own silo; not having quality leadership that you need to win.
  8. How do you decide when to hire new people? – balancing act between risk and reward.
  9. How do you do acquisitions and strategic partnerships successfully? see Chapter 6
  10. Strategy versus culture, which is more important? both are important.
  11. How do you find advisers and coaches? The most basic answer is you have to ask and you have to earn the right to ask. Constantly learning from others.
  12. How do you ensure the longevity as a CEO? it is hard because you have to reinvent yourself to get the basics right. Get the results and business outcomes of your organization. Disrupt or get disrupted. Grow or die. And get market transitions right.
  13. How do you identify and capture market transitions? – by staying close to startups you can see changes in innovation. business models, and new technologies to help connect the dots.

Linking to dividend paying stocks,  in the book Mr. Chambers has many bullet points at the end of the chapter and when evaluating the companies you invest in, they may help in narrowing the field. It is often hard to figure out the culture from the outside, but you can see if the company is successful on its year end targets and expectation from outside investors. It is easier to pick profitable companies with a monopoly or near monopoly however advise from Mr. Chambers helps you pick a choice of two equals, which one is better?

There are more questions than answers, till the next time – to raising questions.


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