Catching transitions is key

Bill Stewart, who has created and maintains two original, informative sites on the history, design and use of the Internet and on free open source software, was at the NAC last week (Oct. 18) to hear Cisco’s CEO, John Chambers (pictured), speak to Ottawa’s high tech establishment. He supplied his “rough quotes from memory” from the talk:
"Catching market transitions is critical. Chambers%2C%20John-167X160.gifIn the mid-1990's ATM (asynchronous transfer mode) was the agreed future. I went into a large company to try to sell them on ATM to the desktop, and they listened politely and told me they were going to go with fast ethernet. So I went into my next meeting with Boeing and they said they weren't so sure about ATM and were looking at other solutions. I said I was thinking about fast ethernet. They said that was funny, they were too, and here was a $10M order. But I wasn't going to get it unless I bought this small company. I bought that company at the huge price of $93 million, and it is worth about $5 billion today.
“I'll never forget Dr. Wang telling me he made ten correct decisions, and the 11'th killed him. (An Wang was a skilled and creative inventor, who built Wang Laboratories into a multi-billion dollar company around a range of products from typesetters to word processors to PCs.)

“How do we find the transitions? You already know the answer. Customers and employees. We listen, when we see some commonalities we act on them, and we move with no fear. Twelve years ago we were 12% of the market cap of our space. Last year we were 60%. And this year our capitalization has grown to $210B.

“Most of the people who have made it into my kind of position are good at command and control. When I say turn right, 61,000 people all turn on a dime. I'm very comfortable with that. But now we're all going to have to learn to collaborate. The workings of business, government, health-care, education, are all going to be based on the kinds of social networking tools - FaceBook, YouTube, video-conferencing, instant messaging - that the younger generation is more comfortable with than the over-40's. And if you aren't a little bit outside your comfort zone, you aren't going to evolve.

“We've done 130 acquisitions. Last year, it took us 45 days to complete an acquisition. And it almost killed us. This year, we acquired a company about the same size, and by using our collaboration systems we did less traveling, completed the process in eight days, and took a day off. We are now taking these systems that we've developed internally to our customers.

“A couple years ago I traveled around the world. I went to four cities in China, four in India, went to the Mid-East, flew back to Washington for an event with President Bush, flew to San Jose for a change of clothes, went to London to meet with British Telecom, and made several other stops in Europe. It took me two weeks, averaged about three hours sleep a night, and was a very productive trip. This year I visited about the same number of cities and places around the world in three days and never left California.

“How long has it taken you to put an ERP (enterprise resource planning) system in and get benefits from it? Four years? It took four years before our ERP system started returning value. The average life expectancy of a CEO is about four years. What would you expect a CEO or CIO say if you go to them and say I want you to invest for four years and you'll see benefit in year five? Now imagine a world in which you can go to the same customer and say, I can put in a system that will return value after one year. What will they say then? ‘How much should I write on the cheque?’

We held a meeting recently, the top execs in the company, and a team working on a strategy problem from around the world. After a few minutes the top four executives in charge of the company just sat back and smiled, because the team was solving the problem and making a much better decision than we ever would have.

“Vision, planning, and execution are key. How do we work out the plan? We used to start with the vision, work backwards and figure out how to get there, work it forward and find all the places that could go wrong, get buy-in on the result and then execute. How do we do it now? We establish the vision, and then we tell the team we'll figure out how to get there as we go along. And you know what? They will. They will collaborate and figure it out, if you give them the tools.

“Most companies have one or a small number of products. We have twenty four projects next year. How many are you going to work on?

“I met with the King of Jordan eight years ago, and he told me that they had no natural resources but a very educated population, and we could make a lot of money there. I told him we would never make money in Jordan. We are now making a lot of money in Jordan.

“Now when I sit down with the leaders of countries, if I say ‘technology is the key to industry, so you have to get your plumbing in’ that would be a pretty short conversation, wouldn't it? On the other hand imagine if I say that we can help increase the productivity of their economy, add good jobs, and help raise the standard of living of a growing middle class?

“I challenged my people to get 30% growth and the same margins in the developing world as in North America. They said it wasn’t possible. Last year we had 45% growth in the developing world and the same margins as North America.

“Some people say that social good, giving back, has no place in business. I respectfully disagree, and that is why we support so many education programs. But it is critical to understand that it is also very good business. There are some countries in the world were we have been told that they are doing business with us partly because they know we do more than just take. We give back as well.”

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