At Cisco, 'Downturn' Screams Long-Term Opportunity

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We build everything around a "vision" that looks 5 to 10 years out; a "differentiated strategy" that looks at the next 2 to 4 years; and "execution"—what you need to do in the next 12 to 18 months.

How has Cisco's organizational structure and practices changed?
We build social communities based on this collaboration model, but social communities with a lot of process around them. We've got councils, which are [pulled together to go after] $10 billion opportunities; boards, which are for $1 billion opportunities. And there are working groups, which either support the councils and boards, or are created to address a specific topic at a certain point in time. And network-enabled Web 2.0 technologies such as Telepresence will help deliver productivity. I think we'll be able to drive Cisco's productivity at 10% a year again (as it did in the 1990s), as measured by revenue per employees. Or we can use those [productivity gains] to free up a tremendous amount of resources to move into [markets for products and services that can work on Cisco-based networks] that I would not be able to move into otherwise, because they wouldn't deliver meaningful revenues for two, three, or four years.

How does the job of the chief executive officer change in this more collaborative approach?
Realize that the hardest one to change is the CEO, and yet this must start at the top. And it means realizing that change is great when it happens to other people, but that it's uncomfortable when it happens to you.

It was hard for me, because I am very comfortable with command and control. So moving away from what was working was hard. At first it was frustrating. I'd get my team together and watch them work on an issue, and I'd usually know what the answer would be within the first 10 or 15 minutes. But over time, they [began getting to] a better decision than I would have made. It's almost like a parent watching their children evolve. It really was exciting. And it took changing the reward systems as well. It took training and rewarding people who were collaborative, and who focused on what was good for the overall company rather than for a specific function or for their particular group.

You wrote an op-ed piece in The Wall Street Journal that this downturn may be the greatest opportunity this generation of business leaders is likely ever to see. Why?
I do believe very strongly that while this is the most challenging time in our careers, as business leaders, customers, and as countries, it also offers potentially the most opportunity. When you face challenges of this magnitude, with the tremendous disruption it creates for businesses, for jobs, for families, you get a willingness [from people] to change with speed you do not get in normal times. So out of this tremendous pain as a country and as a world, I believe we should focus on tremendous gain.

And all of this applies to our country as well. I think we can change everything. We can change our education system. Let's not kid ourselves: Our educational system hasn't changed in 50 years. A teacher from 50 years ago could walk into a classroom today and easily teach the class. That's a sad commentary. It's probably the slowest moving industry of them all.

Isn't it difficult to focus on the "opportunities" when so many people are just trying to keep the lights on or at least minimize the economic damage?
You need to have the ability to focus on the upturn without minimizing the importance of the downturn. You have to paint a picture of where you want to be 5 to 10 years out. That's exactly the mistake that most companies make. Most people fall into the trap of thinking about this quarter or this year, or are unrealistic about not dealing with the severity of the downturn. Or they say they've only got one or two products where they are the leader, and decide to try to power through [by relying on those current strengths]. That's a recipe for disaster as well…This may surprise you, but I spend almost no [time] worrying about the next quarter or even the next year. My focus is on where we want to be 2, 3, 5 years out.

Your advice to other CEOs is to be aggressive during this downturn?
We're going to be extremely aggressive during this downturn. As a company, we can come out of this with a stretch goal of being the leader not just in communications, but in IT on a global basis.

How are you spending your time differently since the downturn worsened in late 2008?
I'm getting closer to the automotive and financial industries than I've ever been. They may not order much from us for the next couple of quarters (laughs), but this is when you go out and build relationships. That's our culture. We focus on catching market transitions, and tend to be counterintuitive. By the time the majority agrees on something, it's probably heading the other way. That's why we don't focus on competition. Competition is just a way of keeping score.