I read an interesting article on Cisco and CEO John Chambers this weekend in the WSJ that reminded me that while prudence is never a bad idea, it’s also paramount to “never waste a good crisis” (which Chambers paraphrased from someone else, who I can’t remember, and no it wasn’t Hillary Clinton). Like many stalwarts, Cisco is cutting costs but not at the expense of growth – instead its doing it in support of it.
As I’ve said before, it’s hard to fire people when you are hitting record revenue and profit targets, but great companies upgrade whenever and wherever they can. Coming out of the current recession (if it ever happens), Cisco and the like know that if they can be in stronger condition than when they went into it, they will be able to hammer on the gas pedal and further push ahead of the competition.
So while they cut costs smartly, they don’t ONLY cut costs. They invest in stealing share and new growth areas. They look to increase their relevance and market leadership – they don’t just hunker down. I watch IBM and see them hunkering – but not growing or share stealing. I see Wall St. applaud IBM’s numbers from aggressive cost cutting – but see their top line and shares slipping almost everywhere outside of services. This is good if there really is excessive fat, but not good if the plan is growth. You can’t win long term by just cutting (ask DG, DEC, Wang, etc.), sooner or later you have decide if you want to play or watch from the sidelines.
Cisco wants to play.
My advice to others is simple: stay in the game. If you can become more relevant in your space in times like this, then do so. IBM may be disappearing for the moment, but don’t assume it will last. You have to take advantage while the competition is focused internally, as you may never have a better opportunity to create or alter how the world sees your company. I’m not suggesting you spend like a moron, but one of the hardest things for any company to do is to steal share of “noise” – the conversation, if you will. WIth many companies getting quiet due to unilateral budget constraints and cost cutting, you have a better opportunity to make yourself heard. Perception is reality, like it or not.
Go generate some reality.
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