“Disruption offers tremendous opportunity.” - John Chambers, founder and CEO, JC2 Ventures
In February, financial markets experienced a historic liquidation alongside news of an emerging health care pandemic.
Despite the global economic shutdown disrupting the day-to-day operation of businesses and governments alike, similar periods of crises predated the onset of lasting innovation and growth in which companies developed quicker, more cost-friendly solutions to existing problems.
Benzinga recently sat down with former Cisco Systems, Inc. CSCO Executive Chairman and CEO John Chambers in an exclusive interview to discuss the next generation of disruptive innovation and his playbook for building great companies in and out of crises.
A West Virginian raised in a family of doctors, Chambers, from an early age, witnessed the double-edged nature of disruptive innovation.
“I saw what happens when a country, company, or geography doesn’t change,” Chambers told Benzinga. “An example is West Virginia, which was the coal-mining center of the world, and yet, because we didn’t change, that all went away.”
Chambers’ parents immersed him in a culture of strategic thought and open-mindedness, pushing him to pursue advanced studies in business and law, despite being diagnosed as a dyslexic early in his childhood, prior to serving at IBM Corporation IBM, Wang Laboratories and then Cisco Systems starting in 1991.
Having seen the destruction that results from being left behind and not moving quickly enough, Chambers honed in on leading the next generation of technology infrastructure and turned Cisco into a $47 billion giant over his nearly 30-year tenure at the company.
His time-tested guide for surviving, disrupting, and thriving has helped leaders like French President Emmanuel Macron and India Prime Minister Narendra Modi create models for growth.
Now, through JC2 Ventures, Chambers is investing in the next generation of innovation, economic growth, and job creation. His book, "Connecting the Dots: Lessons for Leadership in a Startup World," details the insights and tools that accelerate change and prosperity.
How To Maintain Composure During Unplanned Situations
“You have four key roles as a leader: strategy and vision for your company; develop, recruit, retain, and change the leadership to implement their strategy and vision; communication; and culture.”
Chambers’ experience leading Cisco through numerous financial downturns, health scares and market transitions afforded him a unique perspective when it comes to leveraging disruption and breaking away from peers.
"As a leader," he said, "I go back to the principles: What are my goals? What’s the culture that I want to build?"
Chambers started at Cisco in 1983. He served as its CEO from 1995-2015.
When curating goals and enforcing company culture, Chambers focuses on deeper issues and trends. He stresses the importance of emotional composure, embracing innovation and promoting change through a culture of diversity and inclusion.
“During times of challenge, leaders have to be very crisp with their vision," said Chambers. "They have to stay true to their culture if they want their employees and customers to see it through with them. You have to make tough decisions with scenario planning."
How To Motivate And Establish Change
“You can motivate people, or companies, or countries and paint a very positive picture of the future if you move rapidly, and also address the negatives – if you don’t move, here’s what’s going to happen – and I do both.”
During his childhood, Chambers was taught to view the world the way it is, not the way we wish it to be. His experience watching prosperous companies and geographies face challenges due to the perils of success revealed that risk and entitlement are one of the same.
“You can get in more trouble by doing the right thing for too long than you can in taking the risk – and that’s how you motivate people.”
Once a culture has been shaped around the need to constantly change and adapt, leaders can hone in on the strategy. Having a strong culture in place then also makes it more seamless to shift strategies when needed, as often happens during times of crisis.
“You have a playbook for how you survive crises, and then you have a playbook for how you re-IPO – meaning reinvent – your company coming out of the crisis," said Chambers.
The first step of the crisis management playbook is to be realistic. Leaders must assess how much damage was self-inflicted and how much was the result of the external market. Then, leaders must address the damage by developing platforms for survival and goals specific to each.
“You develop your five to seven major platforms you’re going to do differently during the crisis. Everything from how you expense management, free cash flow, focus on customers, your employees, etc. You have to ask yourself: What are the new big bets you’re going to make to come out of this stronger than before.”
Typically, key members are assigned to run each of the platforms, reporting progress to stakeholders along the way. Once stabilizing, leaders then should establish their direction for the future.
“You write the press release for what you want your company to look like, whether you’re a Fortune 100 company or a startup," Chambers told Benzinga. "You're realistic about sustainable differentiation. You basically say here are again the five or six platforms I’m going to run – and those will use to break away, not just to survive.
“People want to feel optimism and realistic thinking from their CEOs. They want to see the courage to lead,” he added.
Disrupt Or Be Disrupted
“This is a chance for the government to actually accelerate inclusiveness by race, by geography, by gender – or its possible for the digital divide to become even wider, and the gap between the have and have nots to become even wider.”
Market transitions wait for no one. How organizations emerge and transition themselves from a crisis is dependent upon recognition of what’s at stake.
“France was the last place in Europe you would have done business five to six years ago,” Chambers said. “Then brought the idea to Macron and Hollande before him to make France a startup nation. I never thought they would. I thought they were socialist and wouldn’t change. Yet, France emerged the number one startup nation in Europe with the number of startups growing fivefold in the last five years.”
“In the U.S., we’re going to, unfortunately, through digitization, automation, and consolidation of big companies, destroy 10 to 15 million jobs in the next decade,” he said. “You need 35 to 40 million more jobs to support our future generations – and we can only do that by making startups a national priority.”
In years to come, governments, citizens and educational institutions will have to work together on equal access to education and technology. Ultimately, change is dependent upon a focus on outcomes, the breakdown of the barriers between business, engineering, law, finance and liberal arts.
“We have a chance to perhaps enrich the lives of all citizens and make jobs inclusive, or it’s a chance for America to get left behind.”
Crisis Can Level The Playing Field, Leverage It
“I always believed that there were two equalizers in life: education and the Internet.”
The recent COVID-19 coronavirus crisis shocked the system, forcing large and small institutions, alike, to get creative with traditional ways of doing business.
“All of a sudden, a small company can challenge a big company," Chamber said."
Remote work, in effect, reduced asymmetry and increased productivity.
“You do see a potential for realignment in the next Apple, the next Microsoft, the next Cisco,” he added. “Digitization accelerates that.”
Chambers recommends using this crisis to become more in tune with technology, remote work and communication.
“The average productivity of my startups has actually increased by a fair amount,” Chambers said. “Salespeople who used to travel from city-to-city for days and sometimes weeks can suddenly make 3 or 8 calls across the country without leaving their home. So, we see productivity increasing and the customer actually likes it because they don’t get exposure with the person coming to see them, and it’s more casual.”
With Zoom Video Communications Inc ZM technology and Google Inc GOOGL Hangouts, for example, geographic limitations have been eliminated.
The way people learn and run business will forever be different.
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