On Monday CSCO CEO John Chambers issued a memo to all email (excerpts are below) identifying the companies many strengths, while also their loss of focus and in some cases neglect. Chambers, in my opinion, is a truly unique CEO in a time when most are empty suits. The Buck Stops With Him. I respect that, even if he has presided over a colossal mismanagement of a once great technology innovator / competitor. Make no mistake, this is not DELL, HPQ or MOT. If there was ever a CEO with the ability to turn around his company’s priorities and get things going in the right direction, it is Chambers. Read the whole thing in the Wall Street Journal (use this link, then click top search result if you don’t subscribe to the WSJ)
Excerpts from Memo:
From: John Chambers
Sent: Monday, April 04, 2011 2:19 PM
Subject: Message from John: Where Cisco is Taking the Network
“I’d like to share with you my thoughts about Cisco,
our strategy is sound. It is aspects of our operational execution that are not. We have been slow to make decisions, we have had surprises where we should not, and we have lost the accountability that has been a hallmark of our ability to execute consistently for our customers and our shareholders. That is unacceptable. And it is exactly what we will attack.
That said, today we face a simple truth: we have disappointed our investors and we have confused our employees. Bottom line, we have lost some of the credibility that is foundational to Cisco’s success – and we must earn it back. Our market is in transition, and our company is in transition. And the time is right to define this transition for ourselves and our industry. I understand this. It’s time for focus.
We now need to prepare ourselves for what’s next, as you will see Cisco make a number of targeted moves in the coming weeks and as we move into FY12. These actions will be based on uncompromising integrity and will represent a very simple set of guiding principles:
1. We will not fix what’s not broken. There are numerous areas where we’re executing incredibly well for our customers and partners. Our five company priorities are established: leadership in core routing, switching and services; collaboration; data center virtualization and cloud; architectures; and video. The importance of delivery to market through our partners is also clear – and we will do nothing but reinforce this.
2. We will take bold steps and we will make tough decisions. With change comes disruption, and you will see this necessary and healthy disruption as we make meaningful decisions in a timely, targeted and measureable [sic] way. We will address with surgical precision what we need to fix in our portfolio and what we need to better enable.
3. We will accelerate our leadership across our five priorities and compete to win in the core.
4. We will make it easier for you to work at Cisco, as we make it easier for our customers and partners to work with Cisco. We will significantly rework our systems, tools and funding models to do this. We will reshape the operational foundation in order to empower our teams, integrate our major functions, and allow our people to focus on inspiring and important work
We are all responsible for driving operational excellence across Cisco. As you’d expect, I’m asking each of you to play your part in this transition. The responsibility does not fall on one leader or one team. As I’ve said before, we will look back at this time in Cisco’s history and remember it as challenging, and important to the future of our company. Plain and simple – we need to roll up our sleeves and work it out, together. I’m ready, your leadership team is ready, and I know you are ready.
I want to leave you with a question: what do you want Cisco to be? I want it to be a company that keeps changing the way the world lives, works, plays and learns. A company that knows how to win and intends to continue that track record. A company that’s taking the network where it needs to be, with focus. And at a place that puts people, customers and communities at the core of its values. That’s Cisco, no excuses.
Ok, the guy seems pretty fired up. But how do you just “come about” on a $40bln company? Well Chambers has a Gazillion reasons (his holdings in the stock) and ultimately his legacy to get this figured out.
1st chart below shows the massive under-performance of CSCO vs the Nasdaq 100 in the last 4 months as result of a series of missed earnings and lower guidance.
2nd chart shows the 3 consecutive gaps after the last 3 earnings announcements. This is not a very constructive pattern and the the 3rd chart shows the almost completion of this corrective phase.