Connecting the Dots (Book Summary)

Connecting the Dots by John Chambers and Diane Brady

INTRODUCTION

That ability to reinvent not only your company but yourself is the critical skill for every leader in the digital age.
What really set us apart at Cisco were four key strengths:
- An ability to anticipate and get ahead of market transitions
- Innovation processes that could be replicated at scale
- A strong culture that was focused on customers
- A network architecture that gave us incredible flexibility to innovate and move into new markets.
We developed a playbook for everything from how we acquired companies to how we managed people, how we dealt with customers to how we digitized countries.
The biggest mistake we all make is that we get comfortable and we get disrupted because we don’t disrupt ourselves.
If you agree with everything I say, I will have failed.

PART I: THE CONNECTED LEADER (THE MINDSET FOR LEADERSHIP SUCCESS

Chapter One THE LESSONS OF WEST VIRGINIA (Disrupt, or Be Disrupted)

Panicking over symptoms does not help you diagnose the disease. As a result, I’m usually at my calmest in a crisis.
An education gave you something that no one could take away: flexibility to do what you want and the process for continuous learning.
Look for signs that things are changing and think about how those shifts will play out in 5, 10, even 15 years or more.
IBM was blinded by its success and wasn’t willing to disrupt itself. It made the classic mistake of getting too far away from its customers, cutting off the most critical source of research into what the market needed.
They all failed to catch one thing: a market transition. Some became so focused on winning the game they were playing that they didn’t notice a new game was starting on the next field. Others stopped listening to their customers. They focused on improving products that were becoming obsolete, diversified into the wrong business, or picked the wrong partners. They held fast to analog technology as the world went digital.
We acquired 180 companies over the course of two decades and developed innovation playbooks that could be replicated across the company and beyond.
If disruption isn’t at the core of your strategy, you’ve got a problem.
When you compete against another company, you’re looking backward. When you compete against a market transition, you learn how to see around corners.
You don’t have to disrupt who you are to disrupt what you do.
We were one of the first companies to bet big on China in 1995. We were pioneers in outsourcing manufacturing because it made sense for our customers and enabled us to keep up with rapid growth. We’ve moved from selling routers to partnering with governments that wanted to transform their economies through digital innovation.
The worst mistake is to do the right thing for too long.

Chapter Two ACT LIKE A TEENAGER AND THINK LIKE A DYSLEXIC (How to Spot Market Transitions)

If you’re a CEO or the leader of any organization, you have four key responsibilities:
- (1) Set the vision and strategy of the organization
- (2) Develop, recruit, retain, and replace the management team to execute that vision and strategy
- (3) Create the culture
- (4) Communicate all of the above.
If you’re looking for signs of disruption and change, you’re more likely to find them. If you want to tackle big problems, you have to take big risks and accept that there will be setbacks along the way.
When you’re willing to make big bets, play by different rules, and talk about dreams that seem unlikely to come true, you’re acting like a teenager. You could fall on your face. If you can then make those predictions come true, though, you have a chance to make history.
In every move, I had a clear sense of where the market was going, what our competitors were doing, and what our customers wanted.
I seek insights and feedback from everyone, especially customers.
I coach new leaders to collect data from customers, study competitors, seek out disrupters, and look at pertinent factors to get a sense of the big picture.
Pay attention to broader shifts in the market, especially where two or more are related, and seek out data or experts to fill in the gaps. As new information comes in, step back and try to put it in the context of the bigger picture.
Seek multiple perspectives, especially from customers, and cross-reference them as new facts come in.
I always put a premium on data that I get from customers
If you can’t think of a follow-up question, then there’s a good chance that you weren’t listening
I constantly ask people for advice on what I can be doing better
Data might not tell you why something is happening, but it does tell you what’s going on.
It’s easier to spot opportunities and changes when you’re on the outside.

Chapter Three DREAM BIG AND BE BOLD … FOCUS ON THE OUTCOME (Play out the Entire Chess Game Before You Make the First Move)

Almost every mistake I’ve made was because I didn’t move fast enough or dream big enough.
One of the biggest mistakes I see people make in business is that they don’t dare to imagine a bold outcome and understand what they need to do to achieve it.
Mario Mazzola: “Vision and strategy are for the amateurs. Execution is for the professionals.”
Not only does Mario think 5 or 10 years ahead when it comes to developing products, he takes a similar long-term view when hiring and managing people.
Before I make a move, I play out the entire game in my head, and then I replay it under different scenarios, forward and backward, in order to anticipate not only my moves but the moves of others in the game.
Spin-in: That’s an independent startup, launched with seed money from Cisco, that would enable [us] to recruit and incentivize top talent to work on a breakthrough technology and turn it into a developed product that would be sold back to Cisco, assuming it was successful.
The most powerful incentive for taking any bet is the customer. If my customer is interested in something new, I immediately become interested, too.
If you just keep doing the right thing for too long, and you don’t have the courage to disrupt both the market and your own organization, you will be disrupted and left behind.
A lot of people stumble on execution because their dreams are not big enough in the first place and they don’t really have a strategy for how to achieve them.
If you don’t have a detailed map, it’s very easy to start sprinting in the wrong direction or get distracted by what you see along the way.
The “Mario Rule”: an agreement that nobody could be fired in an acquired company without the permission of leaders on both sides of the deal.
My first golden rule of acquisitions: Do what the customer tells you to do.
All leaders talk about disruptive innovation and reinventing their business. Very few of them do it. The problem is not that they will be too ambitious; it’s that they will not be ambitious enough.
If your goal is to get the same set of customers to pay more for slightly improved products or services again and again, you’re not innovating.
You have to pick the right battles, and you also have to understand who you’re up against and map out the scenarios in which you can win and the ones that signal when it’s time to cut your losses.
You have a tremendous advantage in negotiations — even friendly ones, which this was not — if you’re prepared to walk away, and I mean really walk away with all the implications.
Merging two successful technology companies of equal size might sound safe. In reality, it’s probably the riskiest thing you can do.
To break away from competitors and catch market transitions, you have to be bold. If you make the moves one or two steps at a time, your odds of success are low.
Many organizations fail because the top team is looking inward when it comes to setting their goals, their strategy, and their vision of success. They don’t pivot when conditions change. More important, they don’t focus on what their customers really want and what customers think about the strategy being pursued
I assigned a mix of people to two groups: a green team and a red team. The green team’s job was to show how we could win, and the red team was assigned the task of pointing out the perils and weaknesses in our position while building arguments for the other side.
What most of us do in competitive situations is assume that our competitors will do what we would do, rather than predict what they will do based on their background.
Remind your team it is a portfolio play with winners and some losers.
The way you win, ultimately, is to see a market in transition and get ahead of it.

PART II: THE CONNECTED COMPANY (THE PLAYBOOK FOR CORPORATE SUCCESS

Chapter Four EMBRACE YOUR PURPOSE, NOT YOUR PRODUCTS (How Cisco Beat Its Competitors)

I developed playbooks [in every area] that captured best practices we could use again and again — and we made them replicable for others to adopt as well.
What really set us apart, I think, were four key strengths:
- (1) an ability to anticipate and get ahead of market transitions
- (2) innovation processes that could be replicated at scale
- (3) a culture that promoted trust and empowered teams
- (4) a focus on solving problems rather than simply pushing product.
I would counsel any technology leader to make sure their company is the first and best user of their technology, and to listen closely to their teams when they are wrestling with real product and service challenges.
Identify noncore areas where you can partner or outsource for agility and growth.
Handing over tasks doesn’t absolve you of the responsibility to maintain oversight of them.
You don’t want to hand over key customer relationships.

Chapter Five AFTER DISASTER STRIKES (Setbacks Can Make You Stronger

One of the biggest mistakes that all of us make, as business leaders and as human beings, is that we personalize every crisis.
The first thing you do in a crisis is stay calm and investigate what’s really going on.
Data might tell you if a crisis is real but it’s no substitute for connecting with the people who buy your products.
When you’re the one who’s dealing with a mess, stay visible.
One of the biggest mistakes I’ve seen companies make, including Cisco, is to equate an external crisis with internal problems.
In every downturn, you have to be realistic in asking how much of it was self-inflicted and how much is due to external issues. [If external, be much more patient and deliberate before making major changes.]

Chapter Six MY BUYER’S GUIDE TO SUCCESSFUL ACQUISITIONS (Based on 180 Personal Experiences

At Cisco, the goal of an acquisition was clear: to get next-generation products that would make us the leader in a market that is changing, growing, and core to what we do.
When you’re buying a technology leader in a growing market, the leadership team is your most critical asset.
You’re not just acquiring the products that you get today but ones that will be built tomorrow. To get both, you need that team to stick around, which means the first test is whether you have shared goals, values, and expectations.
As part of every deal, I would ask key leaders to commit to spending at least two years at Cisco once the deal closed.
I’m not disappointed that one out of every three acquisitions we did at Cisco failed to meet our targets, our overall goal was the performance of our portfolio of acquisitions.
You have to be fearless in making those bold bets and quick to take action when they don’t work out.
We couldn’t just build our way into being a market leader in every business that we wanted to be in. Nobody can. There’s simply not enough time. If you’re not one of the first three to five companies to enter a new market, you rarely get a shot at becoming a top player by doing it yourself.
I don’t believe in acquiring a team that doesn’t want to be acquired.
The most basic mistake I see potential acquirers make — and believe me, I’ve seen this happen time and time again — is that they find a company they like and approach its CEO, saying, “I want to buy your company. What will it take?”
The companies that interest me tend to have strong leaders with a distinct vision and view of where their industry is going. Those leaders are not looking for a buyout; they want a partner who can take their business to the next level. They want to know how it will affect their customers, their employees, and their investors. Most of them would walk away if you just called up with an offer.
The key to making better and faster decisions is to follow a replicable process. It starts with four key principles:
- (1) focus on acquisitions that let you enter or expand new markets that are in transition
- (2) follow the lead of your customers
- (3) unless you are intentionally buying a stand-alone asset, immediately integrate what you buy into your architecture
- (4) maniacally ensure a match with your culture and values.
Seven golden rules that guided us at Cisco in deciding which deals to pursue:
- Each acquisition must align with your vision and strategy.
- Focus on market transitions and technology disruptions.
- Listen to your customers in deciding which companies to acquire. Getting references from early innovative customers of the acquired company is a must before you make the decision.
- Create a win-win for both companies … their leaders, investors, employees, and customers. I will quickly walk away from an acquisition if the target’s leaders don’t buy into a win-win approach for Cisco as well.
- Prioritize companies and technologies that fit with your portfolio.
- Look for a strong cultural match.
- Geographic proximity to your headquarters or key operational centers. The minute you get on a plane from your key locations to acquire a company, your odds of success drop dramatically.
Acquiring large by large, or so-called mergers of equals, almost never succeeds in the technology industry
In almost every case, a strategic partnership between large players is a much better option than acquisition
Guiding principles that increase the odds of success in strategic partnerships:
- First and most important, the partnership must truly move the needle on both top and bottom lines for each company and truly be strategic for both companies.
- Only strategically partner with companies that understand and are committed to strategic partnerships. This sounds basic, but when you ask a potential strategic partner for examples of their successful strategic partnerships and they have none, it is clearly a huge warning signal.
- The strategic partnership approach has to start with the vision and strategy of the CEO, but that’s not enough. It must also be accepted and driven by top management in both organizations.
- Focus on three to five needle-moving projects for both companies, recognizing it’s unlikely that all of them will be 50: 50 projects in which the both parties invest an equal level of resources and expect to receive half the benefits in return.
- You strategically partner big-to-big and acquire big-to-small.

PART III CONNECTING WITH CUSTOMERS (THE PLAYBOOK FOR SHARED SUCCESS

Chapter Seven BUILD RELATIONSHIPS FOR LIFE (Sell People Only What They Need

Our most dangerous competitor is not someone who is fighting us on price but a shift in the market and a startup that sees it first and comes at us from scratch.
If anything, when your customers are in trouble and asking for your help is when you have a chance to differentiate yourself and build even stronger trust and true partnerships.
The most valuable currency with customers is trust and a track record.
You also build trust by being there 24/7 when things go wrong.
At Cisco, I reviewed every critical account in the world every night via voicemail.
Every time we had more than half a dozen customers on that critical list, we’d discover an issue that would eventually start to affect sales in that area and our customer satisfaction scores.
I look at customers as my chief strategy officers in the field. They’re my best source of intelligence on where the world is going and how the market is starting to change.
We weren’t being rewarded just for the products we sold but the service and how we put them together in what I call “architectures.”
Customers don’t push back on pricing premiums when they’re really pleased with the outcome and results.
I don’t think anyone is above or below me, and I genuinely respect everyone.
I say exactly what I’m thinking — with respect, but with candor.
When you finish a meeting, take time to summarize it in your mind and decide on the action items.
Try to take as much pressure or other thoughts off your mind as you go into the next meeting.
Start the next meeting with a clear understanding of what you want to accomplish and get off to a fast start, not disrupted by thoughts from the last meeting or other issues that might distract you.
Always actively and consciously debrief with your team after every major interaction.
While I will never bluff in business, I almost never show that I’m surprised and I never show anger. I’ve learned that emotional responses make situations harder to manage.
When I’m speaking with young entrepreneurs who are trying to scale their company, I always ask about their customers before I talk about their technology

Chapter Eight HOW TO BUILD A WINNING TEAM (Focus on Culture, Diversity, and Results

Like the CEO, every person on the leadership team has to learn how to recruit, retain, develop, and replace the key players on their own teams.
I am always recruiting and you should be, too. Some of my best hires took me months and sometimes years to recruit.
The most talented people are usually not on the market.
I talk to colleagues, competitors, customers, and recruiters — and then I connect the dots to see whose names keep coming up.
I crowdsource for talent in the same way that I crowdsource to spot market transitions.
If we lost a sale at Cisco, I wanted to know who closed the deal for our competitor.
About a third of our leaders were developed, a third were hired from the outside, and a third came through acquisition.
The best leaders have a fundamental belief in the power of teams and an ability to play together with others. As a result, they typically mentor other colleagues and build great teams themselves.
I start with a basic set of six characteristics when recruiting people to a leadership team:
- Results
- How well they build their own leadership teams.
- Industry knowledge.
- Communication skills.
- Real team players: By team players, I mean people who are also comfortable with constructive friction and can openly debate issues without getting into personal animosity or politics.
- Whether they fit our culture
Everyone will tell you that they put customers first, but it doesn’t take long to discover who really does. Ask them to tell you about a time when one of their customers had a problem and have them walk you through how they helped them. Ask for customer references but also check your own back-channel sources.
The most important factors that I’ve learned to look for in any head of engineering are expertise and a track record of building great products and strong teams.
If you want a superstar team, you have to understand the motivation and priorities of those players and make sure your culture will enable them to fulfill their particular dreams.
I approved and studied all of Cisco’s 180 acquisitions in my 20 years as CEO, but I didn’t source or vet all of them.
While not everyone agreed with every deal, if engineering, BD, and I were all aligned, we would move.
When you meet people who have curiosity, a desire to learn, an instinct to help, and an excitement about what’s next, you may well find that they could thrive in any number of roles.
If the only team you ever use is the one filled with people who report to you, then you don’t understand the power of teams.
The culture of a company can evolve over time and move into new areas. What stays constant, however, are your core values and how you live them, consistently, every day. For me, that means putting customers first, doing the right thing, making innovation happen, pursuing audacious goals, treating all others as you wish to be treated, and being No. 1 or 2 in every area where you compete
At its core, Cisco’s culture was focused on putting customers first and treating employees like family.
While my daily schedule and priorities changed many times during my 20 years as CEO of Cisco, there were two things that I’d always make time for: a customer crisis or a Cisco family crisis.
While values don’t change in different markets, customs and expectations often do. I recommend every leader find a wingman or wingwoman when you are new to a market, geography, or industry, someone who will help you navigate differences you might not even pick up on.

Chapter Nine GET YOUR MESSAGE OUT (With or Without the Media

How you handle your setbacks, challenges, and at times, unfair attacks is what will define you more than your successes.
To be an effective communicator, you have to frame the right message to reach the right audience, and you need to develop the right relationships, networks, and platforms to get that message across.
The goal isn’t to create content but to communicate the right message to your target audience. Nobody is hungry for yet more data. What people want is more insight into what you do and how it’s relevant to their lives. They want to know what’s coming and whether to embrace or fight it. They want inspiration to see what’s possible, and the tools to thrive in a new environment. They want to feel that they’re being heard and understood.
At Cisco, for every earnings cycle, even after 80 + earnings cycles, I would practice Q&A with my teams for hours.
Early on, I began tracking how our customers rated Cisco executives presenting in our executive briefing centers. Thousands of customers would come through every year and we tracked every executive, including me, on how many customer visits they participated in and how the customers ranked their effectiveness on a scale of one to five.
Writing the headlines and the press release is a way to visualize success, identify problems, and get everyone focused on the same outcome before we start.
I also insist on a clear, simple set of three to five goals for every interview, meeting, or project.
[I consistently ask customers], “Tell me three things Cisco could be doing better.”
I start many [press] interviews by asking what I can do to help that person make it their best story of the year.

IV CONNECTING BEYOND BORDERS (THE PLAYBOOK FOR A STARTUP WORLD

Chapter Ten BET ON INNOVATIVE LEADERSHIP (How to Partner with Great Leaders

The policy implications of machine learning, robotics, cybercrime, and artificial intelligence is daunting.

Chapter Eleven WHAT ENTREPRENEURS WANT TO KNOW (13 Typical Questions

As large corporations increasingly use artificial intelligence, machine learning, augmented reality, and the Internet of Things to transform their operations, I expect that many will shed thousands of jobs in the coming years.
How do you build trust? Never sell something that is not right for your customers (or your employees) or tell them things that you really do not believe, or you are not going to be able to deliver.
Where do you spend your time? I spend a lot of time developing people and mentoring people. I’m constantly recruiting and sometimes it will take me one to two years to get someone.
What do you do when you have a member of your team who’s failing? Do you coach them or remove them? Staying too long with a person who needs to be changed is a mistake we all make.
How do you deal with multiple cultures in different locations, functions, or the companies that you acquire? There needs to be one common culture and set of core values across the company.
How do you set targets for your team and do you use stretch goals? I tend to set goals that we have a reasonably high probability of achieving and then constantly work with the team to make sure they’re on track to achieve and then overachieve those goals.
What are the three most important things for success? A clear vision of and strategy for where you’re going, the priorities to achieve that, and setting measurements that will truly reflect your success or not.
Mistakes made? Everybody having different goals and targets that are not tied together, operating in silos in your organization rather than focusing on company outcomes, and not having the quality of the leadership team that you need to win.
How do you decide when to hire more people? I’m a believer in being conservative and hiring only when you have a high probably of achieving results.
Strategy versus culture, which one is more important? You don’t have success without both of them being equal in terms of importance.
How do you find advisers or coaches? The most basic answer on the larger picture is that you have to ask, and you have to earn the right to ask.
How do you ensure longevity as a CEO? The basic answer is get the results and the business outcomes for your organization. Disrupt or get disrupted. Grow or die. And get market transitions right.

Chapter Twelve IT’S ALL ABOUT STARTUPS, STARTUP NATIONS, AND A STARTUP WORLD (My Next Chapter on Changing the World … JC2 Ventures

We are investing in more than a dozen disruptive startups from around the world that are at the forefront of major industry transitions in areas like the Internet of Things, cybersecurity, drones, AI, social media management, computing moving to the edge, agtech, data storage, government transparency, cell phone anti-surveillance, and the customer experience.
When I look for who to bet on,
- I start with an industry that’s in transition, enabling disrupters to grow at a rapid pace.
- I look for disruptors who have the technologies, the business model, the network, and other advantages to be No. 1 or No. 2 in that space.
- It helps to have one or two lighthouse customers who will help them develop their products, as well as venture capitalists with a track record of success.
- Most important, I look for a talented CEO who wants my help as a strategic partner
What I look for in every leader: vision, strategy, honesty, passion, curiosity, a desire to win, and a desire to learn.
About 80 percent of CEOs believe their company delivers a superior customer experience. However, if you ask consumers, only 8 percent say they get a superior experience from these companies.
The Holy Grail for putting customers first: Sell people only what they will truly need.
Voice will be the next platform and dwarf all other forms of user interface.
Startup Selection Playbook
- 1. Market in transition (business models / new technologies)
- 2. High-potential CEO who wants to be coached and have a strategic partner
- 3. Startup that can be No. 1 or No. 2 in their focus areas
- 4. Lighthouse customers as references and helpers in developing the startup’s products
- 5. Close to inflection point, where market could take off
- 6. Top-notch peer investors / VCs … believe in the startup
- 7. Building world-class team / culture … dreamers

Chapter Thirteen REINVENT YOURSELF (What’s Next for Me — and All of Us

A billion-dollar company in the future might have two or three employees and build out a core / context ecosystem of strategic partners to drive their growth.
The large companies that survive over the next decade are more likely to add new machines than new employees.
The measure of a great company is its ability to create shared wins for everyone.

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