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Connecting the Dots: Leadership Lessons in a Start-up World

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Язык: Английский
Год издания: 2018 год
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I’ll never forget the day I almost drowned. I was about six years old and my dad had taken me bass fishing at Elk River near our home in West Virginia, when I lost my footing on a rock and fell in. As I was pulled under by the current and dragged into the rapids, all I could hear was my dad shouting, “Hold on to the fishing pole!” It wasn’t an especially nice pole, but Dad clearly wanted me to protect it. Every time I came to the surface, sputtering water, I’d see him running beside me on shore, repeating those same instructions: “Hold on to that pole.” Not wanting to disappoint my dad, I tightened my grip and could think of nothing else but the pole. Finally, we got to a spot where Dad swam out and pulled me out of the rapids, pole and all.

We sat for a few minutes to talk about what happened. My dad was a great teacher, who always explained the thinking behind why he did things. He wasn’t angry that I’d gone too far on the rock and fallen in. Accidents happen. He wanted me to know why it was so important that I held on to the pole. As long as I stayed focused on doing that, he explained, I was less likely to panic and fight to get out of the water, which is one of the worst things you can do when you’re trapped in rapids. You have to go with the flow and look for opportunities to get out. I was too young to get myself out, so his goal was to help me manage my fear until he could find a place to rescue me. You couldn’t stop the fear; you just had to manage it.

After we talked, my dad put me back in the water to swim near the area where he’d pulled me out and then we went back to fishing where we were. It was a lesson that stayed with me my whole life and one that was reinforced a little over a decade later, when I went with my youngest sister Patty to a viewing of one of her friends. He’d apparently drowned in the exact same spot where I’d fallen in the river at the age of 6, only he was probably about 14 at the time. As I walked by the coffin, I was struck by how much he looked like me. I remember his face like it was yesterday. He would have been much stronger than I’d been at 6 and certainly a lot more savvy about how to get himself out of the rapids. I don’t know the exact circumstances of his death, but I suspect he died because he panicked. Nobody was there to remind him to hold on to the pole.

The importance of staying calm under pressure was reinforced by both my parents when I was growing up. I suspect the fact that they were both doctors came into play. I was a kid who liked to race bikes, jump off bridges, take up dares, and chase down adventures wherever I could find them. I’ll never forget running home after colliding with a metal pipe near the same river where I almost drowned. I had to run half a mile with blood gushing from my head. As I came in, literally dripping with blood, sweat, and tears, my mom put her hand on my head and told me I only had a puncture wound. “It probably won’t require any stitches,” she said. “You’ll be fine.” With some soap and water, a bandage, and a hug, I was probably sent back out the door. If any of you have parents in the medical profession, my mom’s reaction might sound familiar. When you deal every day with people who are injured, sick, and often scared, you learn the importance of staying calm. Panicking over symptoms does not help you diagnose the disease. As a result, I’m usually at my calmest in a crisis. To this day, when a friend, a startup, or even a competitor has a problem, they’ll often call me up to ask for advice because they know that I’ll help them separate emotion from the facts in deciding on next steps. My two sisters are the same way.

What I learned at Elk River has been critical in helping me stay focused and calm through crises such as the 2001 dot-com crash. That wasn’t a raging river but what I described at the time as a “100-year flood,” a stock market plunge that wiped out a quarter of our customers and 80 percent of our stock price. Many of our competitors died and, to be frank, I would describe that time as a near-death experience for Cisco as well. That said, I never worried that we wouldn’t make it. Not once. People find that hard to believe, but it’s true. Don’t get me wrong, the layoffs we had to do haunted me and I still cringe when I think of some of the headlines. I made some mistakes, but I never doubted that we’d make it. I believed that our fundamental strategy was right and I held on to that pole the entire time. I knew if we focused on what we needed to do, we wouldn’t drown. I’d learned that lesson in West Virginia.

Most people associate me with Silicon Valley, where I was at Cisco for 27 years. I still live in that part of California and find it’s an energizing and special place to be. Still, nothing can match the heartache and the hope that I feel for my home state. West Virginia is a place that a lot of people hear about but very few people actually know. Some might know of its beautiful scenery, rich history, coal mines, and hardworking, friendly people. Others associate it with hillbillies and communities torn apart by addiction and the despair of chronic unemployment. Like everywhere else, it’s a place that’s been dealt winning and losing hands over the years. We’ve all heard about the problems afflicting West Virginia, from the long-term decline of coal mining and lack of industry in once-vibrant industrial towns to low education rates and high addiction rates that some blame, in part, on the injuries that come with manual labor.

I grew up in a suburb of Charleston, but in some ways my first hometown was Ravenswood, West Virginia. It’s about an hour north of Charleston, where Sandy Creek meets the Ohio River, built on land that was once owned by George Washington. The then-future U.S. president chose the property in 1770 as part of his compensation for having helped the British win the French and Indian War. While he took note of the area’s rich soil and abundant wildlife in his journal, what he really liked was its location at the intersection of two waterways. Every day, pioneer families were loading their possessions onto flatboats and making one-way trips down the Ohio River to find new homes out West. It wouldn’t take much, in Washington’s view, to turn this 2,500-acre piece of land into a profitable hub for settlers heading to a new frontier. He was right, in 1770.

Washington didn’t get a chance to develop the area. He soon had his hands full with leading the American Revolution and becoming the nation’s first president. By the time his descendants got around to building there a generation later, the market had moved on, and the opportunity that Washington identified had gone with it. The land around the Ohio River Valley was settled and pioneers were pushing farther West by rail or road, neither of which connected to what became the city of Ravenswood in 1852. If Washington had created a place to stop for provisions along the river, Ravenswood might have been well positioned to become a transportation hub. Instead, developers bypassed it, extending their rail lines and roads through nearby towns. When it comes to getting market transitions right, timing is everything.

By the time I got there in 1949, Ravenswood was a quiet community of 1,175 people. Its natural beauty hadn’t diminished since Washington first set eyes on it. As a land of opportunity, though, it fell short. Many of the residents were older and getting close to retirement, including Walt and Myrtle Ritchie, and Pierce and Lenora Chambers. I knew them as Grandpa Bood, Grandma Myrtle, Grandpa Pierce, and Grandma Lenora. The two couples lived about three blocks apart, which was very convenient for shuttling a baby back and forth.

That baby was me. Both my parents were in medical school at Cleveland’s Case Western Reserve University when I was born, so my grandparents took care of me in West Virginia for a period of time to let mom and dad finish their studies. If they hadn’t stepped up, I could have derailed my mom’s career before it even started. For a lot of young women after World War II, having a baby put an immediate end to any hope of having a career. The ads that had encouraged women to work in factories during the war were being replaced with the message that they should give those jobs back to the men and go home to raise kids. My mom wanted to raise kids but she also wanted to be a doctor, and my grandparents supported that dream. They’d all gone to college in West Virginia. In fact, through four generations, every single member of my family has earned a college degree, including every aunt, uncle, and cousin. It was understood by each member of my family that after high school, you’d go on to college and get a degree. My sisters and I never questioned that we’d do the same.

You’ll find Democrats and Republicans in my family, along with vegetarians and meat-eaters, and plenty of other differences that can spark a fun debate, but there are two things that all of us share to our core: a deep love of West Virginia and an unwavering belief in the power of education. We were taught that your best weapon in life is your brain, so you’d better sharpen it. Education was the great equalizer. You didn’t have to be born into privilege to get the skills to compete, and no amount of privilege would help you if you didn’t invest in building your skills. How you’d use those skills would depend on what the market needed. An education gave you something that no one could take away: flexibility to do what you want and the process for continuous learning.

That philosophy shaped how my family responded to the ebb and flow of West Virginia’s fortunes, and it would also shape how I ran Cisco. Education enabled my grandparents and their children to move from a contracting industry to a growing one. My family didn’t work in the coal mines that came to dominate West Virginia’s economy, though I knew a number of people who did. Instead, Grandpa Bood built a successful road construction company while Grandpa Pierce ran a bank. Grandma Myrtle and Grandma Lenora were both active in the community and pushed to improve education throughout the state. I learned early on that to have transformative change, groups had to come together, whether it was government and business or workers and managers. You had to find common ground and shared goals to get things done. I can still vividly remember the exciting, emotional debates that would occur around my grandparents’ and parents’ dinner tables when they discussed how education must change to create the skills needed for the jobs of the future. There was also, as you would expect, a healthy give-and-take about which political party was best equipped to do this. But the key takeaway was always that government and business leaders must work together to position the nation, state, or county for the future. I have said many times before that the two greatest equalizers in life are education and the internet. I believe that now more than ever. It is why, over the last 25 years, one of the ways I have tried to give back is to help spur this discussion with government and business leaders that the current education system is letting us down and will continue to do so. The K-12 system in the United States is broken and in need of dramatic repairs. I believe that, regardless of political party association, once again government, business, and community leaders must come together and have the courage to reinvent education for a new era, or future generations will pay a steep price. This was true in West Virginia but now it’s true across our entire country.

I’m lucky to come from a family of optimists. I never heard my grandparents complain. Even in tough times, they talked about opportunities and were motivated by curiosity, the excitement of a challenge, and a desire to help. My mom and dad acquired those values and passed them to us. They’d been married 57 years by the time mom died of Alzheimer’s in 2005. They didn’t just love each other; they respected and supported each other’s dreams and aspirations, too. My dad was an obstetrician and an entrepreneur who delivered 6,000 babies over the course of his career, about a fourth of them for free. He worked all hours while my mom kept a more regular schedule as an internist and psychiatrist. My sisters, Patty and Cindy, and I were all expected to work hard, treat others like family, and never stop learning about the world.

For a lot of families in West Virginia, education was something you did through the end of high school. You didn’t need a college degree to make a decent living in the coal mines or in a chemical plant. You’d learn on the job. While the benefit of spending four years in college might not be clear to families who’d worked for generations in the mines, the cost in tuition fees and lost wages sure was. For a lot of them, that kind of investment just didn’t make sense. It’s an understandable economic calculation and one reason West Virginia still has the lowest percentage of college graduates of any state in the nation. The people were ambitious and hardworking. They’d just tied themselves to one way of making a living.

Things change—that is the only real constant in life after all. Ravenswood didn’t remain a sleepy little haven. Soon after I arrived on the scene, in fact, the town tripled in size. I’m all about driving growth, but I can’t claim any credit for this! I was about five years old when two major events hit Ravenswood: a state road that had stopped 30 miles short of town was finally extended and a shipbuilding industrialist named Henry J. Kaiser decided to build the world’s largest aluminum refinery about six miles away. All of a sudden, our quiet community became a boomtown. With jobs and development came new families and kids and bulldozers and buildings. Ravenswood needed traffic lights, roads, sewers, homes, services, and bigger schools right away. Grandpa Bood stepped up to meet some of those needs for new roads while Grandpa Pierce helped with financing and planning for an unprecedented degree of disruption. The downtown became the “old town,” and new development was built around it. Kaiser Aluminum built the new elementary school and leased it to Ravenswood for a dollar a year. Everything seemed to be happening at once. For a kid, riding your bike past rows of trucks and bulldozers was exciting. It felt like the future. I loved it. For people who’d lived in Ravenswood their whole lives, it must have been a shock.

When Kaiser Aluminum and Chemical Corporation opened its plant in Ravenswood in 1957, it was hailed as a state-of-the-art facility that would help transform the state of West Virginia. It certainly altered the landscape and created a lot of jobs. But Kaiser’s glory days lasted barely a generation. About two dozen years after it opened, Kaiser shut down the last of its aluminum production lines as demand for aluminum cans slowed. It eventually sold the facility to Century Aluminum, which idled the plant in 2009 before permanently closing it in July 2015. Among other things, the company blamed cheap aluminum imports from China. As production moved to lower-cost centers, the company struggled to reinvent itself, to develop new talent and areas of expertise. Not only was the company reeling but also the community that had sustained it. Without a major commitment to innovate and train people for a new era, Ravenswood got left behind. People moved away. Businesses closed. Once again, the town grew quiet and starved for opportunities. As the coal industry faded amid competition and a switch to new forms of energy, that pattern would be repeated in towns across the state.

I wanted to stay in West Virginia when I graduated. Instead, for West Virginians like me and a vivacious speech pathology major named Elaine Prater who stole my heart in high school, the opportunities had dried up. After two years at Duke University in engineering and then completing an undergraduate degree and law degree from West Virginia University, I married Elaine and moved on to get an MBA from Indiana University. We never moved back. I still feel a little wistful when I think about it. My sisters and their husbands also moved away after college. One brother-in-law, Gary Park, runs a large hospital system in North Carolina and my sister Cindy builds houses there. My other brother-in-law, Vince Anido, has been CEO of multiple successful pharmaceutical companies and lives in Florida with my other sister, Patty. I think all of us would have stayed in West Virginia in a heartbeat if the opportunities had been there.

My state used to be a land of opportunity. After my brief early stint in Ravenswood, I grew up in Kanawha City, a middle-class neighborhood just across the river from downtown Charleston. In the 1950s, West Virginia’s Kanawha River Valley was the chemical center of the country, if not the world. It was home to companies like Union Carbide, Dow, Monsanto, and DuPont, a place that attracted brilliant chemists and engineers from everywhere in the world. If you were in Kanawha City or Charleston back then, you felt like you were sitting in the engine room of the next industrial revolution. We were producing the fuels, the cutting-edge polymers, the disease-resistant seeds, and many of the other materials that an optimistic and fast-growing nation was hungry to consume. West Virginia was on the cutting edge of change. You couldn’t imagine a day when that would change. But the same pattern that had played out in Ravenswood almost 200 years ago played out in Charleston. The market shifted and West Virginia was left behind.

What I learned from witnessing the shift in West Virginia’s fortunes wasn’t so much the challenge of dealing with a downturn but the perils of success. The state fed the world’s appetite for chemicals and coal for so long that it failed to recognize when its recipe for winning would no longer work. We did the right thing for too long. New competitors were coming along to beat us in many of the areas where we thought we were untouchable. As our resources were depleted, it became easier and cheaper to mine coal in western states than in West Virginia. Owners started to use machines that resulted in fewer injuries from mine accidents but also fewer jobs. Meanwhile, energy alternatives like natural gas, solar power, and wind became more feasible and therefore more popular. Antipollution regulations that targeted carbon emissions didn’t help matters much. What also killed those industries were the unions that fought to protect old jobs instead of working with companies to create new ones. Don’t get me wrong. I admire what John L. Lewis did to improve working conditions and pay as head of United Mine Workers in the 1930s. The union served a very important purpose. People were being mistreated. However, over time, union leaders lost sight of the bigger picture and became inflexible about protecting jobs, only to watch them disappear. Much like the businesses they fought, unions struggled to reinvent themselves to stay relevant.

Individually, none of these trends came as a surprise. Each of them has been discussed and debated for years. Some factors were blown out of proportion; others were underestimated. Together, they pointed to an outcome for West Virginia that was clear and inevitable. My brother-in-law Jeff Prater got a college degree in mining engineering and technology but then moved on to a different field for the reasons we discussed. The coal industry wasn’t coming back, nor were the aluminum and chemical industries—at least in their current form. Instead of facing that harsh reality and investing in new areas to adapt to it, as my brother-in-law did, a lot of leaders doubled down on a losing bet. They focused on trying to save old jobs instead of creating new ones. They blamed our hardship on outsiders instead of those who seemed determined to maintain an unsustainable status quo. These leaders gave false hope to good people who had worked hard, only to find they could no longer make a living. Instead of trying to stoke excitement and a shared commitment to prepare for a different future, they became wistful for the past. I can’t blame them. Government leaders are usually not rewarded for taking major political, economic, and social risks. Company leaders confronted a lot of challenges. There are no easy fixes for West Virginia, just as there are no easy fixes for the industries and communities being disrupted by technology today.

At the same time, I wouldn’t bet against my home state. In fact, I’m betting on it. If your car is ever stuck in a ditch and you must look for help in the middle of the night, I hope you happen to be in West Virginia. Knock on any door and I bet you’ll find someone who will welcome you in, fix you up a hot meal, and get you out and on your way in no time. If we come together to invest in startups, innovation, skills training, and digitization, there’s no reason why West Virginia can’t rise again.

Knowing the warmth, loyalty, and resilience of its people, I think the state can develop new centers of excellence and reinvigorate coal country in other ways. The key to this will be strong leadership from the public and private sectors and from educational institutions like West Virginia University, where I am sharing my time, money, and ideas to help develop the programs, partnerships, and people we need to nurture a startup culture. New technologies will transform everything from healthcare to tourism. With a strong vision for what’s possible, reasons to believe, and resources to help train and move people forward, the opportunities are there. The conditions for entrepreneurship are not limited to Silicon Valley. In fact, I believe Silicon Valley has become somewhat insular and risks getting left behind as entrepreneurs create new industries on the other side of the country, as well as the other side of the world.

The strategy that will enable West Virginia to come back, that enabled Cisco to come back in 2001, and that has helped me navigate every market transition is one that I first learned from my parents, Jack and June Chambers. As doctors, they taught us the importance of distinguishing between the symptoms and the disease, to look at the whole patient. The visible condition of any one person, company, state, industry, or country is always a symptom of a deeper issue. To address the real problem, you have to investigate the specific underlying issues and learn to step back to see the patterns and trends that point to the big picture. In short, you need to connect the dots.

I saw my dad take that approach in medicine, in business, and in life. Dad had this unusual combination of skills and instincts that enabled him to spot the opportunities amid disruption. Along with being an extremely successful doctor, he was a successful entrepreneur. Some of my earliest and most profound lessons in business came from watching how he capitalized on disruptive trends that some of his peers railed against. He constantly taught my sisters and me to look for signs that things were changing and think about how those shifts would play out in 5, 10, even 15 years or more.

With that kind of mindset, my dad saw opportunities everywhere. When the interstate highway system was first constructed in the late 1950s, he was excited by its potential for Charleston. While other business leaders pushed for the highway to be built outside the city to reduce traffic congestion, my dad argued that connecting its major arteries inside the city could make Charleston an engine of growth for the whole state. He was right. When plans were announced, dad invested in a local heavy equipment distributorship; he knew consumers and developers would want to lease and service such equipment locally because of its bulk and cost. As the new highway routes took shape, dad built hotels where the roads converged because he believed people would want to gather around easily accessible hubs. He then built residential developments in Charleston that offered commuters easy access to the highway to reduce their travel time to work.

Dad wanted to invest in building a better future for West Virginia. That’s why he also played a key role in consolidating the hospital system and persuaded West Virginia University to set up a satellite operation in Charleston that became one of the first regional health science campus operated by any university in the country. He didn’t try to revive the coal industry or convince Kaiser to keep its aluminum plant operating in Ravenswood. Those industries were dealing with forces beyond his control or influence. What he did see were opportunities to enhance the state’s role as an academic research hub and make cities like Charleston more attractive places to live and do business. Dad wasn’t trying to fight the market shifts. He wanted to anticipate and move ahead of them. In every crisis, he was always calmly focused on the outcome.

Those lessons were reinforced early in my career at IBM and Wang. IBM was a revered tech giant when I joined its Indianapolis office in 1976. I wasn’t all that interested in technology but I was intrigued with what it could do. The computer revolution had hit Corporate America and no brand was more powerful than Big Blue. It was the home of the mainframe computer, which relied on massive room-sized systems to process mountains of data. The technology was so compelling that IBM’s leaders couldn’t imagine people going anywhere else.

If you weren’t looking, the threats were easy to ignore. I’d joined an industry giant at the same time that a kid named Steve Jobs was creating Apple Computer with two pals in his garage and another young entrepreneur named Bill Gates was trying to build on the $16,000 of revenue he’d made in Microsoft’s first year. Although my enthusiasm for helping customers use IBM technology earned me the title of top new sales rep in my multistate region that year, I soon realized that we risked being out of touch with the people we wanted to serve. Companies were moving to minicomputers and IBM’s version was difficult to use. When I shared the negative feedback from customers, my bosses didn’t want to hear it. We were the experts; customers were supposed to buy whatever we put in front of them. That attitude may explain why IBM also let Microsoft create the operating system for its new PC without demanding that the startup stop selling software to IBM competitors. At IBM, the prevailing view was that its proprietary hardware was unbeatable; software was the commodity. It didn’t matter if customers were saying otherwise. Like West Virginia, it got stuck on a strategy and mindset that no longer fit the market. In short, 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.

When I got a call from Wang Laboratories in 1983, I decided to take it. Not only was Wang leading the next wave of innovation—the minicomputer revolution—but its home base along Boston’s Route 128 was the high-tech center of the world. Much like Silicon Valley would later do, it had become a magnet for people who wanted to create technology that could change the world. The biggest draw for me, though, was a chance to work with Wang founder and CEO, Dr. An Wang. Many people knew of his reputation as the brilliant, charismatic leader who’d invented magnetic core memory and brought word processing to the average office worker with his revolutionary minicomputer. I had a chance to witness up close what a deep thinker and decent man Dr. Wang could be. At the same time, I saw how he failed to respond to a market shift and repeat the kinds of mistakes that had cost so many West Virginians their jobs. He underestimated the strength of the PC and the Internet Revolution, which cost 32,000 people their jobs. Instead of having the courage to realize that our technology wasn’t competitive against PCs that ran Microsoft, we faded from the game. I oversaw five rounds of gut-wrenching layoffs in the 18 months before I left. We weren’t alone. The entire Boston tech cluster lost out to Silicon Valley by failing to anticipate and adapt to disruption. Like IBM, Wang was so focused on stealing market share from its peers that it underestimated the impact of a new crop of competitors. What’s more, many of our investors and analysts applauded that strategy. As the industry leader, it seemed more prudent for us to build off our core business than to take risks that might sabotage profitable products. When customers moved on the next innovation, though, the core business crumbled. It’s a script that I’ve seen play out many times over my career.

I came to Cisco in 1991, determined to never again sit idly by as the world moved in a different direction. This time, I was betting on David instead of Goliath. I moved to Silicon Valley to help build a 400-person company that nobody really knew, making $70 million a year in revenue from a microwave-sized product that few were really sure they needed. Routers were a relatively new technology that let you send data between computer networks. In the days before the World Wide Web, the value proposition of that technology wasn’t clear to a lot of companies. Friends, especially from back East, congratulated me on joining Sysco, the food distribution giant.

What excited me was Cisco’s potential. I didn’t see a manufacturer of routers. I saw a pioneer at the forefront of a tech revolution that could change the way people work, live, play, and learn. In such a small operation, I could help create a culture that would not only embrace change but seek it out. Freed from the demands of entrenched interests, we could be the disruptors instead of the disrupted. Despite our modest size, we weren’t alone in spotting opportunities in connecting people online. There were about 50 companies in the networking business in the early days of Cisco. Today, all of them have either collapsed, exited the business, or been acquired. Cisco faced many daunting competitors over the years, all of which were purported to signal the end of Cisco and most of which disappeared in relatively short order: Nortel, Lucent, Wellfleet, SynOptics, IBM, DEC, Cabletron, Alcatel, 3Com, and many more. Many were bigger, or more established, than Cisco at one point. I’d like to believe they just couldn’t keep up, but the truth is that many stumbled because the world changed faster than they did. While each company had its own unique set of circumstances, 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. They didn’t disrupt, so they were disrupted.

Cisco not only survived, it thrived. When I stepped down after 20 years as CEO in 2015, the company had become a $47 billion-a-year tech giant with over 70,000 employees. We moved from having a single product to 18 different business lines, with a No. 1 or No. 2 market share in all but a few of them. From the TV programs that stream into your home to the data being generated by a smart grid, we’d helped millions of people connect and protect their data across the network. We did it through building great technology and teams, through listening to customers and partnering with innovators. We acquired 180 companies over the course of two decades and developed innovation playbooks that could be replicated across the company and beyond.

But it all starts with what I learned from West Virginia: the need to stay ahead of the next wave. It’s a lesson that applies to every individual, every business, every state, and every country today. If disruption isn’t at the core of your strategy, you’ve got a problem. A market transition is not a threat. It’s a period of movement from one state to another, when the skills needed to do your job change, when your customers move on to a new technology, or when an economy shifts to new model. It can happen on its own, or as part of a wider trend. What matters is that you recognize it’s both a reality and an opportunity. Those who ignore where the market is going or waste a lot of money in trying to fight it never get very far. They might try to fall back on familiar tactics or pick an easy fight with a traditional rival. When you compete against another company, you’re looking backward. When you compete against a market transition, you learn how to see around corners. Growing up in West Virginia taught me that no one is immune from disruption. Those lessons apply whether you’re a small business that’s looking to grow or a multinational that’s trying to shift to a new model. The ability to figure out what change will look like three to five years before it happens—and then act on it—is how you’ll win.

I’m not wringing my hands over what happened to the minicomputer industry in Boston. As with coal mining in West Virginia, the disruption of an industry doesn’t mean the people and places that once depended on it have to be left behind. We all have choices. They might not be easy choices, but the message here is a positive one: Those who embrace change are about to experience one of the most innovative—and potentially lucrative—periods in human history. Digitization will transform every industry and interaction. For the brave, there will be opportunity. For those raised on a foundation of strength and family, like the people of West Virginia, there will be a chance to lead. This isn’t a Hillbilly Elegy that views those who’ve been disrupted as a lost cause. You can reinvent. I am investing in business education and entrepreneurship through West Virginia University for the same reason that I’ve invested time in writing this book. I believe the next wave of innovation will connect and empower people on a scale never before seen, giving everyone a chance to compete.

Who will win in this transition isn’t clear. I lived in Pittsburgh in the 1980s, when steel companies kept announcing job cuts and there seemed to be nowhere for ambitious young people to go but away. Today, Pittsburgh has become a model of entrepreneurship and innovation. You can feel the excitement and see the results. Silicon Valley, in contrast, has gone from being viewed as a place that helped the world solve its problems to one that’s also causing problems, from a job creator to a potential job destroyer. When I first came to Silicon Valley, a lot of the leaders had strong ties to other parts of the country: Netscape’s Jim Barksdale grew up in Mississippi, Larry Ellison hailed from Chicago. Now the Valley seems a little more inbred and out of touch with the average person in America. Silicon Valley is becoming less a magnet for top talent than a target that many of them want to beat. I think Silicon Valley will adapt, but nobody can take success as a given.

So don’t write off West Virginia. I’m betting on the Mountaineers and believe my home state can become a startup state if the university, business, and public sectors come together to support transformative innovation. We’ve seen companies like Cisco, Microsoft, and Apple, industries like automotive and energy, and countries like India and France reinvent themselves. They don’t focus on preserving old industries or an old way of life, they understand that sticking to a current course is their biggest risk. Your ability to understand and get ahead of market transitions will determine whether you stumble or rise above the rest. In the next chapter, I’ll share some of the techniques that you can use to connect the dots and get a better sense of where the world is going.

For me, though, it all starts with confronting the realities of the world that we’re in and the urgent need to adapt ahead of change. There were times in human history when the job you inherited from your parent was pretty similar to the one you’d hand down to your child. We don’t live in those times. Most of us understand the disruptive power of technology and can feel the accelerating pace of change. If you didn’t, you probably wouldn’t be reading this book. At the same time, though, there’s no reason to panic or underestimate the strengths you already have.

I’ve talked about how I learned to spot and move on transitions from my dad. I learned equally important lessons from my mom about the power of connecting emotionally with people and of genuinely respecting others, regardless of their status or stature. I’ve always considered my employees my family. From time to time, I’ve had different communications experts suggest “family” is inappropriate when talking about employees, wanting me to use “team” instead. I love the notion of teams and use it often, but I’ve also always considered my employees my family and have always tried to treat them accordingly. I think they’ve known that and it has made a difference in good times, but especially in challenging times. I couldn’t have gotten thousands of employees to move as fast as I’ve needed them to if they didn’t trust me, and trust comes from feeling valued and respected. I also don’t know any other way to operate.

The lessons and values that my mom and dad handed to me are similar to the ones that Elaine and I taught our son, John, and daughter, Lindsay. And bear with me, as a proud parent, when I tell you how I now see them live those values every day in their professional and personal lives. Lindsay wouldn’t be the leader in her field of residential real estate development and interior design if she wasn’t highly attuned to the changing patterns, preferences, and trends of her partners, clients, and industry at large. She’s always looked forward and dreamed big. And John has created a career helping disruptive companies like Houzz, Netflix, Walmart.com, and JC2 Ventures enter new markets, adopt new strategies, and understand changing customers. They’ve both achieved success while operating with the highest integrity, building strong relationships, and genuinely caring about people around them. Although my children didn’t grow up in West Virginia, they are also as proud of our family’s ties to that state as Elaine and I are. You don’t have to disrupt who you are to disrupt what you do.

I love West Virginia. There’s nowhere like it on earth. At the same time, the story of my home state is a cautionary tale in what can happen if you don’t make bold moves to get ahead of a market shift. You have to disrupt, or you will be disrupted. Like our own stories, this one is far from over. Nobody is too far behind to come back and nobody is so far ahead that they can’t be replaced. The strengths that you build can be deployed in a new way. It’s not easy but if you start by shifting your focus to the big picture and look for clues to what’s around the corner, you’ll have a head start on those who are focused on preserving the past.

I’m starting this book in West Virginia, in part, because it’s where I got my start in life. The bigger motive, though, is that I see a lot of parallels with what happened in my home state and what’s happening in every part of business, the country, and the world today. We all know that markets are shifting. Whether it’s Uber in transportation or Amazon in retail, no industry is untouched by the disruptive power of new technologies. We’re not just coping with new products and competition from places like China or Mexico. Every company is becoming a digital company. Every person on the planet has the potential to compete against a multinational—and win. With digitization, anyone can innovate and leapfrog the competition at a scale and speed that’s unprecedented. Once mighty companies have failed. America’s dominant position as a center of tech innovation is coming under threat as other countries start to move ahead. Even Silicon Valley’s position as the world’s leading hub for disruptive innovation is far from assured. As everything becomes connected, the rules for success start to change. How you adapt will determine whether you win.

It’s a mindset that shaped how I led Cisco. If you were to ask our customers what we did better than our peers, many of them would say that we moved quickly, with a sense of urgency, to get ahead of market transitions. We absolutely got knocked back on our butts a few times, but in each case, we came back stronger, as our competitors went bankrupt or got consumed. I’d like to say that we were smarter, faster, nimbler, more advanced, and perhaps even better looking than our rivals (you’ll get used to my sense of humor, or lack thereof, as you read this book), but the reality is that we recognized what was happening, responded, and learned to better spot what was coming and get ahead. 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. A lot of people are scared by the next wave of innovation. They can see the threat. What’s less clear is how to respond.

It’s not unlike the challenges that hobbled West Virginia. The difference is that what I saw play out over the course of two generations there can now happen within a few years. I’ve been lucky to spend my career on the front lines of the tech revolution, seeing entire industries get disrupted and building a company that became the backbone of the internet. Now, I believe we are on the cusp of a revolution that will take the impact of the internet and multiply it—possibly by a factor of three to five—and play out faster than seems conceivable from the vantage point of today. The coming era of digitization represents an inflection point like no other in our history. The individual trends may sound familiar: artificial intelligence, virtual reality, Big Data, cybersecurity threats, drones, the Internet of Things, driverless cars, block chain technologies, and more. Put them together and the market shift will be profound. We’ve gone from connecting 1,000 devices to the internet when Cisco was formed to more than 20 billion today. Within a decade, some 500 billion cars, fridges, phones, robots, and other devices will be communicating online. The digitization of just about everything will force us to rethink all aspects of our lives—from our business models to our education system. If we don’t get it right, entire industries and even countries could be left behind. A few years ago, I predicted that the disruption would be so brutal that 40 percent of businesses probably wouldn’t exist in 10 years. I got a lot of pushback for that. In retrospect, I think I was being too conservative.

As I first learned in West Virginia, no person, company, industry, or place is immune from disruption and no one factor is to blame when it happens. And when it does happen, incredible opportunities are always created—both for emergent players and for incumbents. I’ve talked in these first few pages a lot about disruption from the lens of the incumbent. I am equally enthralled with the role that startups play in driving the disruptions and then growing, and the lessons they can take away to increase their odds. I believe that a thriving startup environment is critical to every country, and that tomorrow’s leaders will be those who nurture a healthy set of disruptors to move us forward. Over the coming pages, I will lay out a set of lessons—based on a lot of scars, moments of genius, and episodes of failure—that apply to any individual and leader in business today. If the lessons of my last few decades help even a few leaders, pioneers, dreamers, and change agents more successfully navigate the digital world in front of us, this book has served its purpose.

LESSONS/REPLICABLE INNOVATION PLAYBOOK

Disrupt, or be disrupted. Embrace digitization and new technologies that are transforming how you live, work, and do business. The pace and scale of disruption are increasing. Look for industry innovators, startups, new technologies, and—most important—shifts in customer behavior. You can’t plan for a world ahead if you are not investing in imagining it.

Keep learning. Education is the great equalizer. Make time to update your skills as well as your technology prowess by learning about innovations in your industry and beyond. If you are an employer, create opportunities for people at all levels to learn and innovate in the digital world.

Change before you have to. The worst mistake is to do the right thing for too long. The time to pivot is when your business is still healthy and you’ve earned customers’ trust. Try out new technologies, and embrace a philosophy of constant change.

Take risks and move fast. Better to stumble first than arrive last. First movers face the biggest risks but get more attention, opportunity, and leeway to make mistakes.

Be a magnet for talent. As an individual, be the person who’s known for embracing innovation and promoting change. And remember the adage, “People won’t remember what you say, but they’ll remember how you made them feel.”

Seek diversity in colleagues, neighbors, customers, and local industries. Company towns can die when the company goes away and like-minded people tend to reinforce existing points of view. Diversity breeds resilience and innovation.

Anchor on your core values and strengths, even as you question conventional wisdom. You can disrupt what you do and what you know, but always stick to who you are and what you value. Build on what you know, and use your expertise to guide you into new areas.

Anticipate failure. At times you will fail. Get up, dust yourself off, learn from your mistakes, and move on. How you handle setbacks is as important as how you handle success.

Chapter Two (#ue5c6b010-8e15-5506-b57b-e98a32b1d2d4)

ACT LIKE A TEENAGER AND THINK LIKE A DYSLEXIC (#ue5c6b010-8e15-5506-b57b-e98a32b1d2d4)

(How to Spot Market Transitions) (#ue5c6b010-8e15-5506-b57b-e98a32b1d2d4)

One of the advantages of being a CEO in Silicon Valley for 20 years is that I got to see a lot of leaders when they were just starting out. Their businesses and their personalities are all quite different, but they share some common characteristics with a lot of the startup founders that I’m betting on today. If you think that they all came in with an impressive track record or flawless communications skills, you’re wrong. In fact, some of them were so green and lacking in those areas that it was easy for critics and competitors to write them off as inarticulate, naive, or even immature. What struck me was not their inexperience, but rather their insatiable curiosity and ability to handle multiple random data points at once. Along with possessing a bold, almost dreamlike vison for where they want to go, they have this distinct talent for moving from one topic to another with lightning speed, and possessing a bold, almost dreamlike view for their company. It’s the kind of nonlinear thinking that someone who is dyslexic, like myself, will find familiar. The most consistent similarity across every age and area of expertise was the mindset of these entrepreneurs: They came across as fearless, curious, and hungry for new ideas, with a desire to disrupt a segment of the industry. They were all about the future and determined to do things differently from the people who were in charge. Some seemed almost too impatient to stand still and none of them were satisfied with the present. In short, they acted and thought like teenagers—with all the enthusiasm, bold dreams, and ambition that most of us had at that age. Teenagers don’t believe in incremental change and the best leaders don’t either. They want to disrupt the status quo and are frankly audacious in believing they can change the world. I’ve seen that quality in startup founders who are not far removed from their teens and also in leaders who are well into their nineties.

What differentiated the ultimate winners from the losers in Silicon Valley wasn’t their ability to “mature,” but their ability to hold on to that teenage mindset and “dyslexic” ability to connect the dots while adopting the practices to scale and continuously innovate their businesses. Today, many of those impatient, curious, and bold founders are leading some of the biggest tech companies in the world. The qualities that made others write them off were essential, I believe, in fueling their success. What is so exciting—and makes me feel so positive about the future of startups on a global basis—is that I see the same combination of factors in the next generation of leaders. The difference is that, this time, I’m seeing those leaders emerge in every part of the world. Three of the startups I am involved in have CEOs who have won multiple awards and recognition as leaders under the age of 30. They are all similar when it comes to their vision, curiosity, impatience, competitiveness, and bold aspirations to change their segment of the industry. The age of the average CEO I am meeting with nowadays is actually getting younger. The reason, I think, is that the need to solve hard problems with a digital native’s enthusiasm for new technologies and a desire to disrupt the status quo have never been greater. That’s not enough to win in the long term, as I’ll explain later on, but that mindset is a prerequisite to being in the game.

In the last chapter, I talked about the lessons of West Virginia to show how any place can become a market leader at a point in time, and lose that status when it fails to get ahead of market shifts. In this chapter, I want to bring the focus back to the individual. Everyone has their own definition of leadership. For some of you, it might involve starting a company that will change the world. For others, it might mean becoming a decision maker in a major company that needs to adapt to a rapidly changing world. Some might want to build a career in politics or create momentum around a cause that really matters to them. No matter what your ambition, the foundation for success is not only your skills but your mindset. If you are curious, hungry to learn, audacious, and eager to seek out change, I’d bet on you before I’d bet on someone with a great set of skills but no vision for what’s possible, no appetite for what’s next, and no willingness to take bold moves.

Why am I so optimistic about the role digital natives will play in leading us through the next waves of disruption? They are prewired to seek out change and dare to get ahead of it. If you’re a CEO or the leader of any organization, you have four key responsibilities: (1) to set the vision and strategy of the organization; (2) to develop, recruit, retain, and replace the management team to execute that vision and strategy; (3) to create the culture; and (4) to communicate all of the above. How you fulfill those responsibilities will depend on everything from your industry to your personality, but it’s hard to succeed in any of them if you don’t start with the right mindset. You have to develop a capacity for filtering and evaluating the facts, the fears, the fiction, and the feedback that bombard you every day. When you see an opportunity, you act fast to figure out where the world is really going. Standing still is riskier than moving forward. If you wait until the trend is obvious, you’re already too late.
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