By now many of you have read that my old alma mater, Cisco, has laid off more than 4,000 employees and is shedding businesses right and left in an effort to assuage investors.
Don't get me wrong, I can think of about 5,000 people off the top of my head who need the axe at Cisco, but those aren't the ones being axed. They are the ones doing the axe-ing. And please don't misinterpret this as 'I hate executives', as there are good and bad executives just as there are good and bad marketeers, salespeople and engineers.
The mistake is that they are repeating their error of the dot-com crash of 2001 and contracting when they should be expanding. They are cutting down the new growth areas in their infancy, thereby hobbling their future growth potential and damaging themselves more in the long term. They are retreating to a conservative posture of their core, cash-cow, mature (read: Geriatric) businesses that have no rapid growth potential. They had market dominance and cash on hand during the last downturn, and could have purchased key technologies and companies until the DOJ red carded them for a market monopoly.
This is the bigger problem. Investors want consistent quarterly results and linearity in a non-linear market. This gives no latitude for executives who need to rapidly innovate, as rapid innovation introduces large upswings or downswings depending on success. Investors hate swings, but they are an inevitable byproduct of market maturity. They want a clear, linear path to RoI. That's the Indy 500, driving circles consistently over and over. Unfortunately, Innovation is the Rubicon, off road and harsh.