When I saw that Patrick O’Shaughnessy had posted an interview with John Chambers last week, I rushed to listen. The following quote contains a number of gems which I will continue to mine.
When Chambers uses the term “pattern recognition” and explains the concept, it’s so much more coherent than the latest BI and data science geek speak.
And when Chambers mentions “[seeing] the patterns so accurately… for 40 quarters in a row” the whole concept of “engineering growth” comes to mind, especially regarding the implications of a public company that can successfully and near-perfectly engineer growth over long time horizons. Cisco’s case reminds me of what I learned about Netflix’s growth levers, and Enron’s artificially engineered growth.
John Chambers was the CEO of Cisco from 1995 to 2015 where he helped grow Cisco from $70 million to $40 billion in annual revenue.
Begin quote (via Invest Like The Best)
“Pattern recognition defers to the numbers. [It’s] the ability to be able to see the patterns based upon how an order rate went in a given day of any month, in a given week of any month [or] quarter, of a given quarter in a year—and to see the patterns so accurately that for 40 quarters in a row, we not only didn’t miss… we were plus or minus, always at the midpoint or above in the range of the market. [And that’s] even though eighty percent of our business was new every quarter. So we not only hit our year forecast, [but] we hit the quarter forecast, always at the number, usually 2 cents [per share] above…
…it was that pattern recognition that allowed us to spend money during the quarter and be able to develop in ways that others did not. [It was] pattern recognition that [enabled us so that] if there was a problem or an opportunity, we saw it at the very beginning, which we could then adjust appropriately to.
But it wasn’t just at the top, it was all the way empowered down through the various engineering and sales arms. They were able to see the numbers so accurately. [And] they knew what they needed to change and correct ahead of time on it.
So that pattern recognition is so key. The pattern recognition has always been driven by customers… I get an idea about a market transition enabled by a new technology and then I go straight to customers and say, “what do you think?”
[It’s the] pattern recognition amplified by listening to the right customers at the right time, on what they think, either on the issue or the company, [that] allowed us to do 180 acquisitions with the highest track record… in the hi-tech industry… we were a machine on acquiring [companies]…
We ran playbooks on everything that we did, from acquisitions to being [number] one or two in a product category, to how you digitize a country, etc., in terms of direction.
It is that pattern recognition [which is] then put into playbooks that allows [you as a company] to move at a speed that others can not.
A simple issue: Playbooks. Pattern recognition. Then replicating that pattern much like a great sports team… [for example, the] Warriors team that passes 130 times per game, which is more than anybody has ever done in history, and wins 98% of the games when they pass 130 times…
Watching the patterns, then replicate it and playing it through, and being able to tell those stories again of what works and why it’s applicable.”