CIOs Need To Use Lessons Learned During The Dot-Com Crash To Do Well Now

by drjim on June 23, 2010

Cisco Has Some Lessons For How CIOs Need To Exit The Recession

Cisco Has Some Lessons For How CIOs Need To Exit The Recession

When you become a CIO, you will have the chance to be leading the IT department when the next global recession hits. I don’t care if you’ve got a list of Cisco technical certifications as long as your arm after your title and the fanciest MBA degree available, there’s no training for how to deal with this. Good news: the folks over at Cisco are in the process of blazing a trail that will show CIOs how to deal with this type of situation.

What Cisco Did During The Dot-Com Disaster

Everyone knows that Cisco is a huge company that is now and has been quite successful. What we’re interested in is how they’ve been able to survive the past two dramatic industry recessions – the dot.com event and the 2009-2009 global recession.

The fact that they made it through the dot.com technology downturn means that Cisco came into the most recent downturn with a lot of experience. It’s what they did back then that can help CIOs figure out what they need to be doing today.

Back in 2001, Cisco’s leadership made the difficult decisions early on. In March of 2001 they decided to roll off 18% of their workforce. Because they made such a big cut early on, Cisco didn’t have to make any additional cuts during the entire dot.com crash. There’s something for CIOs to learn from this.

When the dot.com crash had passed through its darkest days and a small glimmer of a recovery started to become visible, Cisco got aggressive. What they did was to start to make investments in new businesses that they thought would be significant markets.

Although as CIO you might not be buying up other companies, the idea of starting early on projects that are going to make the company stronger as you come out of the recession is something that can make or break your CIO career.

What Cisco Is Doing At The End Of The Current Recession

Cisco says that the #1 thing that they learned from the dot.com downturn that they are applying today is that they need to move quickly. They say that back then they spent too much time looking at how dismal the current market was and not enough time looking forward at how the market was going to be in the future.

For CIOs this is a key piece of advice. Since you’ll be rubbing shoulders with the CEO and CFO in your CIO position, you’ll be getting a lot of negative vibes during the recession. It will be your job as the company’s technology leader to rise above the doom & gloom and set your sights on what’s coming your way once the recession is over.

There are tactical things that you’ll be able to do also. Hopefully it goes without saying that if you are able to keep your IT team together, then having an experienced team on board will make getting through a recession that much easier. At Cisco they’ve been able to keep 45 of the 65 executives who were with the company during the dot com days still on board.

Additionally, freezing hiring early on will make it that much easier in the event that you need to do some downsizing – there will be fewer heads that need to be cut.

What All Of This Means For You

If the world was perfect, then when you became CIO the company would have nothing but smooth sailing ahead of it. Clearly this is not the world that we live in.

There will be another recession and with a little luck you’ll be a CIO by then. In order to make it out of the recession stronger than when you went into it, you’re going to need to take action. This means doing the right size downsizing and knowing when to start the projects that will position the company to be successful when the recession is over.

It is possible to hold on to your CIO job even when the global economy is not doing well. The folks over at Cisco seem to have come up with an approach that CIOs would be well advised to follow!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills

Question For You: Do you think that laying off large amounts of your IT staff just once early on is better or worse than multiple smaller cuts over time?

Click here to get automatic updates when The Accidental Successful CIO Blog is updated.

What We’ll Be Talking About Next Time

What if software was free? Every CIO has to stop and ask themselves this question every once in awhile. With the cost of ERP and database systems constantly increasing, software costs can quickly become a significant expense for any IT department. The “Open Source” software movement, born in the days when Napster was giving away commercial music for free, is one way the IT departments can get high quality software for free. But should they?

CIOs have a difficult decision to make when it comes to using open source software: do they risk using software with no formal support in order to cut IT costs
Be Sociable, Share!

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: