Tuesday, 17 May 2011

Cisco's Pearl Harbor

Even 70 years later, the Japanese raid on Pearl Harbor is an emotional topic for many Americans. But viewed dispassionately (maybe easier for me since I'm not an American, by birth anyway), it was a strategic masterstroke and a flawless piece of execution. Japan, a country with practically no natural resources, had created a vast Pacific empire. The US, reacting rather tardily, decided to slow them down by imposing an oil embargo which would be catastrophic for Japan's ambitions. What to do? The concentration of the US Pacific fleet at Pearl Harbor created a unique opportunity to destroy at a single stroke America's ability to enforce the embargo. It was not an easy thing to do - Hawaii is way out of land-based range for the aircraft of the time - but the raid was cleverly planned and rehearsed. Nobody can deny that it worked. Contrary to a common belief nowadays, it was not a "kami kaze" raid - the Japanese pilots and aircraft nearly all returned safely, ready to fly another day.

So, clever strategy, excellent execution. What could go wrong? Well, we all know what went wrong. Not surprisingly the US was seriously irritated (as we Brits would put it) by this devastating attack from a country that was not even officially at war - owing to the one execution failure, the incompetence of the Japanese ambassador in Washington. And over the following four years, and despite the complete destruction of the Pacific fleet, America fought back and of course eventually wiped the Japanese empire off the map.

I don't know the answer to the question, "X is to strategy as strategy is to tactics". I don't think we have a word for that - the kind of cosmic level above strategy - so let's call it "meta-strategy". While Pearl Harbor was strategically practically the only choice for Japan at the time, at the meta-strategic level it overlooked the fact that the US has such vast resources, both human and natural, that it simply cannot be beaten militarily. Until Pearl Harbor, Japan's empire was an annoyance to the US, a strategic threat, but not a reason for  military action. Afterwards, the US had no choice but to react in the most devastating possible way - and was able to do so.

What does this have to do with Cisco? By the mid-2000s, it had the enviable position of total dominance in its market, but had nowhere else to go. Hence the famous misadventure into the consumer domain. But there was something much more adjacent to its existing empire in the enterprise - the computing side of the data center. There were a few truly visionary people inside the company who could see this and tried to lead them there. There were a few false starts, but finally the acquisition of Mario Mazzola's Nuevo Systems spin-in/out in 2006 gave them a credible product to address this market. Since then Cisco has turned it into a $1B product line.

What could be wrong with that? Brilliant strategy to get the company out of a tight corner, excellent execution. Now maybe you can see the parallel with Pearl Harbor. Because shipping a product to compete directly with the traditional computing providers was a direct attack on them, the commercial equivalent of bombing their Pacific fleet into shrapnel. What's more - and this is where the analogy breaks down - IBM and HP were not just competitors, but also major sales channels for Cisco.

HP has taken this very badly. They couldn't just walk way from their Cisco partnership, but it's clear that a decision was made at the highest level that Cisco was now the enemy. Five years later we are seeing the result of this, even to the extent of hiring away Cisco's top techincal architects - not to mention acquiring 3Com. Curiously, it was HP who destroyed my previous large-company employer, DEC, after Ken Olsen's disastrous "snake oil" speech and outright rejection of Unix. Looks like they'd like to get Cisco, too.

As for IBM, whatever nice things may have been said in public, they never got over being driven out of the networking business by Cisco in 1999. There has never been much love there, and Cisco's move into their very own territory was just one step too far.

I don't know what Japan could have done if it hadn't attacked Pearl Harbor, and I don't know what "adjacency" Cisco could credibly have attacked if it hadn't been the data center. But the meta-strategic issue is the same in both cases. The US will come and get you if you annoy them enough - just ask Osama bin Laden. And so will IBM and HP.


David Kirk said...

John, stimulating food for thought.

Peter Long said...

I like your insight - nice job.

L. said...

Not sure the Pearl Harbour analogy holds up - there's a school of thought that says that Roosevelt knew that the attack was coming, and deliberately prevented the fleet being warned so that it would be sunk, with the resulting public outrage forcing the US to enter the war.

Now that's metastrategy.