June 1, 2009 will be remembered for a really long time. As I last blogged, I think the iconic impact of GM as one of the most successful and profitable of all industrial companies makes its bankruptcy more important than almost any other company.
As GM loses its market value, it was forced off the Dow Jones Industrial Average. In "What's behind the Dow changes?" (Marketwatch.com) we can read about how the Wall Street Journal editors selected Cisco to replace GM. I've long been a detractor of GM for its slavik devotion to its outdated Success Formula. For an equally long time I've long been a fan of Cisco and how it keeps its Success Formula evergreen. Cisco reflects the behaviors needed to succeed in an information economy, and its addition to the DJIA is a big improvement in measuring the American economy and its potential for growth.
What I most admire about Cisco is management's requirement to obsolete the company's own products. This one element has proven to be critical to Cisco's ongoing growth – and the company's ability to avoid being another Sun Microsystems. By forcing themselves to obsolete their own products, Cisco doesn't get trapped in "cannibalization" arguments. Management doesn't get trapped into listening to big customers who want Cisco to slow its product introduction cycle. Leaders end up Disrupting the company internally to do new things that will replace outdated revenues. It sounds so simple, yet it's been so incredibly powerful. "Obsolete your own products" is a statement that has helped keep Cisco a long-term winner.
Since even before writing "Create Marketplace Disruption" I've espoused that Cisco is a Phoenix Principle kind of company. One that uses extensive scenario planning to plan for the future, one that obsesses about competitors in order to never have second-place products, willing to Disrupt its product plans and markets to continue growing, and loaded with White Space developing new solutions for new markets. It's a great choice to be on the Dow – which will eventually have to replace all the outdated companies (like Kraft) with companies that rely on information – rather than industrial production – to make money.