Cisco's Great Execution Goes Unrewarded

Cisco is a fascinating case study in company strategy and a bit of a puzzle.  The networking equipment giant is known for being phenomenally well-run and dominates many of the markets in which it competes.  In the 1990’s, Cisco advised many companies not just on networking equipment, but also on how to use the Internet in general for business purposes.  Recently, they have been expanding into diverse areas including the smart grid, set-top boxes, and even server hardware, and they are becoming known as a leader in online collaboration.  Yet the stock has gone sideways since 2001, not even taking into account the huge drop after the dot-com bust.  Part of that is simply bad timing, but Cisco is also struggling against the age-old problems of extremely successful companies – maturing markets, the law of large numbers (the difficulty of maintaining growth rates as a company gets bigger, not to be confused with the statistical law), and maintaining adaptability as an ever-larger organization.  Is Cisco’s strategy really all that great, and if so, will it be recognized by the market? Continue reading Cisco’s Great Execution Goes Unrewarded

The Secrets of Market Sizing

Market sizing is a staple of consulting engagements, strategy development, investor pitches, and case interviews (e.g., classics like “how big is the market for golf balls in Japan?”).  Oddly enough, there’s very little publicly-available information on how to go about it.  Maybe that’s how consultants maintain demand for their services, or maybe it’s because no one wants you to know how shaky even the most frequently cited market size estimates can be.

Like forecasts, market size estimates should most often be considered directional (consulting speak for “in the right ballpark”).  You should also keep this point in mind when consuming market size information – the market size numbers you read in the news or market research reports are probably only accurate within 10-20% in many cases.  One of the best ways to ensure that you get at least a sensible result is to triangulate between different approaches: top-down and bottom-up estimates. Continue reading The Secrets of Market Sizing