Relevance: Hitting Your Goals by Knowing What Matters

5

THREE KINDS OF PERFORMANCE GAPS AND THE STRATEGY REVIEW

The three sorts of knowledge form a tripod: if any leg were lost, no part would stand.

—Donald Davidson

In the winter of 2000–2001, Cisco had a near-death experience. It missed the downturn in the economy. It fired eighty-five hundred employees—about a fifth of its staff—and wrote off $2.2 billion of fast-obsolescing unsold inventory. Cisco stock was down 83 percent by April 2001. The reason was a mistaken growth assumption.

By 2000, Cisco had enjoyed ten years of quarterly growth. Internet router components being in short supply, that growth record seemed to justify aggressive anticipatory component procurement.¹ But dot-com companies were failing and reselling scarcely used Cisco equipment. ...