Finding an Opportunity in a Crisis

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Crisis by definition represents a stark deviation from the norm, and deviations often create a lot of noise. Are we in a health crisis, or a financial crisis, or both? Is cash king? Should I sell all my stocks right now, or buy the dips instead? Is the Fed serious with the $2tn bail-out package? Is that why the S&P 500 is back up to 2,900 so quickly when there are 6.5m+ job losses claimed? Is this the stage for Bitcoin to finally shine as a truly deflationary hedge mechanism in the digital era? But why has the supposedly uncorrelated asset shown such a strong correlation to the sharpest decline in stock market history in 30+ years? Was the WeWork debacle really the least troubling news to come out in the past 6 months? Most importantly, when and where is the bottom?

To unravel these trains of thoughts racing through our heads, we often look to prudent investors and industry leaders to remind ourselves of perspective-awakening principles such as: “Crisis is a terrible thing to waste”; “The best way out is always through.” At TechNexus, we recently held a webinar with the former Executive Chairman/CEO of Cisco, John Chambers, to talk about what to make of all that’s going on, and how his teams at Cisco had remained resilient in previous crises by focusing on the facts, and persistently holding a long term view.

“The truth is that each time a market is in transition, you can either gain or lose market share.” — John Chambers

Chambers’ prescience to tap into opportunities from downturns actually goes way back — all the way back to the Asia financial crisis in 1997. Despite the volatility of the Asia markets, and contrary to many of Cisco’s competitors significantly dialing back their resources, Cisco focused on the fact that with the rise of countries like India and China, Asia would come to play a critical role in the global economy in the next decades. As John saw the market transition as “an undercurrent propelling the technology market in a generally unforeseen way,” Cisco then decided to actually increase Cisco’s presence in the region.

Similarly, as the 2008 financial crisis took the world by storm, John held a contrarian view that despite a sharp near-term decline, he “knew how [he] interfaced with [his Asia] customers in the countries during the crisis would determine [his] relationship not a year later, but 5–10 years later.” With the long term relationship-building process in mind, Cisco doubled down on Asia once again, and has never relinquished its leadership position.

What resonated with me the most from the session was that in order to clear our vision from being clouded by emotions and worries in these turbulent times, we ought to find an opportunity by zoning in on the facts. Rather than assumptions, or expectations of what may unfold, focus on the fact that this too shall pass, and swiftly execute based on how you want your business positioned at the end of the tunnel.

This is a crisis. Millions of people have lost jobs. Life is unpredictable and no one is fully immune from this global pandemic. It’s certainly disheartening to see significant business struggles at companies at every stage. Needs for re-sizing of certain businesses are inevitable and necessary. However, so as not to waste this crisis, big corporations and start-ups must make the necessary tough decisions to tighten the ship, defend its long-term trajectory, and explore efficient/innovative sources of growth because crisis only rewards resilient and adaptive competitors, and because within danger and chaos also lie opportunities for businesses.