SAN DIEGO: Cisco’s guiding light — and one of the IT industry’s most accomplished leaders — won’t formally step down until the end of next month (he’ll remain as chairman), but during his keynote at this week’s Cisco Live, John Chambers effectively passed the CEO torch to his successor, Chuck Robbins. Although he will continue a whirlwind global tour with Robbins, meeting with political and business leaders at least until the July 26 turnover, it marked the end of an era, and drew several standing ovations from the 25,000 attendees, and quite possibly from the 80,000 who were participating online.
In addition to his half-job as chairman, the two announced later in a joint press scrum that over and above spending more time with his family, improving his golf game and becoming a better helicopter pilot, Chambers will be kept very, VERY busy in his semi-retirement. In his copious free time he will be responsible for driving Cisco’s security focus, mentoring university students, starting up some new ventures, and working on bringing peace to the Middle East.
There have been a lot of changes during his 20 years as CEO (and several major ones in the last few weeks): Cisco annual revenue grew from $200 million to $47 billion; and the number of staff — which Chambers repeatedly called his extended family — jumped from 4,000 to 70,000. Along the way the company made 167 acquisitions, and now holds down the number one or number two position in 16 of its markets (and third in two others). Plus, the Internet, which he and Cisco are largely credited with making as widely successful as it is today, has soared from 45 million users to 3.1 billion.
As sweeping as these changes have been, we haven’t seen anything yet, said Chambers. Looking ahead, its about transformation to the digital age, and the capability to run the fastest race that’s ever been run. Many organizations say they must change, and are prepared to do so (87% of CEOs think going digital is crucial), but he said the reality is that most aren’t (only 7% have a digital strategy), and technology will not be the major cause of failure.
“The technology is actually the easiest part.” What will bring most businesses down will be the cultural barriers, and he expects it to be brutal. “40% of business in this room will not exist in a meaningful way in 10 years.”
By 2020, 75% of businesses will become fully digital, said Chambers. However, only 30% of those organizations will be successful, and the number one reason companies don’t succeed is that they fail to innovate and reinvent themselves.
The winners — or at least survivors — will be the companies that don’t miss the transitions, that don’t keep doing the right things too long, that reinvent themselves, and that don’t get too far away from their customers and partners, said Chambers. Companies have to have the “courage to realize you have to change dramatically to win”, and either “disrupt or be disrupted”.
Drastic changes are coming with digitization and the Internet of Things/Internet of Everything (IoT/IoE), he said. “I think you’re going to see huge companies that have two employees, a CEO and a CIO.”
The future will be about Fast IT, powering fast innovation, agility and speed, he said. According to Cisco, ‘Fast IT transforms your IT infrastructure, making it more flexible, automated, simple, and secure. It unifies compute, storage, networking, virtualization, and management solutions in a single fabric to:
-reduce complexity and operational costs;
-create capabilities and services that add real value to the business, while protecting investments; and,
-respond to threats intelligently and dynamically.’
The results of Fast IT are compelling, said Chambers. In the last four years Cisco revenues increased $4.5 billion, while expenses increased by just $400 million. Customer examples include: reducing IT OpEx by 20-25%; improving operations 4x; and, lowering network costs by 75%-plus.
Fast IT is just one of the changes transforming Cisco, he said. “We had to change or we would have been left behind.” For instance the company changed 41% of its executives in the last 2 years). Chambers said the company’s transition to Fast IT was without fear, but with a healthy paranoia. “We’ve moved from selling boxes to selling outcomes.”
Cisco is moving pretty fast, but not fast enough., he said. “Watch how fast we move over the next six months compared to the last 2-3 years.”
Looking ahead to the future under Robbins’ stewardship, he made the very aggressive prediction that Cisco will be the leading IT vendor by 2018, ahead of all of its competitors and cohorts, because “we had the courage to do everything over the last 3 years.” About a year ago Chambers and Robbins asked the leadership — about 5,000 executives — if the company was ready, and the answer was not quite yet. “Today we are!”
Chambers said the process to pick his successor was long and complex, but it ultimately came down to Robbins, who was selected by a unanimous vote by the board. He has an unbelievable track record at Cisco… he’s the best I’ve ever ween”, he added.
Robbins opening remarks were a commitment to the customers and partners: “That’s my promise, we won’t let you down.” And when asked by Chambers what needed to be done to make Cisco the IT leader over the next 3-5 years he identified several areas, starting with innovation: “we’re going to crank the pace up like you’ve never seen before.”
Other areas of focus include speed, prioritization, getting the right team together, simplification, and culture. Regarding the recent leadership changes, he said it is “so important for creating a culture of moving quickly.” We wanted to be transparent, “but we also wanted to send a message, that we need to move faster.”
Summing up, Robbins said organizations need build a digital strategy, move with speed and figure out how does your OT and IT work together. “I think the companies that figure it out the fastest win.”
DISCLAIMER: Cisco looked after airfare and hotel; it’s also in my stock portfolio, where hopefully it will play a bigger role, given all the predictions made during and leading up to this event.