Cisco's Chambers: A retrospective
- 07 May, 2015 04:36
You don't become one of the most admired and successful CEOs in Silicon Valley and in all of business by doing many things wrong.
Sure, there were missteps along the way for Cisco during the 20 year leadership of John Chambers. But they are outnumbered by the successes and overshadowed by the company's sustained growth over those two decades.
"The growth of the company, from what it was to what it became," will be the highlight of Chambers' career, says Glenn O'Donnell, a Forrester Research analyst. "Cisco is one of the great success stories of Silicon Valley. That will be his legacy."
Chambers will step down on July 26. His successor is Chuck Robbins, a 17-year Cisco veteran and currently the senior vice president of worldwide operations, responsible for direct and indirect sales. That was the same role Chambers had in 1995 when he was named CEO, having come to Cisco from Wang Laboratories in 1991.
During Chambers' tenure, Cisco grew from a $1.2 billion maker of multiprotocol routers and Ethernet switches into a $47 billion IT titan. That's a compounded annual growth rate of 20% during at least two major economic downturns: the dot-com bubble of 2000 and the Great Recession of 2008.
And just before that dot-com bubble burst, Cisco was the most valuable company in business with a market cap of $700 billion.
Cisco left its traditional switch and router competitors behind as it set its sights higher than just providing Ethernet and IP data networking infrastructure. It ventured into voice and video, data center servers, storage networking and sensors as it looked to broaden its reach and disrupt several non-traditional markets in an attempt play a more vital role in communications.
It helped speed the demise of Bay Networks, Cabletron Systems and Nortel; it marginalized other traditional enterprise networking competitors, like Extreme Networks, Foundry Networks, Alcatel-Lucent and Avaya; it forced marriages like HP/3Com, Nortel/Bay, Wellfleet/Synoptics, Dell/Force 10, Extreme/Enterasys, Brocade/Foundry; it toppled IBM's SNA and prompted IBM to abandon networking -- twice.
Along the way, Cisco acquired 168 companies to spread its influence and fuel its growth. Most of these ventures were met with success; Cisco is the No.1 or No.2 player in 16 of the technology markets in which it participates.
Others were not.
One of Cisco's, and Chambers', chief failings was a stretch to get into the consumer market. After acquiring Linksys for home routers and Flip for pocket video recorders, Cisco divested these business and product lines for much less than they acquired them for when the potential Cisco initially saw failed to pan out.
Apple beat Cisco's Flip to cloud-based videocam hosting and storage. Linksys hung around for much longer but was ultimately sold off as Cisco honed in on enterprise IT. Cisco's Eos media and entertainment, and umi consumer telepresence efforts were also killed off.
And in its bread-and-butter router business, Juniper Networks, Alcatel-Lucent and Huawei took considerable share from Cisco and continue to challenge the leader.
These and other events forced Cisco to look inward and narrow its focus and workforce lest it end up like its compromised peers.
"Not everything is going to work out," says Forrester's O'Donnell. "Cisco is now facing a big challenge going forward (with initiatives like Internet of Everything and digitization of companies, cities and countries), but it will be faced by Robbins instead of Chambers."
In addition to his success, it might be hard for Robbins to match Chambers' panache. During Chambers tenure, he rubbed elbows with several world leaders and other dignitaries during a period when several major world events occurred.
Chambers made Cisco and its business a global brand. He evangelized the Internet -- and Cisco's leading infrastructure presence -- as a global business and consumer communications backbone. He touted the benefits of IP- and Internet-enabling utilities, municipal and governmental infrastructures, and manufacturing and oil and gas industries.
Chambers helped the Internet, IP -- and Cisco -- change the world.
"I'm most proud of our leadership team and in changing the world," he said this week during a conference call introducing Robbins as his successor. "We played a huge role in how the Internet has evolved and changed peoples' lives."