How you handle setbacks is what determines great firms: John Chambers

How you handle setbacks is what determines great firms: John Chambers
John Chambers, chairman and chief executive officer (CEO) of Cisco Systems Inc., the world’s largest maker of networking equipment, has been the face of the $48.70 billion company for 20 years. On 26 July, Chambers, one of the world’s longest-serving non-founder CEOs of a major company, will become executive chairman to make way for Chuck Robbins, who replaces him as CEO. Cisco’s financial year starts on 1 August.
Both Chambers and Robbins were in India to meet Prime Minister Narendra Modi and discuss business possibilities around Modi’s “Digital India” vision. In an interview, Chambers and Robbins spoke about the company’s global strategy, their own individual roles, leadership changes that saw the likes of chief technology officer Padmashree Warrior move out, and the way forward with disruptive trends such as the Internet of Everything. Edited excerpts:
How did you narrow down on Chuck Robbins to step into your shoes as CEO?
Chambers: Leaders need to constantly reinvent themselves in a company. We did that in Cisco five times. And if you think about the next-generation leaders, it is the ability to take our vision and strategy and execute it at a faster and faster pace. That is what Chuck is world-class at. He has been able to combine execution with vision and strategy to drive enterprise growth in the US at 21% and drive six quarters of growth in the commercial market at double digits.
If you watch how we made the CEO selection, it was one of the best and done confidentially—16 months of intense focus. If you watch Chuck’s leadership capabilities, he can do the things that I can do, as good as I do, and some even better. His real strength is his execution machine.
So what will your (Chambers’s) role be as executive chairman?
Robbins: First of all, it’s a clear advantage to me to have John in the role (as CEO) for 20 years, to have him stay as executive chairman, which means he will be very active. He is telling me that he wants to work half-time in the next 90 days. But his wife Elaine is asking me to keep him busy since she can’t handle him when he’s idle (laughs).
John has tremendous passion around country transformation, digitization, great relationships with government leaders around the world. And so he will continue to work those, continue to spend time with some of our biggest customers, and countries with which he has built relationships, and others that he will build. He will continue to help us with key strategic partnerships. He will advise me on strategy. He’ll be involved in strategic M&A (mergers and acquisitions) with me.
Most recently, I have asked him to be the executive sponsor for our security and cybersecurity strategy inside our company. So he will have enough to keep him busy in his new role.
How will things work out between you and Chambers?
Robbins: When John first told me that I was going to be his successor, the very first thing he went overboard in making me understand (was) that even though he was going to be the executive chairman, I would be the CEO and take all the decisions. Even for the decisions taken before 26 July, when I officially take over, John told me that I would get a 51% vote on all major decisions taken before that date because I would have to live with the implications of the decisions taken.
We’ve had a lot of healthy dialogue around certain situations over the last eight weeks and I’ve seen that in all the situations, he has implemented what he said. Although we don’t disagree in most situations, I have grown up through the company—almost 18 years here—and I started at the absolute bottom of the organization. So I have seen how the place works, I have worked in almost every segment of our organization across all customer segments.
Hence, I can understand where we can operate more effectively. If you look at our performance, relative to our peers and competitors, we are executing incredibly well because we do have the right strategy.
But given that you bond so well, how easy will it be to drive strategy in your unique way? Some leaders, like Padmashree Warrior, are leaving your company. What was the reason?
Robbins: First of all, our current strategy is right. John has already allowed me to move on things I felt we needed to do. For instance, I announced my new organization and that was done with John as an advisor. We obviously had a discussion with the leadership team, and one of the things that I looked at is, if the vision and strategy are right; then I needed to build a team that could move with speed and be focused on driving the company for the next three to five years.
So we sat down and defined the characteristics for every role that we needed in the leadership team. We picked the people later—those who had those characteristics. Then I sat down with those leaders and said: I need five years. If not, at least three. Are you in for three? So many of the departures that you see are a result of the very honest conversation that we had. Those who left had different aspirations from what we wanted to achieve and you can tell from most of them are very positive on the company—on social media.
Padmashree, for instance, is working on key strategic partnerships. She is a very good friend of mine and John’s. She said, “I want to stay and finish some things before I move on.” And that is the kind of person she is. We saw that across all of the leaders that we faced this situation with. This is the very unique culture at Cisco—something that John has created.
You (Chambers) said you reinvented Cisco five times…
Chambers: We focus entirely on market transitions, which has allowed us to be successful where other companies have failed. The transitions can be economic, technology-driven, change in business models, change in customer buying patterns, etc. We have a lot of skills but the best one is that we listen to our customers, understanding what they are trying to do and then, working together. Then we tie up these capabilities in architectures which allow us to implement this so much faster than our peers.
In terms of segments, we had the courage to reinvent the definition of innovation. For instance, we did acquisitions at a time when people felt that these would fail. Our nearly 170 acquisitions have helped here.
The third is the Internet bubble. Jack Welch (former CEO of General Electric) then advised me: “Watch what your peers do.” We not only emerged successful. We left all our peers behind. How you handle your setbacks is what determines great companies. Not how you handle your successes. In 2012, when we decided to sell outcomes rather than just products. We moved at a tremendous speed, and we had the courage to transform the whole company. And now with the current change of leadership, Chuck has readied the organization for the future.
What’s the way forward, especially with disruptive waves like the Internet of Everything (IoE)?
Robbins: If you think through all the reinvention phases that John described, the one thing that we always start with is the customer. Our customers are thinking how technology is permeating everything they do—much like what we talked about with Prime Minister Modi today. Technology is no longer sitting in a corner of an IT organization—it is defining or enabling and even differentiating the strategy of companies. As we look at that, our customers—whether enterprise or even governments—see the need to move quickly. They either need to disrupt competitors, or they are concerned that they will be disrupted. So what they require us to do is to deliver innovation faster, and see what they can do three to five years down the line.
For the future, I actually see a world where all the architectures we talked about—cloud, IoE, applications, policy and security—come together. We don’t talk to customers just about fast switches today, but what they want to accomplish (outcomes). That’s how we can help our customers through the consolidated use of all the technologies we have. Here’s where we are completely different from our competitors.
India appears to have become a very important part of Cisco’s global strategy…
Robbins: When we speak about our priorities, we start with innovation. When we came to India, it was all about talent, the thousands of engineers, the start-up ecosystem—all that spelt out business opportunities for Cisco. Now we also see a government under Mr Modi’s leadership that truly understands what technology can do to change the lives of the people here in India. He also believes that Cisco can play a very important role in doing that. So we are very excited about this.
How is the start-up ecosystem in India furthering Cisco’s overall strategy?
Robbins: We are very good at partnerships—the channels that we built, our overall partnerships with other technology companies. If you look at things like the converged infrastructure and IoE, they will require complex technologies. We have built innovation through our own R&D (research and development), acquisitions and partnerships. Now it’s also through our investments in start-ups—25 in India today. We believe that our ability to partner in all these areas will help us differentiate ourselves, and help drive an ecosystem of innovation, like in India.
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