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A year and a half after beginning one of the most important restructuring efforts in its history, Cisco is once again in trim, fighting shape.
It was a strenuous step but a necessary one, argues Chairman and CEO John Chambers, because the Cisco of 2013 and beyond is a tech behemoth that not only looks at challenges, such as chief executive succession and the emergence of software-defined networking, but also has its eye on becoming the world's No. 1 IT company. It isn't far-fetched that Cisco, Chambers said, can be the largest IT company, given just how many of the major market transitions occurring, from big data to cloud to mobility, depend on the network.
The ever-effervescent Chambers touched on all those topics and several more during an exclusive, 45-minute discussion at Cisco's San Jose, Calif. headquarters this month with CRN. The conversation veered abstract at times, true to Chambers always-percolating way of answering questions. But, Chambers this time around was more forward-thinking, more upbeat, more evidently satisfied and more overtly competitive than he was just 18 months earlier during his last CRN sit-down. Things are clearly getting good at Cisco again.
Excerpts of that conversation follow:
You made some specific remarks a few weeks ago about Cisco's CEO succession and said you'd step aside likely in two to four years. Why is now the right time to be planning this?
So, the thing we've done well over the years, together on our focus on our channel partners, is be very predictable. The first decision I made when I came to Cisco was to move us from a direct player to a channel partner and that's still where 80 percent of our business goes. In terms of transitions, we've done this so smoothly as a company that you don't even see when we make transitions.
We've had seven heads of sales. I personally liked the second one because it was me -- little bit of humor there [laughs]. We're on our fifth CFO. We've had five or six different heads of engineering, a number of heads of manufacturing, and the point I'm trying to make is that we do this extremely well, and if we do it right, you'll see the same transition at the top.
Barring a surprise -- and if the board wants me to do it; I have to earn it -- you'll see me transition to chairman at that time as we pass the CEO mantle. But, the real issue here is that the market is moving very rapidly. We've had regular succession planning for two decades, a first wave and a second wave, but that was more "hit-by-the-bus" or I mess up. Now, we're looking at a logical transition occurring, and last year we said three to five years, so guess what, now we're saying two to four. No major surprises there.
What's exciting about it is that we have two waves on which we meet with the board on leaders. The first is three or four people, the second is five or six, and that seems like a lot, but really, it's what you need in the pipeline. It isn't just about who's going to be CEO, but who are the three to five people that are really going to run the company. And by the way, no one will be CEO here who would not stay if they weren't one of the three to five running the company. This is about culture and direction. And nothing's a guarantee, but it can be a lot smoother perhaps compared to what peers like GE went through with their transition.
In terms of why now, you have to basically get very visible in terms of the new leadership. You've seen me put Gary Moore on the road, you've watched me put Rob Lloyd on the road, you see up and coming players like Edzard [Overbeek], Pankaj [Patel] -- hasn't he been spectacular in engineering? We've got players in engineering stronger than we've ever had. We've got seven or eight VPs there who are really good: Marthin De Beer, Rob Soderbery, Chris Young -- an up and coming star -- Kelly Ahuja; I could just go boom, boom, boom, all world-class players, [and] David Yen. You see the same thing in sales. Rob has four to five players who could be the head of any of our competitors. Same thing in services: world-class organization.
What you see is a management breadth and depth that none of our peers have, and we're going to make these transitions ways that are almost completely transparent. Why? It's time to make clear what we're talking about, and even though at times, no good deed goes unpunished, we are going to be a transparent company. We're going to share with the market what we're seeing, we're going to share with the market what we think the implications would be, and I think we'd all agree that over the last 20 years, but especially in the last five or six, we've called every transition right.
That was good, but also a little bit lucky. We got the tar beat out of us on the transitions that were negative and those [problems] were criticized as "unique to Cisco," but once again, we emerged stronger than we did in any upturn or downturn. That's what Cisco does. We will do the same with the top position. My job and the board's job is to make sure this is relatively seamless.