Cisco's Chambers: 'Disrupt Yourself, Or Be Disrupted'

Tom Spring

January 07, 2015, 07:50 PM EST

John Chambers

Cisco Systems CEO John Chambers has a message for the business world: Disrupt yourself or risk being disrupted by the competition.

During a panel discussion here at CES in Las Vegas, Chambers reflected on the rapid pace of change in IT that has forced Cisco to rethink how it will be successful in the years ahead.

"Cisco has changed more in the past year, as we position ourselves for the future, than we have any five years before this," he said. "Over the past six months, we have reorganized the entire company. Almost 70 percent of our engineers are now doing something different for us. We had to do some very painful things like laying off 7,000 people and hiring back 6,000 with different skill sets. We have moved from selling boxes to selling outcomes."

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Chambers said that the IT industry is in a period of transition where the "Internet of Everything" is poised to accelerate the digitization of entertainment, people's lives, companies, governments and entire cities.

"What you are about to see with the Internet of Everything is the unlocking of enormous potential," Chambers said. When you connect the digital worlds together -- from cities, companies, citizens, automobiles and even sporting events -- new capabilities are possible, he said.

He said business and Cisco partners were on the front lines of that digital change. And that soon every business and vertical will be forced to embrace the digital revolution and "every business will become a tech company."

Sensors, monitors, data collection for energy, health care, entertainment habits will become digitized and will help revolutionize health care, education and the entertainment industry.

"The speed of change is one of the key messages of today's world. Even the most powerful company in the world knows they have to move dramatically or risk getting left behind," Chambers said.

To navigate that change, Chambers advocated that companies needed to partner and work together to help one another.

"To move somewhere as a company is hard enough, but to achieve something good with another company requires even more commitment. But with the speed in the market today, you have to rely on other partners to get anywhere," Chambers said.

"Just watch what Uber is doing to the taxi industry and what Air BnB is doing to the hospitality industry and what Amazon did to bookstores. Now look at Walmart and how it has to reinvent itself virtually and physically to survive," Chambers said.

You either disrupt your industry, disrupt yourself, or become a victim of disruption, he said.

"This is not a technology discussion, by the way," Chambers said. Chambers believes changes start with companies being more agile, more willing to partner, and build systems and processes to accommodate that change.

"It used to be you made strategic decisions for five to seven years out. Now long-term planning is three years," Chambers said.

Where change and Chambers' Internet of Everything collide is making the right decisions. "If you really stop to think about the issues and focus on the outcome, you want to get then to a logical conclusion. My worry is we will make decisions without the right data," he said.

"Our key is, how do you capture this data the way it allows you to combine information in a way that makes business outcomes? That's the challenge we face," Chambers said.

Chambers said only 40 percent of companies today will exist in a meaningful way in 10 years. "This moment is an opportunity for you to learn change. Figure out how do you make it an opportunity and how do you embrace the cloud and connect to everything.

"As all CEOs know, in this room change is really hard. But it's going to be required for survival," Chambers said.

PUBLISHED JAN. 7, 2015