When Cisco Systems employees head into work Monday they’ll encounter something they haven’t seen in two decades: A new boss. Chuck Robbins – formerly senior vice president of worldwide operations – takes over as CEO from John Chambers, one of the most visible and quotable figures in business.
In this early-access interview with John Gallant, chief content officer of IDG US Media, Robbins sets out his priorities for Cisco and his new management team, and talks about the opportunities and challenges facing the network giant. Robbins dissects the competitive landscape and explains why so-called ‘white box’ data center gear and software-defined networks are not the threats to Cisco that some pundits contend. He also describes his vision for the “hyper-connected architecture” that will speed customer digitization efforts and help IT capture the value in the Internet of Things. Finally, Robbins talks about life at Cisco under a leader not named John.
Chuck, what do you bring to this role that’s different than what John brought to it?
John has done an amazing job here for 20 years and he’s an icon in the industry. He’s an icon globally - in the political scene, the corporate world. He’s done a phenomenal job. There are two things that I think about. One, I came up through the company so I have a clear understanding of how things work and, sometimes, how things don’t work around here. The second big thing is that John has been very present and has had a sense of ownership relative to the company strategy for most of his time as CEO. My view is that the market is too complex, moving too fast. We have to shift to creating a very diverse leadership team that has very different perspectives. Then we have to take advantage of those perspectives to drive our strategy going forward - and that does not mean slow. It means fast collaboration, leverage the value of the diversity that we have and move quickly together. That’s one of the things that John and I have talked about and he agrees with me. He’s talked about it publicly. The biggest difference I see going forward is how we’re going to have to move with speed but leverage a lot of diverse input.
Was that the motivation behind the flatter organizational structure that’s been announced already with the changes on the management team?
Yes, I think we are going to have to move with greater speed and no one would deny that smaller teams can move faster. That’s why when you’re building small teams that have to move fast, it’s so important to get the right mix of experience.
We’ll talk about where you think you need to act with greater speed, but at a higher level what do you want customers to understand about this leadership transition and the future of Cisco under your leadership?
In the last six weeks [since the CEO transition was announced], we have been around the world and we’ve sat down with country leaders in India and France and the UK. We’ve met with leaders in China, leaders in Germany, leaders in Italy. We have had Fortune 500 company after company coming through here to talk to us about how we can help them leverage technology to fundamentally define the future strategy of their businesses. The vision we have around what’s going to happen relative to IoE [Internet of Everything], IoT, the whole notion of digitizing business, is very accurate. I believe that our strategy for [making] that happen is also very accurate. We need to prioritize the things that are going to matter in our ability to help customers deliver that over the next two to three years - prioritize and accelerate those areas. With the speed we want to move at, we have to drive a greater degree of clarity and simplification in our internal communication, our external communication and how we’re going to help our customers achieve that.
We have driven a level of operational rigor here that’s fairly unprecedented. We’ve added $5.4 billion of revenue over the last four years and we’ve only added $400 million of expense. [We need] to look at our operational capabilities on a quarter-by-quarter because I think the business is moving so rapidly that annual processes are almost too slow. We have to look quarter-by-quarter, not at our strategy, but how we’re managing the business effectively.
Also, [we need to pay attention to] our culture, and it’s not just our internal culture. I [want] Cisco to be viewed as having the most innovative workforce experience in tech or in corporate America. We’ve got a lot of things we’re thinking about as to how to do that. But I think where it really manifests itself is in our relationship with our partners because the way we treat our employees and the way we treat each other internally is how we end up treating our partners. We treat our partners the way we would like to be treated. We treat our customers the way we would like to be treated and it creates a high degree of value in our relationships. Ultimately, I want that to manifest itself in our customers - whether that’s a country, a city, a company - believing that we are the best partner to help them move down this digitization path.
John talked a lot in our last few interviews about Cisco becoming the most important IT company and he had a definition of what “most important IT company” meant. Is that still the priority?
It is. The way I think about it is our customers believing that we are the partner that helps them build their digital strategy. I started my career 28 years ago in IT. I was an application developer at a major financial institution. I sat in a cube and I wrote code and I joke that IT back then, we were relegated to the basement. Throughout my career, we’ve seen IT move from the basement to the boardroom. As I think about where our customers are today, they are looking at how technology can enable their business, which is what we do today and lots of other players do. Many of our customers are now looking at how technology can differentiate their strategy going forward. Then we have some customers who are fundamentally looking at how technology redefines or defines the future strategy of their business. We believe we can help those companies who are putting technology at the core of their strategy. [They are] most likely to be the leaders in their industry or be the disrupters of the future. We did research that basically suggests that even five years from now, 40% of the market leaders in any industry won’t be the market leaders anymore because of the pace of change.
When we talk to IT leaders, there is this clear desire to be at that transformative stage in leading the company as well as a very cold reality that very few of them feel that they’re actually doing that. How will you help more of them be successful at that?
When I’ve talked to CIOs over the last year, most of them would tell [me that] they historically spent 75% of their time doing classic systems integration for their enterprise. Think about the desire by the line of business or the business functions to have technology play a more prominent role. The CIO and the IT organization are trying to drive more value and participate in that. They’re trying to go from having 75% of their time in systems integration capability to spending 75% of their time strategically adding value to the business, helping the different business functions understand what technology can do. A lot of the communication in the industry has been that the sales organizations of IT companies need to get outside of IT. Industry groups talk about how the spending is moving outside of IT. More frequently now, we’re engaging with the CIO and with the IT organization and then we’re partnering to help the line of business take advantage of technology. We see IT organizations trying to move with much greater speed but still having that responsibility for compliance, security and the other things that matter to the organization.
There’s a lot going on at Cisco, whether it’s around Internet-of-everything or security, analytics, servers, SDN, etc. How do you get people to understand this larger message around digital transformation? How do you get them to understand how all the piece parts come together?
There are a couple of discussions. The first discussion is typically with the CEO or the head of a country and it’s about understanding the real value of the technology and what it can do - whether that’s GDP or job creation or inclusion of minorities or whatever their priorities are. Their priorities become our priorities and we talk about how technology can help achieve them. Then you move to the next level of ‘why Cisco?’ and what do we see happening with the next-generation technology architecture. For 50 years we’ve had data centers and we brought data to them to be processed. Over the next two to three years we’re going to build these hyper-distributed architectures because the data is going to be pervasive everywhere. The value that’s going to be derived by the organization is going to come from insights from that data. We’re going to build this hyper-distributed architecture inclusive of public cloud, private cloud, that takes the processing power and the technology assets to the data because by the time you move data to a central location, process it, drive analytics on it, there’s a high likelihood you’ve lost the value of the information anyway. We believe that this hyper-distributed technology architecture is going to be required to see the benefit of all the Internet-of-everything and digitization in the first place. This intelligent infrastructure, the intelligent network that we have, is the way to enable all of that. It will comprise automation, analytics - there’s a lot of analytics the network can provide - and security as well. We believe it will be this hyper-distributed mode.
I want to specifically ask you about Internet-of-everything as part of this larger equation. Do you think IT understands that it is something that IT should be driving or leading?
I think they’re beginning to. When we’ve had conversations with both the CIOs and the CEOs over the last six months, we see this emerging trend. We’ve seen convergence over the last 30 years, but the technology convergence is typically the easy part. It’s the cultural and organizational changes that have to take place that are really the complex ones. Back in the days when we converged SNA traffic to IP you had the IBM teams and you had the network teams. Then we did it with voice and you had the TDM voice guys and the IP guys. What we see now is this real desire to pull the operational and the IT organizations together because they know that’s the only way this is going to work. I’ve seen so many customers here, even in the last month, that have had a combination of IT and the business units here together to work on some of these ideation opportunities.
You’ve talked about two core things, speed and simplification. Where do you need to move faster?
Well, you own it as of today and some parts of it are working really well and I’m sure there are some parts you want to fix, things where you want to see Cisco move faster. Where does Cisco need to move faster?
I say everywhere somewhat tongue-in-cheek, but there’s also a bit of truth to it. There are a couple of reasons that I moved so quickly on announcing the first wave of the organization. Number one, we had made the decisions and I committed to our teams that we would drive a greater level of transparency inside the organization. I think we move faster when people have the information. Once the information is known, if we can share it we should. We knew what we were going to do and I wanted to send a signal to the teams that we are going to make the decisions more rapidly.
We need to move faster across every piece of our business. We’ve already begun the process. Look at what Pankaj [Patel, EVP and Chief Development Officer] has done in engineering. He’s created a lot of small teams that can move faster and they are driving pure innovation projects as opposed to worrying about ongoing support, as an example, of different products. We’ve got our sales organization moving more rapidly towards being able to engage in a deep business discussion with our customers. We need to move faster in connecting the technology to the business value we talk about. In our services organization we need to move faster to deliver services around the business outcome that is desired. As an example, financial institutions want to deploy a remote expert solution to deliver a mortgage specialist from a central location out to each of their branches. The team is working on having services around that solution. We have to move faster across all those to be ready for that. Then I think that we need to just do what we’ve always done, which is listen deeply to our customers and then have our organization aligned so that information leads us to a decision, we make it and we move.
Are there specific markets or tech segments where you feel Cisco needs to move more quickly?