Cisco’s John Chambers on Digital Disruptions Ahead

The Cisco CEO Says Many Companies Will Fail If They Don’t Change Dramatically

 — Via Wall Street Journal

John Chambers has been chief executive of Cisco Systems, the world’s largest maker of data-networking equipment, for 20 years. Although Cisco’s annual revenue has grown to more than $47 billion under his watch, the company’s core networking business is now facing threats from lower-cost competitors.

Mr. Chambers sat down with The Wall Street Journal’s senior deputy technology editor, Scott Thurm, to discuss the intense digital disruptions facing all companies.

Here are edited excerpts:

Back in Vogue

MR. THURM: Last year, you said almost in passing that the role of the chief information officer is going to change more in the next year than it has in the past five. Can you tell the CIOs here what you meant by that?

MR. CHAMBERS: If your CEO was [at the World Economic Forum] in Davos, I guarantee you that the No. 1 thing on his or her mind is how to make your company a digital company.

No. 2 is the “Internet of everything” and the capability of sensors, etc. It has exploded. It’s going to change every country and every business. It’s also about fast innovation, which means fast IT, and then it’s about security.

But almost every company coming out of Davos said, “I’m not moving fast enough. I have to become a digital company first, a physical company second.”

f that’s on the CEO’s mind, then guess what? That’s on the CIO’s mind. I think in this next decade, IT will be in vogue again. It will be centered all around these new concepts, and the role of the CIO can change dramatically.

MR. THURM: Your CIO is Rebecca Jacoby.How has her role changed at Cisco in the last couple of years?

MR. CHAMBERS: Every company’s future is going to depend on whether they catch the market transitions right. Forty percent of the companies in this room won’t exist, in my opinion, in a meaningful way in 10 years unless they change dramatically. So getting market transitions right is the first issue, and obviously, digitization and the Internet of everything is at the front of that.

The second is don’t stay doing the same thing for too long. That’s the second thing that causes a company to fail. You’ve got to move into market adjacencies, and bring what you learned back to your core capability. GE is doing that remarkably well.

The third thing, and this is a tough one, you must reinvent yourself—as a CIO, as a CEO and your company. Most companies struggle do that, especially the more successful ones.

And then there is the pace of change. We’ve changed more at Cisco in the last 12 months than at any time in our history. It’s Becky’s job to make sure she leads in this.

Making Data Meaningful

MR. THURM: The amount of data we’re going to be creating from Internet-connected devices is going to increase exponentially. How are the CIOs of the world supposed to manage all that data?

MR. CHAMBERS: This is something CIOs need to lead in. It’s very simple. It’s getting the right data at the right time to the right device or right person so they can make the right decision.

That means the role of the network is going to change dramatically.

Contrary to a lot of people’s views on big data, I think the majority of the data will actually be analyzed and acted upon at the edge of the network. And if you write your applications right, they can run in the cloud, they can run in your data center, they can run in the [wide area network], they can run right all the way to the edge. It will transform business at a tremendous pace.