Chambers Goes After Building Unsexy Business, Riding Storms

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Cisco's Chambers: I'll Be 'Wing-Man' for New CEO Robbins

Over 20 years at the helm of Cisco Systems Inc., John Chambers was one of the few nonfounders of a technology company to survive Silicon Valley’s boom-bust cycles.

He did it in the unglamorous business of building network equipment, with the lofty goal of transforming the way the world works, plays and learns.

“Many people said ‘Yeah right, a router company can’t do that,’” he said during Monday’s press conference announcing plans for Chuck Robbins to take over as chief executive officer. “We changed people’s lives.”

The coming years will be an “instant replay” of the 1990s as our culture increasingly goes digital, Chambers said in an interview Tuesday on Bloomberg TV. He said he wasn’t interested in running for the Senate in California.

“Politics moves too slow for me,” he said. “I just like to get things done.”

Chambers, 65, will relinquish the CEO job before a self-imposed retirement deadline in 2016. He’s weathered criticism he didn’t do enough to prepare Cisco for new networking technology and for making an ill-timed foray into consumer products by buying Linksys and the maker of Flip video recorders. Once the world’s most valuable company by market capitalization, Cisco’s growth prospects have been hurt by its own bureaucracy and industry upheavals, including a shift toward using software and generic computers instead of brand-name routers and switches to shuttle Internet and corporate data.

But Cisco’s stock was the sixth-best performer in the Dow Jones Industrial Average last year, which makes it a pretty good time for Chambers to go out on top. And since he’ll stay on as executive chairman, the end of one era may not look that much different than the start of the next.

‘High Note’

“I think he’s leaving on a high note, if he’s really leaving at all,” said John Butler, senior analyst at Bloomberg Intelligence.

Over two decades, a successful track record and masterful sales pitches weren’t enough to ward off the worst of the dot-com bust, the 2008 recession and intensifying competition. Still, a personal touch helped Chambers keep a firm grip on power.

He’s long required lieutenants to let him know when any of Cisco’s 74,000 employees faces a life-threatening illness or other personal tragedy. He tries to call some of these workers to offer help securing appointments with sought-after medical specialists or find some extra financial help from Cisco’s coffers.

“John Chambers is revered at Cisco,” said Barry O’Sullivan, a former Cisco senior vice president who runs a startup called Altocloud. “Everyone has a ‘John story,’ about something he did to help them. People relate to him in a very personal way.”

Acquisition Strategy

Cisco hired Chambers for its top sales job in 1991, after he’d worked at International Business Machines Corp. and Wang Laboratories. He lead Cisco to dominance by building an aggressive sales team and, as CEO, providing it with plenty of new products to sell by acquiring smaller networking companies.

Since becoming CEO in January 1995, he’s continued to hone a sales-focused strategy. Each evening, his staff creates a thick binder filled with facts about people he’ll meet the next day, such as their favorite beer or sports teams.

Now, the company’s facing the prospect of shrinking demand for its bread-and-butter products, as companies including Facebook Inc., Goldman Sachs Group Inc. and AT&T Inc. adopt an approach called “software-defined networking.” That lets them build cheaper, more flexible networks without being locked into pricey hardware from Cisco or its rivals, which include Juniper Networks Inc., Huawei Technologies Co. and Alcatel-Lucent.

Where’s Growth?

“That’s my biggest issue with Cisco -- how do you make it grow?” said Chris Bertelsen, chief investment officer of wealth manager Global Financial Private Capital, which recently sold its Cisco shares. He said the appointment of Robbins, who like Chambers has a sales background, signals that investors shouldn’t expect the kind of major overhaul that Cisco would need to return to fast growth.

While Chambers earned a reputation as a visionary for his energetic evangelism of the Internet in the 1990s, some of his predictions in the past decade didn’t come to pass. A radical council-based management system, designed to let Cisco maintain double-digit growth by moving into dozens of new markets at once, created a bureaucratic morass and was undone in 2011.

“The only way he can do something is to restructure,” Bertelsen said of Robbins. “And if they’re all part of the same team and they all wear the same uniform and they all bleed the same color, there might not be much of a chance of that happening.”

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