Some quick musings on John Chambers finally stepping down as CEO of Cisco.
- Chambers is still Executive Chairman and Chairman of the Board. He isn’t going far and not much will really change in the next 12 months.
- A personal thanks for making my unbelievable career possible.
- A change at the top of Cisco seen as long overdue by most industry watchers.
- The EMCworld conference is happening in Las Vegas. Cue your own speculation on that. Remember that the global Cisco Partner conference was last week.
- Chuck Robbins wasn’t the front-runner. Rob Lloyd and Gary Moore were previously tipped and suggests that something has changed inside the Cisco boardroom.
- Chuck Robbins was running sales and operations – you could speculate that the board wants to focus on defending and continuing the current sales position and improving internal efficiency. Moore/Lloyd were positioned as leading the “next generation” of technologies that Cisco that have moved slower than expected.
Cisco press release has some “Why Robbins ?” points:
He most recently served as Cisco’s senior vice president of worldwide operations, leading the company’s global sales and partner team that drives $47B in business for the company. He has helped lead and execute many of the company’s investments and strategy shifts, including building the industry’s most powerful partner program, now worth more than $40B in revenue to the company each year. He was also a key architect of the company’s strategy for the commercial business segment, which grew 8% year-over-year last quarter, and now represents 25% of Cisco’s total business
You could put almost any sort of speculation into this space as to why the previous front-runners weren’t selected. I would take a guess as follows:
- The BUs that Chuck runs appear to have been stellar performers.
- Cisco cares a LOT about sales in the current market as it is under attack from all sides.
- Sales in the Data Centre haven’t been that great compared to overall growth in the segment. UCS has done very well but remains small, ACI has a had slow start. Importantly, VMware’s NSX has been growing much faster. Customers are slow to adopt SDN in the data centre.
- Meraki has been a huge success for Cisco, growing from $150MM to $500MM and is based on subscriber model. Robbins seems to have had a big hand in this.
- It could be that the board wants to focus on operations and sales during a time of change. Whitebox products in Ethernet, optical and routing could disrupt Cisco’s market position.
This article at Bloomberg has the following quote that bodes badly for employees suggesting that further headcount reductions and cost cutting will happen soon:
“Being the mathematician with a focus on numbers, we’re going to drive a level of operational rigor that maybe even is a little tougher than what you did, John,” the incoming CEO said.
The Cisco executive ranks have been competing for the CEO position for several years and rumours abound of a dog fight to gain status and rank have been swirling around. Now that a candidate has been selected, most people expect that the exodus of long-term staff from Cisco will happen to senior executive ranks as they cash out or head to more interesting jobs in startups or competitors. This could create serious disruption internally as the balance of power between the internal fiefdoms/BUs shifts.
This competition has been both positive and negative for customers in terms of products and sales. Its possible or even likely that Cisco will go through serious disruption if large numbers of executives leave.
Something to watch for in the months ahead.
The EtherealMind View
This long overdue transition is a small start to adapting to a changing market. John Chambers isn’t leaving or going very far so its hard to see that much will change in the next year or so. The incoming CEO is strong on sales and operations which suggests that Cisco will continue to push hard to sell what is has today, continuing the fast follower strategy and avoiding innovation.
Ultimately, I believe that Cisco has limited control over the future as the data networking market goes through convulsive post-scarcity transition to a commoditized market. It faces unprecedented competition in nearly every market segment in which it operates such as Optical, SP edge, data centre, enterprise WAN and some markets are sunsetting such as Unified Comms, Videoconferencing and Cable Video.
Appointing a CEO who specialises in sales and process seems more like rent extraction from the existing business than a herald of real change at the company. And thats probably the best choice for shareholders in the short-term. Good luck and best wishes to the new CEO, Chuck Robbins.
Cue your own comments. Would be interested to hear what you think ?