Cisco’s Chambers Slams U.S. Lack of Progress on Digital Transition

By David Needle  |  Posted 2015-09-30 Print this article Print
digital transformation

In a wide-ranging discussion, the executive chairman of Cisco said other countries are leaving the U.S. behind when it comes to moving to a digital economy.

SAN FRANCISCO—Cisco's John Chambers is excited about what government is doing when it comes to deploying and integrating digital technologies across society—just not the U.S. government.

"For the first time, our country has not led in technical innovation," said Chambers, the former CEO of Cisco who now serves as executive chairman. Chambers on Sept. 30 shared the keynote stage in conversation with Box CEO Aaron Levie here at the company's BoxWorks conference.

"It sounds like America is screwed," quipped Levie, but after a scattering of laughs, the convention hall went quiet as Chambers took a minute to consider his response.

He said the digital transition is happening in places like India, France and the United Kingdom, "but our government is moving remarkably slow. We are the last major industrialized country that doesn't have a digital agenda."

Chambers said it's "amazing" to him that some socialist governments are partnering with Cisco to help create digital jobs. "You're seeing every country start to move in this direction. Our country needs to accelerate," he said, adding, "Secretary of State Kerry gets it."

Learn to Manage Transitions

Reflecting back on his long career at Cisco, which has seen competitors rise, fall and, in many cases, disappear, Chambers said companies need to learn how to manage transitions to be successful over the long haul. By contrast, he said the tech industry is "notoriously bad at transitions" with several notable exceptions.

"Jeff Immelt [CEO at] GE gets it, Doug McMillon [CEO of] Walmart gets it—how to compete with Amazon—and Mary Barra [CEO ] at GM gets it. She understands the need to transform the experience in our car," said Chambers. "[Apple CEO] Tim Cook clearly gets it. The transition he's made there following the legend of Steve Jobs. He did what was expected and then took Apple to another level."

Though Apple has had strategic partners like Microsoft and Intel, historically, it's not something the company pursues very often, but Chambers said strategic partnerships are one of the things successful companies need to master and predicts they will "influence success in ways you haven't seen before" while also being harder to do than acquisitions. (Cisco recently announced a strategic partnership with Apple in which Cisco will optimize its networking gear for Apple's iOS devices and software and enhance the experience iPhone and iPad users have when using them with Cisco's broad array of collaboration tools, including TelePresence video conferencing systems).

"Traditional companies think linear, that's what they learned in business school—make constant improvements," said Chambers. "But disruption lets you reinvent your company and leadership allows you to do innovation faster."

He also warned businesses have no choice but to adapt to the new reality of disruptive competitors like Uber and AirBnB. "Is Uber a taxi company? They have technology they can apply to any industry. The same with AirBnB," said Chambers. "There’s a new generation of competitors, and that's healthy."

Advice for CIOs—Focus on Business Outcomes

Chambers' advice for CIOs and other IT executives is to get more involved in "business outcome" discussions with the CEO.

"Quit talking to your CEO about technology," said Chambers. "Who wakes up thinking about software defined networks? They know they need to change so they're looking to you to talk about things like productivity and changes to the supply chain. Identify six key changes and then talk about the technology to make it work."

Asked by Levie what he thought the number one "blocker" that prevents companies from making dramatic change was, Chambers said it's concern they won't get the market transition right.

He said many CEOs "don't have the courage to change. I probably did it six times in my 29 years at Cisco, four times proactively. If you [adopt new] technology but don’t change the process, you won't get the outcome you're after."

Another point of guidance: "Those who succeed know not to do the right thing for too long." In other words, don't assume what's working today will always be the right solution.


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