SPARK OF THE CORPORATE
"I learned an awful lot about what not to do. You could see management getting further and further from the customer, telling the customer that they knew what he needed better than the customer did"
John Chambers is an influential leader of the past one and half decade, a great strategist and visionary who took up reins as Senior Vice President of global operations of Cisco Systems in 1990 and later raised through ranks as CEO in 1995 till now and Chairman of Board since 2006. The company was operating with $70mn when Chambers started in 1990 and in 1995 when Chambers took helm as CEO, the company grew to $1bn and the growth continued persistently under the great leadership of Chambers to the rate of nearly $40bn. Today the company is the world leader in networking systems.
The company, which was a routers company, expanded itself into packets, switches, ATM's, Internets, and Intranets tapping new technologies and markets with quick moves of acquisitions and porting the new technologies to synchronize into Cisco's infrastructure.
The key strategies that were fundamental in success of Cisco Systems was its simple to use technology, the top priority given to the customers' preferences and needs, delivering more value to the customers as compared to its competitors.
In the previous past, Cisco Systems delivered a value of 26 cents per dollar. This was all made possible by the great and pioneering knowledge of Chambers about the growing markets and his unwaivered focus on the future growth of Cisco and his customer centric approach. He worked on his laurels relentlessly, raised the company through the odds, and made it to the top far beyond the expectations of his contemporaries and analysts. Thus, Chambers succeeded in building an innovative next generation company and stood a role model for the upcoming CEOs.
The Essence of Real Leadership
As all of us know that the times of turbulence are real measure of leader's success. As Cisco reported a marginal loss in the recent past, the CEO holds himself responsible for the weak performance of the company and addresses the customers and employees saying that he is confident that "Cisco's vision and fundamental strategy is right". He would act on what is to be fixed in the Cisco's portfolio and the fundamental changes are ahead.
The success of Cisco was mostly dependent on its acquisitions (as many as ten acquisitions in the first ten years of his tenure), where as the world has shifted to consumer dominant products. He says that he plans to boost Cisco's focus and discipline.
Chambers added, "We have disappointed our investors and we have confused our employees. Bottom line, we have lost some of the credibility that is foundational to Cisco's success – and we must earn it back." A Cisco's spokes person revealed "At Cisco we've been driving a value-based channel strategy since 2001 and are committed to earning our partners' loyalty each and every day. While many of our competitors' partner strategies remain unclear, Cisco is doubling down on the channel by investing $75 million in our new partner-led sales model."
Chambers named several of Cisco's strengths, including its ability to anticipate and take advantage of changes in the marketplace, its continued growth in the data center, its focus on collaboration, and its big leap into the world of technology. "We have been slow to make decisions, we have had surprises where we should not, and we have lost the accountability that has been a hallmark of our ability to execute consistently for our customers and our shareholders".
The way he was connected to the customers, shareholders, employees and partners shows his empathy and emotional intelligence, the real qualities of a leader. This bonds the Cisco's customers for lifetime, with encapsulating trust at the time of turbulence. Hats off for the great leadership of Chambers.
Educational and Career Outlook
John Chambers with his winning attitude has overcome his problem of Dyslexia, and got himself well educated as any other leader did. He finished his high school at Charleston High School, Charleston, West Virginia, in the year 1967. In the year 1967-1968, he enrolled himself in engineering in Duke's University, but failed to continue. Later he did his Bachelors in Economics/Science in the year 1971 from West Virginia University. In the year 1974, Chambers finished his JD in the law college, West Virginia University. He did his masters in business administration from Indiana University, Bloomington in the year 1975.
After finishing his Masters and deciding his future would be in business, Chambers accepted a job offer from IBM in 1976 as a salesperson, with least desire to be in sales. At the time when Chambers joined in IBM, the company was a giant in the computer industry, the most massive and powerful company known as "The Big Blue". Soon after he kick started his career as a salesperson, he found himself good at the task with determination and touch of southern gentility he could gain a positive response from the customers. John soon realized the shortcomings of IBM that it was working on business computers and typewriters, where as adventurous startups of that era worked on personal computers. As John was lacking an engineering and research background, he doubted his stepping up the corporate ladder in IBM, though he excelled in sales. Therefore, after a six-year long tenure of sales experience in IBM, he managed to convince Wang, Chinese American founder of Wang Laboratories in the year 1982, that he was the right person to head the Asian sales team of Wang Labs and walked the path of his ambitions with pride. Asian customers liked the easygoing Southern manners of Chambers as compared to loud and hard-driving American salesmen.
Chambers had utmost respect for his boss Wang and he stated that Wang was the most impressive person of his life after his father, who had belief and trust in him. Later things drastically changed and Wang passed away with cancer in 1990's and Wang's son Fred took up Wang's Laboratories as successor to Mr. Wang and the company's prospects turned worse and the stock fell steeply as the investors quit. Chambers happened to resign from Wang labs and looked for a new job.
John Chambers was seriously looking out for executive positions and Cisco was the only company that responded to Chambers letters sent out for job search. In fall of 1990, Morgridge, the energetic, veteran of both Honeywell and Stratus, appointed John Chambers as Senior Vice President of Cisco for Worldwide sales and operations. This was the beginning of the Cisco's way by John Chambers striving through the volatility of the technologies and marketplaces.
Cisco was found in 1983 by a married couple of Stanford, Len Bosack, head of computer-science department and Sandy learner, an MBA. The company was pivoted on device called router, built around a microcomputer, which helped interdepartmental communication through Internet Protocol. Moreover, by the year 1986 Cisco had revenues of $10mn approximately. A venture capitalist Don Valentine was given one-third of the company, for his $2.5mn investment. Len Bosack, Sandy Learner and Don Valentine took the company public on February 16, 1990.
Later the founders were out of the company selling their stakes at $170mn. In 1990's being selected by Morgridge, traditional John Chambers was not an easy fit for the fastest trends of Silicon Valley, which were out of control. At the time when Morgridge and Chambers worked together with "technological agnosticism" the major Cisco's policy, the company has a roaring business in routers. Both of them thought that routers were not the only game of the company. Therefore, they wisely took a decision, keeping in view the company's future generally and technologically to acquire Cresendo Communications, a switching company for $95mn. This was the first acquisition made by Cisco in 1993. These switches gave power users and devices easy and better accessibility to the servers making networking child's play. This acquisition proved to be a great success though the revenues of Cresendo Communications were as low as $10mn, because the giant companies like Ford and Boeing were interested in switching products. The saga of acquisitions continued (2001) and Cisco went ahead to acquire other small switching companies such as Kalpana, Lightstream, and Grand Junction, negating the switching competition gradually.
In January 1995, Morgridge left the company, with John Chambers as successor CEO. Under the leadership of Morgridge Cisco not only went public but also had tremendous growth with takeovers and was at $1bn. The company which has a meager workforce of 34 employees rose to 2,260 by 1995. Chambers was strongly determined to take the company way too high beyond the expectations of industrial analysts and leave his mark in the corporate history.
The most valuable learning that Chambers got from IBM was that, customers liked simple one-step concept of technology rather than trying numerous components rigorously. Therefore, he implemented this learning in Cisco and made it a point to provide Cisco's customers with a full array of data solutions in order to stop them from reaching out competitors. Chambers wanted consistent and continuous growth of Cisco and navigated through routers, packets, switches and with explosion of telecom market; Chambers found that ATM is the key for Cisco's growth because of which he acquired StrataCom in 2001 for $4.5 billion far more than the company's market value. This pushed Cisco to the first place as vendor in 2002, to provide advanced network infrastructure for the intranet and Internet environments and the only vendor to offer end-to-end connectivity across public, private or hybrid networks.
Under the strong leadership of Chambers, Cisco started hiring best talent in technology and business as a part of its aggressive recruitment program. Chambers strongly believed that to stay on the top in the marketplace is to listen to the customers carefully and take into consideration their preferences for now and for five to ten years ahead of time and respond to the customers needs accordingly. Chambers always nurtured R&D and told them to integrate the technology of the acquired companies, making it compatible with Cisco's existing infrastructure. Chambers strengthened the position of Cisco forever by acquiring Linskys for $500mn in 2003 and Latitude Communications, a company specialized in conferencing for $80mn cash in 2004. In 2006, John Chambers took up as Chairman of Board in addition to the responsibility as CEO.
In his journey in Cisco from 1990 until date, Chambers experienced numerous peaks and falls, but steered the company towards excellence with his quick response to the ever-changing market strategies. One such instance; in early 2000 the network and telecom companies have been overvalued and in early 2001 Cisco experienced a fallout hit after 14 consecutive strong quarters till August 2000. As a response to this fall out hit, the company fired 15% of its workforce and the company's CEO received a salary of $1 per annum. He became the inevitable part of Cisco and stood exemplary to the future entrepreneurs.
More about John Chambers
The born leader John Chambers took birth in Cleveland, Ohio, U.S.A on August 23, 1949. Chambers spent most of his childhood in Charleston, West Virginia, with his sisters Cindy and Patty. Chambers was from a well to do family. His father, Jack Chambers, was a famous obstetrician and gynecologist who delivered all of the children of big wigs like, the Governor Jay Rockefeller. His mother June Chambers was a Psychologist.
Young John at the age of nine had a problem of Dyslexia, a learning disorder, which often made his education and study more torturous. Nevertheless, John's parents were confident about John and arranged him a reading specialist, Lorene Anderson-Walters, to cope up with his problem. John was highly optimistic and had a competitive attitude and enterprising type of personality, by which he achieved his education and stood an exemplary leader for past two decades.
John's favorite game was basketball, which he enjoyed playing in teams and he always played tennis doubles. Later he married, Elaine, his high-school sweetheart and frequent doubles partner. With Elaine, he had two children a girl Lindsay and a boy John.
Added to his entrepreneurship are his social responsibility and his philanthropy. Chambers played an active role in forming public-private partnerships to reorganize healthcare and education in 2008, for earthquake effected areas of China. Chambers also co-sponsored Jordan Education Initiative and the World Economic Forum. Chambers has also held several other education initiatives, including the 21st Century Schools initiative, to improve education and opportunity for children in the Gulf Coast Region affected by Hurricane.
He not only donated $180,000 for the Republican Party (Mr. McCain) and $100,000 to the Democrats Party (Mr. Bush) for the Presidential elections; but also served two American presidents; most recently as Vice Chairman of the President George W. Bush National Infrastructure Advisory Council (NIAC), where he provided industry experience and leadership to help protect the United States' critical infrastructure. He also served on President George W. Bush's Transition Team and Education Committee and on President Bill Clinton's Trade Policy Committee.