5 keys to understanding Cisco CEO's world view

John Chamber sees opportunities and challenges ahead

Cisco Systems Inc. CEO John Chambers recently made a swing through Washington, D.C., and spoke to industry and government leaders.

Chambers' particular view is colored by the access he has to world leaders and his work in running a company that is at the leading edge of technology. Much of his message can be distilled into five major points.

1. Technology drives new growth in productivity.

“I think we’re on the front edge of a 3 percent...to 5 percent productivity gain over the next 10 years,” he said. “That’s only been done once before — between 1997 and 2004. Cisco called it then, in 1997, and you’re about to see it again.”

The Internet and Web technologies drove that economic spurt. The upcoming rosy economic era will be driven primarily by technologies for collaboration and video, but it will be underpinned by clouds and the virtualization of data centers, he said.

“You’re about to see Generation 2 of the Industrial Revolution. It’s the same concept: You bring the work to the employees. But if you bring it virtually to them, they can be anywhere in the world working on the project,” he said.

2. Command and control is dead.

In 2007, Chambers began remaking the governing structure of the company into an amorphous cluster of committees. In the next two years after that, 20 percent of the company’s senior executives left, the Wall Street Journal reported. The controversial move was widely condemned and called “nutbag,” “insane” and “awful.”

But now, 70 percent of Cisco’s decisions are made collaboratively; its top 12 product lines are all new in the past 18 months; and the company posted quarterly net income of $1.9 billion, up 79 percent over the fourth quarter of 2009.

3. Industry as a global citizen.

After the May 2008 earthquake in Sichuan, China, left 75,000 people dead, nearly 5 million homeless and 400,000 seriously injured, Cisco sent $1 million in aid, then committed $45 million to a partnership with China's government to build Connecting Sichuan, a model for 21st-century health care and education, based on fast broadband and video, Chambers said.

The company has replicated that in California with a telemedicine pilot project with Molina Healthcare, two San Diego health centers and state government to bring health care to underserved and underinsured people in the state.

In India, Chambers said, leaders asked him if Cisco could deliver $1-per-doctor-visit health care to every person in the country. “At first, I hesitated, because it’s an unbelievable concept,” he said. “India has 1.4 billion people. But once you look past the scale, once you put in a national fast broadband, you can do that.”

4. Threats to the United States.

“A large part of future growth for every country in the world is going to be in developing companies,” Chambers said. But the United States operates as it did when he was growing up, when 18 of the top 20 companies in the world were in this country, he said. “Now it’s in the single digits on its way to zero.”

5. Broadband as building block

Fast, universally available broadband is the foundation for even more change that could help awaken the U.S. public to the threat of a less-than-super-powered future, Chambers said.

“One of the great things about IT is that it breaks down barriers,” he said. “Americans are going to realize that the education we’re giving our children is not competitive. Parents, instead of comparing their child’s education to that [offered] by the school down the block, they’re going to be looking at how much better the education is that children are getting in Europe or Asia.”

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