Cisco CEO: We Need to Think Like a Startup
At Cisco's Annual General Meeting, CEO John Chambers explains why his company is well positioned to win in SDN, IoT and the road ahead.
Cisco is the largest networking vendor in the world by revenue and dominates nearly every sector in which it participates. Yet despite being an industry giant, CEO John Chambers want the company to behave more like a startup--when it makes sense.
Chambers made the comments during his company's 2014 Annual General Meeting (AGM) on November 20. The Cisco CEO reflected on his company's most recent quarter, in which revenue growth slowed to only 1.3 percent year-over-year.
"It's a tough environment," Chambers said.
Fundamentally for Chambers, the modern networking and IT landscape is about accelerated evolution and change.
"Change is the new status quo," Chamber said."Our job for our shareholders is to combine this change and ride the innovation wave, combined with the growth wave."
While there is no shortage of competition across all sectors in which Cisco is engaged, Chambers emphasized that he doesn't focus on the competitors. Instead, his focus is on capturing market transitions.
One such large market transition in the networking space has been the move to Software Defined Networking (SDN), a market that some had said would negatively impact Cisco. With SDN and with NFV (Network Function Virtualization), the general premise is that networking functions are abstracted from the underlying hardware. The risk is that hardware then becomes commoditized, which would negatively impact a company like Cisco.
Chambers emphasized that Cisco's view is that having a virtual network that is separate from a physical network is often too costly and difficult to manage. Instead, Cisco's approach is about Application Centric Infrastructure (ACI), which focuses on policy and intelligence.
"We are able to put to rest, in most people's opinion, the concern of whether SDN will have an impact on our margins," Chamber said. "Clearly [SDN] didn't. Our switching margins have been remarkably steady for the last six quarters."
There will still be challenges and battles in the months ahead in the space. Overall, Chambers noted that Cisco is moving from a boxes approach, with routers and switches, to an outcome-based approach.
Cisco as a Startup
Chambers admitted that he's not perfect and neither is Cisco, but he stressed that Cisco will always take business risks. As part of that, Chambers wants his company to be even more agile and faster than ever before.
"We have to think like a small startup," Chambers said.
In a small startup, the number one thing that the company focuses on is exponential growth. Chambers noted that in some market segments, incremental growth is all that is possible, but in some, exponential growth is possible. Specifically, Chambers said that Internet of Things (IoT) and security are both areas where exponential growth is possible.
"It is the ability to act like a startup and get the effectivity and scale of a large company - that's how we believe we will differentiate versus our peers," Chambers said.
Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist.