Chambers is on the Bridge

by Dave Michels

Chambers likes to do interviews, but they are mostly on point about something Cisco just announced. I thought this Wall Street Journal Interview captured more about Mr. Chambers than most. Though I disagree with the Trek reference. If you want to capture Trek’s ability to create virtual conversations “beyond Skype” I think there’s better examples than a generic reference to Scotty. Next Generation had the Holodeck that create virtual environments. Voyager had the Hologram doctor. Chambers didn’t mention that most conversations on Trek were audio-only via communicator. 

Cisco CEO on Star Trek, dyslexia and the importance of failure

John Chambers, chief executive and chairman of Cisco, the network- equipment company, has just beamed in for his interview. Appearing in high-definition on a large flat-screen TV in New York, in real life he is sitting in his San Jose, Calif., office, showing off the capabilities of one of his company’s videoconferencing products. “Fast-forward five years and you’re not going to know who you met in person and who you met through the technology,” he says, nearly life-size on his screen.

The product, a new version of a platform called TelePresence, is one of the latest initiatives that Mr. Chambers, 64, is launching at Cisco, which is known mainly for its networking technology. An enthusiastic salesman, he talks about its lowered price point (from $300,000 to $2,000) and the ability for people to go beyond Skype to have more lifelike virtual conversations. “As video moves to the Internet, it’s time to have a ‘Star Trek’ experience,” he says, “And so I said to my engineering team: I want this to be like ‘Star Trek’ and I want to be like Scotty,” the engineer in the series.

Another recent initiative might be considered his take on “The Jetsons”: Cisco’s Smart Cities program provides cities with technological improvements such as parking sensors that alert drivers to open parking spots and video surveillance that incorporates social media. Mr. Chambers came up with the idea eight years ago, and it began to take off in the market about a year ago, starting with cities like Barcelona; Songdo, South Korea; and Nice, France. In Barcelona, for example, some streetlights go on only when people walk by (saving power when no one is around), and the sanitation department is alerted when garbage cans fill up so that workers know when to pick up the trash.

Both projects are part of Mr. Chambers’s strategy to stay relevant as technology—and everything else—is being upended faster than ever. “Our industry is going to be one in constant disruption, which you’re now starting to see across all industries, it doesn’t matter which one,” he says.

He credits his parents for teaching him how to get through tough transitions. Growing up in Kanawha City, W.Va., Mr. Chambers was the son of two doctors. His mother first studied internal medicine and then became a psychiatrist. “She taught me not to have fear of connecting,” he says. “My mom taught me about being able to extend yourself out there, the willingness to connect emotionally, and to let down your guard down, and Dad taught me to see around the corners.” Mr. Chambers says that even now, at age 90, his father is thinking of ways that West Virginia can save its economy, for example, by focusing on water as the state’s next asset after coal.

Mr. Chambers says that he had first wanted to become a doctor like his parents, but his dyslexia prevented it. At one point he wasn’t sure he would make it through college. He did, ultimately earning a bachelor’s and a law degree at West Virginia University and an M.B.A. at Indiana University. He hasn’t forgotten his struggles. “Learning disabilities stay with you throughout your entire life,” he says. He knows some other CEOs who are dyslexic but won’t admit it publicly. “They view it as a weakness, which I do as well,” he says.

After his studies, he went to work as a salesman at IBM IBM +0.16% at age 27 and then did a stint at a smaller tech company. He joined Cisco in 1991 as a senior vice president of sales. Four years later, he was named CEO.

Cisco’s revenues have grown from $1.2 billion in 1995 to $48.6 billion in 2013. Mr. Chambers attributes that growth to the company’s ability to continually change its offerings. When it can’t create its own new products fast enough, it acquires others. In the early 1990s, “we were a router company, and there was a technology called switching, and we viewed that as a dark side,” he explains. Still, they acquired the switching startup Crescendo Communications in 1993 and launched its switching business. Cisco has since branched out to areas like cloud storage and mobility.

Mr. Chambers says that when Cisco acquires new companies, one out of three inevitably fail. For example, in 2009 Cisco bought Flip, the video camera maker, for nearly $600 million. When Flip was shut down in 2011 in the midst of declining sales of camcorders, critics questioned Mr. Chambers’s acquisition strategy. He stands by his decision. “If you’re not failing, you’re not taking risks. And when you do fail, you’re going to get criticized,” he says. “I probably take things a little more personally and emotionally than most of my CEO counterparts,” he adds, and then pauses to consider whether that is a strength or limitation. “It’s probably a little bit of both.”

Cisco has acquired three new companies so far this year, including ThreatGrid, malware-detecting security software, which Mr. Chambers thinks is increasingly necessary in our highly networked world. The following month, the company acquired Assemblage, a collaboration app company, and Tail-f Systems, a network service company. He says that he decides which companies to acquire by listening to his customers when he travels and when he talks to them on the phone—a practice that he says differentiates him from CEOs like the late Steve Jobs. While Mr. Jobs saw new technology trends himself, “I do the reverse,” he explains. “Customers told me which video company to buy, and they told me which security company to buy.”

To relieve stress, Mr. Chambers runs 2 to 4 miles most days through the woods. “I jog to…stay in shape, but also because I like to eat,” he says with a laugh. “For the first part I think of something personal or in business that’s on my mind, and for the last part I just enjoy it.” He also spends time with his wife in their Palo Alto, Calif., home, and with their two adult children and two grandchildren. His hobbies include hunting, fishing and golfing, and after a few more lessons, flying a helicopter.

Mr. Chambers also travels extensively to meet with politicians around the world, mostly to encourage them to adopt his Smart Cities program. “The reason I meet with government leaders isn’t because I like politics—I really don’t. I don’t like politics in our own organization,” he says. His office isn’t completely politics-free, however: He keeps a picture of himself with former California Gov. Arnold Schwarzenegger behind his desk.

Although he has been CEO for 19 years, Mr. Chambers says he has no plans to retire soon, and he expects the ever-increasing capabilities of technology will keep his job exciting. “There no substitute for being in the right industry at the right time,” he says. “Being in the Internet for the last 20 years was a good place to be.”

Bonus question: 

Who are your competitors?

“We compete against market transitions, not competitors. We focus on being disruptive as we move into new industries, then we are comfortable with disrupting ourselves. We’re offering whole new sets of products with dramatically different price points. This is how you open up the world.”

How did you get your first job at IBM?

“[The man who became my first boss] at IBM asked me to come up and interview. I said, ‘I didn’t go through years of education to sell computers.’ He said, ‘I have two tickets to the basketball game.’ I said, ‘I’ll be there.’ That is literally how I ended up at IBM. I was in Chicago and already had my job offers in New York. He basically went through the interviews and at the end of day said, ‘John, you’re not going to come work with us, are you?’ and I said, ‘No sir, I’m not.’ And then he explained how technology is going to change business. Once he showed me how technology would transform business is when I fell in love with technology. That one conversation changed my career. He basically walked me through how you would change manufacturing, change the supply chain. He said, ‘Is money a particularly motivating factor for you?’ I said, ‘No, it’s not one of my top priorities.’ But he said, ‘What are your top offers?’ I told him and he said, ‘I’ll guarantee you twice that’…and he got my attention.”