Category:Admin News August 29, 2007
From Ciscowiki
August 29, 2007
John Chambers Addresses Transforming Business Through Collaboration
The Next Wave of Productivity
Hello, my name is John Chambers, Chairman and CEO of Cisco Systems. And it’s a pleasure to share with you today what we see occurring in communications and IT on a global basis, what we believe will be the second wave of productivity and the Internet—something called collaboration and Web 2.0—where we see companies going on a global basis, and what is Cisco’s strategy in this marketplace that we see evolving very rapidly.
The first phase of productivity was literally about the internet being used on a transactional basis. The second phase of the Internet productivity, very similar to what happened in the early ‘90s, drove productivity of countries around the world for over a decade. It will be built around a new series of technologies, something called Web 2.0 and it will be built upon enabling collaboration.
I think the future is about us, about collaboration, about social networking going into business, interactivity in our home and entertainment in ways that we’re just beginning to imagine. And it will drive a generation of productivity, probably well beyond 10 years.
The first generation of Internet productivity was driven literally from businesses into the consumer where business did a lot of the interactions on a case-by-case basis, a person to a machine, email, if you will, outsourcing of manufacturing models, et cetera. But it was transactional, one person to one person or one person to machine. Now you’re beginning to watch what is occurring from our children and from the younger generation driving businesses where the consumer is literally changing the idea of social networking, where it’s many to many working together.
But it really boils down to three major changes that are going to be enabled through this Web 2.0 and collaboration. It will empower the users, the individual within an organization, to work together in ways they’ve not been able to do before. It will allow for access to any information anywhere you want, over any combinations of networks through whatever device you want in a secure, real-time fashion. And it will take these concepts of an enterprise and make them literally borderless on a global basis, or as an individual able to access anything you want, anywhere in the world that you’re authorized to get. These will be the trends that will be driven by collaboration and Web 2.0.
Our strategy in this market will not be to look at where the market’s been and then try to emulate it, but to catch the market transitions. Market transitions can be product transitions. They could be convergence of data/voice video. They could be economic transitions. We will go with a new innovation model, which will center around, not just internal innovation on the individual products but also an ability to acquire and to partner.
But if you think about the next generation of productivity, it will be built around Web 2.0 technologies. And while we might want to stay away from the technology because it makes some people uncomfortable, take a step back and say what are we really doing. Simplistically, what we’re doing is enabling collaboration - many to many - to drive productivity and standard of livings for the next decade.
Now take a step back and you could say well, John, Web 2.0 is not that new. What makes it unique to this point in time? And while Web 2.0 has been around for a while and people have found it interesting and the young people do it a lot in social networking and many other areas, it is just now starting to be accepted by business.
And Cisco, if we do our job right, will once again take the ability of Web 2.0 technologies and use them internally on everything from how we develop products, to how we interface to our customers, to how we do our legal work, to our investor relations, et cetera, and to drive a generation of productivity internally but also take those capabilities and say here’s how we can use it with our customer environments.
But there was also a fundamental change that has occurred with Web 2.0 technologies that’s different than the prior generation. We can communicate through any number of devices in ways that we’re most comfortable. The ability to get access to any information over any combination of networks without worrying where it’s processed, where the application resides or where the content is stored is what the future is about.
Collaboration at Cisco
But we will also transform our own company at the same time. We will approach it, once again, not just from a technology architecture but also from a business architectural change. And we will enable all elements of our strategy through collaboration, IT and the Web 2.0 technologies. To do this also requires us, however, to rethink about a command to control and a hierarchical approach to the market more to one that will be based upon collaboration and teamwork.
And there are many examples that we will share with you over time in terms of what we’ve been able to do with these type of technologies. But just to share with you a couple basic examples, most people consider us the best in the high tech industry by doing acquisitions. We’ve done over 120 acquisitions in a market where probably 90% of acquisitions fail. And yet 70% of ours have hit or achieved what we told our board of directors we would do.
A year and a half ago, we did an acquisition called Scientific Atlanta, paid over $7 billion for the company and we literally implemented this acquisition decision and rollout in 45 days. And it was done extremely well, but boy, it almost killed us. We had our data rooms with lawyers around, investment bankers, our business development people. We did our evaluations on a global basis. We communicated out to our customers and to our shareholders what we were doing through email and other types of activities. And we were pretty pleased with how it went.
A year and a half later, we did an acquisition called WebEx. There was no data room where this occurred. There weren’t lawyers and business development people and a whole host of others standing around, that was virtual. And we did the acquisition in eight days and actually took one day off. The person who ran the communications was literally helping us with our 21st Century School systems down in Mississippi. And she ran the communications remotely. But the point that I’m making about using these Web 2.0 technologies, with a change in style in terms of collaboration and teamwork, not just command and control, it changed dramatically how quick we did a transaction.
Another example would be what we do in engineering now in terms of the new creative ideas. And while we’re very proud of developing over 15 major new product markets that are market adjacencies and moving into them in a way that no other company has done in history in terms of growth and direction, our ability to do that was far too often based upon somebody giving an idea to the CEO or to our business development lead or key people in engineering.
We now use internal wikis in terms of the capability to collect these ideas from our employees, from our customers and over time, from the market in general. And to take these thousands of ideas that flow in each quarter and to bring these down to the top dozen business cases and then launching three new emerging technologies per quarter when we used to launch one per quarter.
So it is the ability to take both technology, a change in process and the ability to use a new level of innovation that enables these type of moves. But perhaps the most fundamental change that is occurring on a global basis is what is occurring in the emerging markets.
And it is the ability really to understand these market transitions and to use your own capability and collaboration and Web 2.0 technologies that allowed Cisco to move into these new emerging markets and literally in 18 months build and develop and implement a structure that is allowing us to grow approximately 40%, give or take 5%, every year in terms of growth in these markets with the identical profitability in terms of gross margin contribution from the emerging markets than you do in the established markets.
But we did this by establishing a collaboration team where each functional group had a representative who had to be able to speak for the whole function and then a virtual team in terms of leadership and direction. And we did this, not over a period of 5 or 6 years, but literally in 12 months.
The Collaborative Opportunity
What we really did was change from an environment that I was very comfortable in, command and control, and even though we have 60,000 people today and we’ll grow dramatically in the future, if we execute properly, that style will not be the style for the future. We will move more and more into collaborative groups.
It also required us as a company to change our expectation of leaders. And I’ve always measured leaders first on results. But the leaders of Cisco of the future will require cross functional leadership capabilities. They will require the ability to do collaboration and use technologies, the Web 2.0 technologies, to enable their leadership implementation. And instead of doing 1 major project a year, which is what we did from 2000 through 2006, we now move to 2 in 2007 and in 2008, we’ll attempt to do 20. And it is this informal group with process built into it, this social networking within a company, that now enables and drives our vision and strategy of the company.
And the only way that you could address this is not in an old fashioned way of a command and control with a central organization who is both the enabler and the bottleneck for how fast you can move, but literally virtual councils which we’ve been working on for over seven years. Without new technology, such as unified communication, such as blogging, such as telepresence which allows virtual meetings to occur, you could not achieve the level of collaboration which is now in front of us.
If you only take a few comments away from today’s discussion, I would think first in terms of what’s going to occur in the market. Collaboration and Web 2.0 will drive a decade of productivity, both for businesses and change the way that we live our lives that will make us better individuals, healthier, better educated, will make us more productive as companies and will drive literally productivity and standard of living on a global basis.
It will result from moving from the first phase of the Internet where we interfaced transaction one person to one person or one person to a machine, then literally collaboration many to many. It will evolve in terms of leadership of companies and of the organizations more to a collaborative from a command and control type of mentality. And it will require companies to either embrace this or they will get left behind.
Cisco, if we do our job right, will become your trusted partner. We will have done the technologies and the implementation ourselves and also be committed to listening to you on how we do it together in your environment.
And so our goal is to move from being a strategic technology partner to many of you to being your strategic business partner as well. And one thing about Cisco, we partner for life. Thank you very much.
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