Cisco's Chambers: In Managing IT Disruption, IT Is The Easy Part

Cisco Chairman and CEO John Chambers, whose company has led the networking and Internet revolution for the past 20 years on his watch, warned attendees of this year's Cisco Live conference in San Diego, Calif., that they had better move fast to catch the next wave of innovations or risk becoming history.

Chambers, who Monday took the stage to a standing ovation at Cisco Live for his last keynote at the head of one of the world's largest IT companies, said the growth of the Internet has been huge, but the growth in IT related to the coming digital age could be 10 times as big.

"And the cool thing is, together we are going to make it happen," he said.

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About 90 percent of CEOs today believe their companies must become digital companies, Chambers said. But it will not be an easy transition, he said.

"The technology is the easiest part," he said. "It's the cultural change, the corporate change, I want to talk about."

Within the next 10 years, about 40 percent of today's enterprises will no longer exist, whether it's because of not catching market transitions, not re-inventing themselves quickly enough, not finding the right partners, or continuing to do what for now is the "right thing" for too long, Chambers said.

A new wave of disruptive businesses like Uber or Airbnb are succeeding, not because they are transport or hospitality companies, but because they are IT companies, he said. "You have to change dramatically to win," he said. "But change makes us uncomfortable. ... We either disrupt, or we will be disrupted."

Chambers noted that the same thing has happened to Cisco's competitors, with such firms as Nortel, Lucent, and Alcatel not able to keep up with his company.

Chambers warned the same thing could happen to the United States, as other countries such as Germany, the U.K., and France are moving faster into the digital age. "Just because you won the last information age doesn't mean you'll win the next one," he said.

Cisco has transformed itself over the past three years, spending $400 million during the process, and was rewarded with an extra $5.4 billion in revenue, said Chambers, who steps down next month as chairman and CEO but will remain as executive chairman. However, the change was not easy, requiring as it did a complete rearchitecting of the company, he said. "We have completely turned our organization on its head. ... The tech was the easy part," he said. "It was about changing our leadership."

Cisco Live continues through Thursday.

PUBLISHED JUNE 8, 2015