So Who Is the Heir Apparent for the Role of Heir Apparent at Cisco?
Posted by: Peter Burrows on December 21, 2007
This time, John Chambers couldn’t talk Charlie Giancarlo into staying.
In their press conference yesterday to announce Giancarlo’s departure for private equity firm Silver Lake Partners, the pair disclosed that Chambers had been trying to convince Gianrcarlo to stay put for the past six months.
It wasn’t the first time Giancarlo came close to jumping ship.
Back in 2003, Giancarlo almost left to become CEO of chipmaker Broadcom. But then a cable news network prematurely announced the move, which Giancarlo learned of during his commute one morning when he called in for the daily voice-mail of headlines that’s sent to Cisco executives each day. “I was about to turn around and go home,” Giancarlo told me a few months later. “But the next voicemail was from John, saying 'Well, Charlie, I guess we have something to talk about when we get in today'.”
That time, Chambers prevailed. Giancarlo agreed to stay, and was soon promoted to chief technology officer and was then handed the keys to all of Cisco’s R&D and product development. But this time, he couldn’t be swayed. Now 50, he says he didn’t want to wait the three to five years (more likely, five) for Chambers to retire. Also, Chambers is committed to a new Web 2.0-style management approach, in which decisions are made by councils of executives rather than in the traditional command-and-control manner. While Giancarlo strikes me as every bit the team-player, this change comes at a point in his career when he evidently wanted to find out what he can do on his own. (By the way, Paula Musich at eWeek predicted this one in a story on Dec. 13).
No doubt, it’s a major loss for Cisco. Giancarlo was one of Chambers’ most versatile, effective lieutenants. Before his current gig, he spearheaded Cisco’s effort to expand beyond routers and switches into so-called Advanced Technologies such as office phones, security software and home networking (he championed the Linksys merger, for example). These businesses delivered more than $8 billion in sales in the year that ended last July, and grew twice the rate of the rest of the company—a major reason Cisco has been able to satisfy Wall Street’s hunger for 15%-plus annual revenue growth.
Chambers also credited him with helping develop another one of Cisco's competitive advantages: it's ability to integrate newly-acquired companies. Besides overseeing 18 deals as the company's chief development officer, he helped the company hone a process that kept political infighting and bruised egos to a minimum--enabling Cisco to do far better than most at retaining people from the companies it buys. I can see why. In my interviews with Charlie over the years, he's always been even-keeled, affable and respectful (Unlike many executives, he understood that the way to work with the press most effectively is by helping them tell the story they were interested in, not just in telling the one he wanted to tell). If you're being assimilated by the borg, he'd be a great guy to have in charge.
On the other hand, I also buy the line that Chambers was selling during the call: that Cisco can absorb this hit. The CEO's comments reinforced my sense that Chambers is more charged up than ever about Cisco’s opportunities. It’s clear he plans on trying to move some mountains in his last half-decade on the job, and that he's asked his top executives to sign up for some heavy lifting as well. (On the flipside, I can't help wondering if Charlie simply needed a break from the grind. He clearly could have landed a marquee CEO job if he wanted it. Maybe he's been watching what happened to Ed Zander, another overqualified No. 2 while at Sun Microsystems who also left to join Silver Lake. Zander then left to become CEO of Motorola, and is now returning to Silicon Valley--his reputation somewhat battered given Moto's ups and downs in recent years. Listening to Charlie's comments yesterday, he didn't sound like a guy who was aching to follow those footsteps right away.)
And while every company claims to have a deep bench, Cisco can back it up. The company could probably field a baseball team of people who are credible candidates to take Chambers' place some day. Giancarlo stood out in part because he was the most visible outside evangelist for the company (other than Chambers), with the press, at conferences, and the like. But from what I can tell, some of the others can step into that role as well. (Now that I think of it, maybe Charlie's departure helps explains Cisco's hiring of former Moto CTO Padmasree Warrior a few weeks back. She's already an industry celebrity).
So who is the new heir apparent? Chambers said in the conference call that the company currently had its eye on six potential successors. I’m sure that list includes US operations chief Rob Lloyd and chief globalization officer Wim Elfrink. Others that come to mind are software chief Don Proctor, and up-and-comers such as router expert Tony Bates and maybe even M&A chief Ned Hooper, who was recently put in charge of Cisco’s effort to grow its consumer business.