Updated: Jun 27, 2019
by Diane Brady
When John Chambers joined Cisco Systems in 1991, it was a 400-person company that few people knew about, making $70 million a year from a microwave-sized product. By the time he stepped down as CEO in 2015, Chambers had built a $47-billion tech behemoth that had become the backbone of the Internet and a leader in areas from cybersecurity to the Internet of Things. Along the way, Chambers led Cisco through the acquisition of 180 companies, turned more than 10,000 employees into millionaires, and outmaneuvered numerous competitors. Now, the Silicon Valley visionary is betting on a future where the key driver of job growth will come from startups, and innovation will arrive from the most unexpected places. Chambers sat down with journalist Diane Brady, also co-author of his new book, “Connecting the Dots”, to talk about how leaders can prepare for the digital age.
You call this the “digital age.” Haven’t we been in a digital world for decades?
I can’t argue that, but what has changed over the past few years is the sheer speed, scale and scope of new technologies that are being developed. Twenty-five years ago, I said the Internet would change the way the world works, lives, learns and plays. That era was about the power of connecting people to the digital network. Now, we are experiencing the power of connecting things we use every day to the network, too. Within a decade, some 500 billion cars, fridges, phones, robots, and other devices will likely be connected and communicating online. We’re in the early stages of a revolution that will take the impact of the Internet and not only multiply it, but also play it out faster than any disruption we’ve ever seen before.
How do you think leaders are responding to these changes?
I think a lot of them are nervous and it’s easy to understand why. If you’re in business, you just have to look at how platforms like Amazon, Uber, and Airbnb have disrupted their industries to realize that no company is safe. The old models don’t work and the worst thing a business can do is keep doing the right thing for too long. Those that don’t disrupt themselves will get disrupted. The growing connectivity of devices, people, and places is transforming every country and the life of every citizen.. Technologies like self-driving cars, 3D printing, robotics, blockchain, and an intimate road map of your own DNA could unleash incredible creativity at the individual level, but they also mean many traditional jobs will disappear. In fact, I think 40 percent of today’s large companies won’t exist in a meaningful way 10 years from now, which of course impacts people employed by those companies. This truth is not going to comfort political leaders who are already worried about jobs, cybersecurity and how these tools can be abused. We’re already seeing the impact start to play out in political movements, job losses and broken business models – all of which is being felt by CEOs and other leaders who have to respond to and navigate them in their own way.
All of that said, we’re also seeing the impact of visionary leaders who recognize the opportunity that these new technologies are bringing. They’re incredibly excited by the potential for technology to help foster longer lives, safer communities, and greater global prosperity, as well as to create hundreds of millions of new jobs. Leaders – whether they lead an entire country, a multinational company or an early-stage startup – face a choice. Companies and countries alike need to become truly digital and empower people to thrive in the current environment. If they don’t, they will get left behind by the competition.
How does a country become
The scope and breadth of what goes into creating a truly digital country is daunting, but the process for how you get there is easy to understand. It’s a replicable process that we tried and tested many times at Cisco. You start by finding enlightened leaders who can weave together trends in order to outline a broad vision of what’s possible. This, in turn, helps inspire people to embrace digitization as a way to boost GDP growth, job creation, innovation, education, healthcare, security, ecosystems, the environment, and inclusiveness. The vision should have a strong message, be grounding and backed up by powerful data. After the vision and strategy are in place, you then need to bring together enlightened policymakers, business leaders, educators, and citizens to make it happen. The vision of leading with what I would call a “startup mentality” has to come from the top, and it won’t become reality if you don’t have the right people working together towards the same goal.
Are there any success stories
out there yet?
The first country that I saw really grasp the idea of going digital and implementing it at a national level was Israel, under the strong leadership of former President Shimon Peres and Prime Minister Benjamin Netanyahu. Israel has invested in infrastructure and training, adopted policies that encourage entrepreneurship and partnerships, attracted talent and venture capital, and is working to help bring those benefits to their other neighbors in the Middle East.
When it comes to technology, Israel seems to have a running start. Would you say that is accurate?
That’s true, but it’s worth keeping in mind that Israel is also a small country, which is an obvious advantage. Yet, many countries are just as small and don’t have the same success Israel has had in embracing digitization. France and India may be more vivid examples of what’s possible – the progress they have made towards becoming truly digital has been extremely impressive.
Do you consider France and India to be Startup Nations?
I certainly believe that they are well on their way to becoming the next Startup Nations. French President Emmanuel Macron and Indian Prime Minister Narendra Modi have both embraced digitization, recognizing it as a way to transform their economies and create inclusive growth.
Both men have also faced criticism and a backlash, too. What are your thoughts on that?
Change is difficult. It’s that simple. It can be tempting to get comfortable with the way things have always been done, and lobby for leaders who share that nostalgia and make promises to bring back the old days.
Let’s start with France. I used to think of France as a wonderful place for a romantic getaway and fabulous food, but it was one of the worst places in Europe to start a business. Fast-forward a few years and a lot has changed. Under President Macron and his predecessor François Hollande, France has become one of the best places on the continent to start a business, due to initiatives like French Tech Ticket – a visa program for foreign entrepreneurs looking to start businesses in France – and the creation of Station F, which is now the world’s biggest startup campus.
At the same time, India recently moved up 30 places in the World Bank’s Ease of Doing Business ranking and it’s also risen five places to become the 58th most competitive economy on the World Economic Forum’s index. It’s the most improved G-20 economy, thanks to Prime Minister Modi’s policies that put digital first, such as Digital India, which ensures that the government’s services are made available to citizens electronically through such things as improved online infrastructure and increased Internet connectivity.
Is the U.S. the role model of a true Startup Nation?
To be candid, I actually think the United States is falling behind. According to the Bloomberg Innovation Index, we are not even in the top 10 of the most innovative countries in the world, even though we were number one less than a decade ago. We can learn a lot from what France and India are doing, especially when you consider that we are the only developed country in the world that does not have an agenda focused specifically on embracing digital.
Why are we falling behind?
You can look at a number of factors. As I mentioned before, the U.S. is one of the only major developed countries that lacks a comprehensive digital strategy. Additionally, even though the number of new companies starting up in the U.S. is at a 20-year low, Silicon Valley seems increasingly out of touch and slow to respond to the issues it’s facing. As such, I really believe that the basic problem is that we are failing to stay ahead of where the world is going. Most companies don’t fail because they make a mistake; they do the right thing for too long and get left behind when things change. I’m from West Virginia, and when I grew up there in the 1950s and 1960s, it was the chemical capital of the world and one of the leading producers of coal. Then the market shifted to lower-cost centers and my home state was left behind. I saw the same thing happen at Wang Laboratories. When I left Boston for the West Coast in 1991, it was the high-tech hub of the country. Boston’s Route 128 was home to minicomputer giants like Wang and Digital Equipment Corporation (DEC), and hundreds of other companies. When the market switched to the Internet and PCs, Route 128 was left behind. I learned the hard way that if you don’t get market transitions right, you get left behind. There’s no entitlement. Nobody is too big to fail, including Silicon Valley and the entire U.S. as it relates to us leading the world as a Startup Nation.
So, how can we change and get back on top?
First and foremost, we need to create a digital and startup agenda at the national government level. That is absolutely where we need to start, but individuals can of course make a difference too. I personally founded JC2 Ventures to invest in game-changing startups from all around the world. I help leaders grow and scale their businesses and mentor them on digital innovation. I’m really trying to create a new model for VCs – I’m not just an investor or Board member; I’m getting my hands dirty every day with more than a dozen CEOs who are currently a part of the JC2 family. I also wrote “Connecting the Dots” with you, Diane, to share the lessons learned, and the processes and playbooks I used at Cisco with the public, which I’m now also introducing to JC2 portfolio startups. I talk to entrepreneurs around the world and advise leaders like Prime Minister Modi and President Macron on their digital policies and agendas. I’m even investing in the future of my home state. In partnership with my alma mater West Virginia University, we are bringing together a strong coalition of private and public players under the leadership of President Gordon Gee and Business School Dean Javier Reyes. Our hope is that West Virginia can become a model for not only a reinvigorated heartland but for how every part of the U.S. can become a Startup State.
When you look at the tone of political debate and the issues around how tech companies manage their growth, are you still optimistic?
Yes, I am. We’re at a pivotal point in our society’s history. While business will find the disruption uncomfortable and unlike anything we’ve experienced in our lifetimes, the opportunities that all of these changes will bring are mind-boggling. We have a chance to invent new jobs and turn the most unlikely cities into startup hubs. Technology will enable us to enhance the skills we have, while also learning entirely new ones. I don’t think any one industry or country has a lock on entrepreneurial success, but I do firmly believe this should be the future of the United States and all countries around the world. And the time for action is now. We need to change how we educate our kids and find ways for women and minorities to get excited about developing the skills they’ll need to thrive in a digital age because, in the future, every company will be a digital one!
In the global digital economy, our threats and our prosperity are shared. In fact, the goal is not just to become a Startup Nation, but a Startup World. The success of one nation creates opportunities for the next. This is not a zero-sum game. We need the brightest minds to engage in solving the world’s most pressing problems, from new job creation and reducing pollution to increasing average household income and improving health for all citizens. There’s so much we can do and I’ve truly never been more excited about the future.