Computerworld - John Chambers, CEO of Cisco Systems Inc., talked about Cisco's 20th anniversary during the WorldWide Analyst Conference in San Jose this week. The actual anniversary of Cisco's founding in 1984 by two Stanford University scientists is today. Since that time, Cisco has grown into a worldwide networking equipment powerhouse, with 35,000 employees in 259 cities and $22 billion in annual revenue.
Chambers joined Cisco in 1991 as senior vice president of worldwide sales and operations and was named CEO in 1995. He spoke with Computerworld in his San Jose office about Cisco's plans, as well as lessons learned during the IT downturn and the importance of large corporations that give back to the community.
This is Part 2 of a two-part interview. Part 1 is available online (see story).
Following the IT bubble and bust that happened four years ago, you made many adjustments here at Cisco, including layoffs and the establishment of productivity goals per worker. Now your company is coming back strong. What did you learn from that process? Our industry had never seen a downturn of this magnitude. In terms of jobs alone, the downturn in Silicon Valley was the worst that has happened since the Great Depression in any industry or geography. It was much worse than L.A. in the defense downturn or Detroit in the auto downturn. It was a very tough time.
In terms of handling basic downturns, there are common lessons that apply across all industries. The first is, when you find yourself in a downturn, ask, "Was it market-driven or something in your strategy?" And you deal with them differently, and many companies get them confused. If it's market-driven, then you focus on how long you think it will last and how severe it will be, and you adjust quickly -- ideally, one time, like layoffs. Then you get ready for the upturn.
Once we got surprised, and it took two months of soul-searching to determine that we thought it was a major industry phenomenon. Then we stepped up to it very aggressively. And we caught a lot of criticism, but we said it was a 100-year flood because we thought it was.
We made all our changes and implemented them in 51 days. On Day 52, we started gaining market share. We returned to normal profitability. It was March of 2001, and we were through by the end of April. By May 1, we were focused on getting ready for the upturn. So it was giving the vision of where we
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