Chambers sees Cisco CEO role changing

By Ritsuko Ando

SAN JOSE (Reuters) - Cisco Systems Inc (CSCO.O) Chief Executive John Chambers said on Tuesday that the office of the CEO will be less hierarchical in five years, although he has not yet decided on when he would hand over to a successor.

In one of his most candid remarks about the future leadership of the world's top network equipment maker, Chambers told Reuters he envisioned a more collaborative executive suite.

"In terms of how we evolve our entire leadership team, including the office of the CEO, it's very likely to be different five years from now than it was five years ago," Chambers, one of Silicon Valley's longest-serving CEOs, told Reuters in an interview.

"There will probably be a title of CEO, but the next CEO will probably be more a leader of a council than a 'command and control'," said Chambers, 58, who also is Cisco's chairman.

Since Chambers took the CEO role in January 1995, Cisco has grown from a company with $1.2 billion in annual revenues to around $40 billion, as the expansion of the Internet fueled demand for routers and switches that direct Web traffic. Cisco also has been expanding into new areas such as online video.

Many analysts say Cisco has a deep bench of executive talent, but few have been identified as strong CEO candidates.

Two of Cisco's top executives, who were seen by Wall Street as possible successors to Chambers, have left the company in the last year: Michelangelo Volpi quit to join Internet video service Joost, while Charles Giancarlo, who was chief development officer, left for private equity firm Silver Lake.

After Giancarlo's departure, Cisco reorganized management, installing a council of executives instead of appointing a CDO replacement. Chambers said the new structure helped to speed up business decisions and the concept could be applied to the CEO role in the future.

"The CEO role at Cisco going back over the last five to 10 years has been very much 'command and control' and I think we do it pretty well, and if we say 'turn right,' 65,000 people turn right," Chambers said.

"That's very effective when you're in a couple product areas or one or two major cross-functional initiatives per year. It is not an effective leadership style or organization structure if you're moving into a lot of market adjacencies and you have a lot of major cross-functional priorities."

Chambers said that, while he was still committed to his job for the next few years, the development of new leaders was already taking place with four layers of top executives.

"The top layer is those who are ready today and there are five of them," he said, adding that those in the lower layers could become top leaders depending on timing.

READING THE ECONOMY

Chambers' office, a modest room in the company's sprawling headquarters in San Jose, is decorated with photographs of him with President George W. Bush, Secretary of State Condoleezza Rice and others.

Because of his connections with such top policymakers as Federal Reserve Chairman Ben Bernanke, as well as his ability to read technology spending trends, Wall Street takes Chambers' comments on business conditions seriously.