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John Chambers, Cisco and its Internal Governance Systems
Introduction
In the months leading up to the Annual Meeting of Cisco System, Inc. in September 2011, there was considerable speculation over whether the company's high-profile CEO, John T Chambers (Chambers), would continue in the post. During Chambers' tenure of over 16 years as CEO, Cisco's revenue had grown from about US$1.2 billion to over US$40 billion. Its market value had increased over 900 percent. The Dow and the S&P 500 had each grown by less than 250 percent during the same period. Net income had also grown but at a slower pace, from US$410,456 to US$7.8 billion in 2010. |
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These investors and Chambers's detractors contended that for more than a decade, Chambers had failed - his growth strategy, his shareholder value creation strategy, as well as an operating governance structure that he had touted as the organization of the future that would enable Cisco to execute its strategy with speed and efficiency, had failed. Critics claimed that the strategy and the structure had confused employees, slowed down decision making, led to an exodus of key executives, and resulted in Cisco losing market share in its core businesses. Some even said that the management structure was aimed at delaying the emergence of a successor to Chambers rather than empowering groups to make decisions.
