Exclusive: Video Interview With Cisco CEO Chuck Robbins

You know, Steve, we're in the midst of this next wave of technology transition, which is fantastic. And I think that we have a history, to your point, of proving that we can adapt to these transitions. And we've led so many of them: voice integration, video integration, the SP space, mobile and fixed convergence. And I think you're right, the technology pieces of this in many cases are the easy part, right? And even for our customers, as we think about this next wave of technology, how people work, and the culture and the processes that have to change. And that's no different for us. Right, so there's a massive sort of war for talent going on right now. And we live in Silicon Valley, where it's even more exacerbated. Yeah. And so what we are doing is really trying to take advantage of what our culture is. Historically, we've had a tremendous culture of caring deeply for our employees, caring deeply about our customers. In fact, sometimes when we fall a little behind on something, our customers give us a bit of grace because of how much we tend to take care of them. And we really try to think about them. So right now we are focused on trying to create the most innovative employee experience, trying to provide people with career opportunities, and giving them a chance to have fun. We're going to live in a world that moves very fast, right? And sometimes people take it a little too seriously. Yeah. Trying to have a good time along the way.

You know, in giving credit to John and Pankaj, they started this process before I took the job. But I also know how to take things that are working and accelerate them, right? And it's great for a couple of reasons. Number one, I think that when you look at our innovation strategy, we talk about it. We have our internal innovation, we've got our M&A activity, we got partnerships, we're now doing co-development with customers, and we're trying to be more strategic even with our investment portfolio around the world. But when we look at our R&D, you have to look at people. Everyone's a little different. Some people like maintaining things, and some people like being incredibly creative and doing new things. And so what Pankaj and the team have done is really figure out how to take a team of 15 or 20 or 40, depending on the size of the project, and get them out of the ongoing day-to-day stuff and create sort of a feeling of a startup inside Cisco, give it the appropriate funding and just see what they can do. And also give it that infrastructure and culture support of the same, all the good stuff they get from being part of our organization, while cutting out some of the stuff that can drag you down. And it's a pretty good method. It's had success right now. Well, I know you do. And he said, 'Oh well, we've got seven of these things, and products have come out of two.' And I was like, 'What? You mean there's another five products?' He was like, 'Oh yes.' And I was like, 'What? Tell me more.' And he was like, 'Oh, I should have said that.' So we know you've got at least another five good ones coming. That's all right, tell me afterwards.

There are technology trends that occur every year. And the thing to this point, will white boxers become prevalent? I don't know. I'll give you my view on how this is going to play out. But I think first and foremost, we have to just stay focused on the fact that no one buys technology for technology's sake. There is a business reason behind it. And I think that whether it's SDN or cloud or white box or whatever they are, we tend to get caught up in the technology transition and we lose sight of what's driving the customer to make that decision. Okay. And so what I'm trying to get our teams to do is understand what the customer is trying to achieve. Because I joke at our briefing centers that no customer will wake up one day and say, 'If I can only buy SDN,' or 'If I can only buy cloud.' Their objective is not the technology. They believe that whatever that technology is, is helping them with agility, more efficiency, better utilization of their capital, whatever that is. So as I think about this particular issue, essentially money, speed, ability to move faster, competitiveness, customer intimacy, whatever those things are, it's important for us to understand what those are so that we can make sure we're addressing that issue. Because if we address that issue, the customer doesn't really care about what the technology is, or they're going to trust us to take care of that piece. So I think in this case, when you think about what's happened in the service provider space or the enterprise space, there's been a significant pivot to the operational costs of running these networks. And I told our teams, the good news is we've been trying to tell our customers that operating expenses matter. And now the good news is that they're telling us it matters. And now we have to do our part in helping solve those problems. So I think this is where this moved toward virtualization of the dynamic provisioning of services, how they use their assets effectively. And frankly, they have to get to a place where they can be competitive. So I think the white box discussion is more symptomatic of them telling us that we have to deliver technology in a more cost-effective way to allow them to deliver services more cost-effectively, drive new streams of revenue, make me more agile on my services delivery, and by the way, you got to do all that with a wrapper of security where I don't get myself in trouble.

We actually have been working with service providers for the last decade or more on how to do service creation together to make money for them. So I focused on the costs because your specific question was around that. But when we engage with country leaders around the world, or CEOs of companies, or CEOs of enterprise businesses or service providers, what we try to do is first understand what their priorities are. And in the SP space, it is about 'I want to deliver more services, more innovation, drive revenue, I want to obviously do it at lower costs, I need to do it as quickly as possible, and I need to do it securely for my customers.' And there's some variation of those, right? So we have had a capability over the years of really helping our service provider partners by driving market analysis, understanding the next services, actually helping them do service creation. How can I actually define it? How do you market it? And then with our enterprise presence, we can actually partner with them in helping take that service to market with a customer. So we try to operate on all of those levels. And whether we're talking to the Prime Minister of Italy about job creation, or whether we're talking to the CEO of one of our large service provider customers about a new service, we try to stay focused on what they care about. And that's very cool.

Well, I think that if you look at our capabilities and what brought us together in the first place, we first make sure that when we look at any of these strategic partnerships, do we have a common view of the industry? And we did, right? Do we have complementary portfolios and capabilities? And will our customers believe that they will gain more value from us being together than being apart? And I think that's absolutely true. So we're motivated by helping our customers solve problems. We're motivated by that. Ericsson is motivated by that. We're driven by more innovation and helping this industry continue to move forward. And I think the combination of us coming together in this partnership will only accelerate that. I can't even imagine a discussion where we've ever thought about anything other than how do we come together to drive more innovation, help our customers be more successful, yet at the same time obviously benefiting both of our companies. But you know, I won't go into all the reasons why it makes sense. But I actually believe that most of our customers are very optimistic about it. In fact, a lot of the questions I'm getting are around, 'Okay, how deep does it go? What do you think it is five years from now? Are you guys committed to this?' Because they believe that there's a great deal of value.

You know, Hans and the whole team of their guys are great people as well. Just like we have elements of our portfolio that are competitive, and we just know that and we work through it. When we were building the partnership, we had a whole discussion around patents. And we felt, let's get ahead of this, and we did the cross-patent licensing agreement because we didn't want our customers to ever believe that we're at odds with each other. So it's been a fantastic partnership, and we trust each other a lot.

Sure, there's a lot of responsibility and risk. There's always danger in moving too fast. But I think there's greater danger by not moving. So what I've told our teams is, we're going to get 80 percent of the information we need, and we're going to move. They have to be comfortable that we may move in and then come back six months later and say, 'We actually weren't right on this one.' But hopefully we get 90 percent of the moves right.

Yeah, and what I've learned is, a slightly imperfect decision is better than no decision at all when it comes to our teams and responding to this market.

When you look at the Jasper acquisition, I think that when you step back and look at our priorities, our priorities are around positioning our customers for the future through IoT platforms, security, analytics, and all those things. And it fits right at the heart of that. They have a commercial offer as a platform developed for customers. It's the largest out there. They have 3,500 enterprise customers who have written applications to take advantage of the data that exists. And I think when you look at our presence and depth in the enterprise combined with our presence and depth in the service provider, we have a unique ability to bring these two together so that you can really see the value here. So we actually think about this as a very long-term play for us. And when we look at the value of IoT and this next generation of connectivity, it's difficult to look at it in the context of just what the Jasper revenue is going to be. But in order to make that come to life, you're going to need routing, wireless, and it's just a massive pull on the rest of our portfolio. So we're thrilled about it. There's a great cultural fit. Their CEO is fantastic. He's incredibly humble. And his goal is to actually lead the IoT transition for Cisco. So we're very excited about it.

I think that as we look at innovation, you talked about our internal spend, and we talked about Ericsson and the Apple partnership, which I think you're going to see us have deeper partnerships with very unique companies as this transition occurs, because it's going to bring together industrial giants and technology giants. But our M&A activity, particularly in light of some of the valuations and the changes in valuations that we've seen over the last few months... of the smaller companies? Yeah, I think that prices have gone down. We're seeing some stuff going for a reasonable price at this point. But if you're working at one of them, that's a good or bad thing depending on your perspective. Yeah, it's a buyer's market for sure.

Well, you know, I'm humbled and I appreciate the notion. When I was going through the process, my wife told me, 'Don't get confused. This isn't an election.' Right? So, but I am pleased. And I think that when you talk to your teams, your customers, your partners, the thing that's valued today, and I think more than it ever has been in the past, is transparency and pragmatism about what's going on, and being honest with your teams, to the extent you can. There are some things we're just fundamentally legally not allowed to share, and we have to be thoughtful about it. But to the extent we can, I try to be incredibly open with our team about where we are, what we're doing well, what we're not doing well. And I think they appreciate that. A recognition of the things we're not doing well, and by the way, a very serious focus on not having that same conversation six or twelve months from now. And I think that I will have to make tough decisions. There is no doubt in my mind. And but my intent is to continue to be transparent with our teams about why we have to make them, to the extent that it creates any challenges for our individuals, and you treat them with tremendous respect.

The stories about me playing basketball with Michael Jordan are much better than the reality. You know, I played in Eastern North Carolina in high school, and so did Michael. And we had a lot of common intersection points. My aunt taught at his high school. When you're a basketball player at that time in your life, you're always looking for pickup games. And so I went to Wilmington and played a lot of ball with him. And then I ended up playing junior varsity at North Carolina, and so we played a fair amount of pickup ball, and occasionally out of practice with the varsity. So yeah. I like to think that every time I guarded him, I gave him the confidence he needed to be successful.