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Chambers, John T.

Chambers, John T.

(1949-)
Cisco Systems Inc.

Overview

An impassioned promoter of electronic commerce and all that the Internet has to offer, John T. Chambers heads Cisco Systems Inc., the world's largest manufacturer of data networking equipment. Since taking over as Cisco's chief executive officer in January 1995, Chambers has led the company from annual sales of $1.2 billion to nearly $22.3 billion in fiscal 2001, which ended July 31, 2001. A born salesman, Chambers has helped his company to win control of nearly two–thirds of the international market for the switches and routers that power the Internet and connect networks. He has also positioned the company to compete for a larger share of the telecommunications market with its line of products able to carry data, voice, and video traffic. So effectively has Chambers preached the Net religion that fellow executives in the business have been made to sit up and take notice. Eric E. Schmidt, chief executive of software maker Novell Inc., said of the Cisco CEO: "Chambers has made himself into the No. 1 communicator of the networked vision." Chamber's effectiveness as a salesman for the Internet has not escaped the attention of the nation's top leaders. A few years back, President Bill Clinton and Vice–President Al Gore described the Cisco CEO as "a true leader in this industry, in America's economy, and in the global economy." Clinton and Gore hailed Cisco as "one of the most respected companies, not only in [the networking] field, but in any field."

Personal Life

Chambers was born in Cleveland, Ohio, on August 23, 1949. Shortly after his birth, his family moved to Charleston, West Virginia, where he grew up. Both his mother and father were physicians. As a boy, he struggled with dyslexia, but his parents hired a private tutor who helped Chambers to overcome this disability. So well did he overcome it, in fact, that he graduated second in his high school class. He attended West Virginia University in Morgantown, where he earned his bachelor's degree in business administration in 1971. He went on to Indiana University in Bloomington for his master's degree in finance and management and later returned to Morgantown to earn a law degree.

Chambers and his wife, Elaine, live in Los Altos Hills, California, not far from the executive suites of Cisco in nearby San Jose. The couple has two children, a daughter, Lindsay, and a son, John. When not traveling about the country extolling the virtues of the Internet and networking in general, Chambers enjoys fishing and tennis.

Career Details

Chambers began his business career in 1976 at IBM, where he remained for six years before moving on to Wang Laboratories. During his eight–year stay at Wang, Chambers as vice–president was forced to lay off some 5,000 employees, an experience he found profoundly disturbing. So disturbing, in fact, that he abruptly left Wang, even though he had not yet landed another job. Of the massive layoff at Wang, he later said, "I'll do anything to avoid that again."

In 1991, Chambers joined Cisco as senior vice–president of worldwide operations. The company at that point had annual sales of about $70 million. In the fall of 1994, Cisco's board announced Chambers' appointment as president and chief executive officer, effective in January 1995. By 2001, Cisco had increased its annual revenue to more than $22 billion, a phenomenal increase due in no small part to the leadership of Chambers.

Almost from the start, Chambers began selling the Internet and networking with missionary zeal. In a November 1997 interview with ZD COMDEX, Chambers predicted that "companies that don't adopt networking and the Internet will be left behind, regardless of their size. The productivity gains are too large. Every major aspect of how business will be done will be affected by this new technology." And Cisco has certainly been practicing what Chambers preached. The company transacts more than 80 percent of its business over the Internet. More than that, Chambers has made Cisco a shining example of the productivity gains that can be achieved through use of the Internet, both by speeding up most processes and sharply reducing costs. Every corporate function—including customer support, finance, manufacturing, and human resources—at Cisco is performed through Net systems, winning a reduction of $1.5 billion in costs between 1996 and 1999. Chambers himself is obsessed with customer satisfaction. Every night before he retires, he routinely listens to ten or so voice–mail messages from staffers in the field who have phoned in reports on the status of Cisco's top accounts.

Asked by ZD COMDEX about the challenges likely to face companies seeking to implement a network–centric approach to doing business, Chambers conceded that companies will have to make some significant adjustments. "The first is there are five to maybe ten applications that are the big payback applications. You want to select the right applications at the right time for your industry. . . . The second is to really think about how your network is going to work and what the true cost of the network is. . . . And the third thing is to determine what they are going to do themselves and what they're going to look for their partners to help them do in the implementation of the network."

To speed Cisco's growth and diversify its product base, Chambers has engineered the acquisition of more than 60 companies since becoming the CEO. A key area he has targeted for growth is the telecommunications sector, envisioning a time in the not–too–distant future when "data, voice, and video will be delivered over a single connection in our homes." In Chambers' vision, Cisco's vast data networks could in time become the world's leading voice networks. Cisco's maneuvers in the telecommunications arena will not go unchallenged. As the longtime telecommunications leaders become increasingly Internet–savvy, they are moving to head off Cisco's move into the sector. In mid–1998, Nortel bought Bay Networks Inc., a longtime rival of Cisco.

Chambers has traveled the country to promote the new world that has been opened up by the Internet for business and consumers alike. He spends nearly half his time on the road, spreading his message. In his keynote address at ComNet '97 in Washington, D.C., Chambers used several examples to press his case for connecting companies globally and to prove how pervasive both networking and the Internet have become. He pointed out that at a growing number of colleges, the traditional college library has been replaced by the World Wide Web and term papers are submitted via e–mail. He also pointed to the rapidly growing number of company meetings conducted through videoconferencing.

Chronology: John T. Chambers

1949: Born.

1971: Graduated with B.A./B.S. in business from West Virginia University.

1974: Graduated with J.D. from West Virginia University.

1976: Began business career at IBM.

1982: Moved to Wang Computers.

1991: Joined Cisco Systems Inc. as SVP, worldwide sales and operations.

1994: Named Cisco's president and CEO.

1995: Assumed position as president and CEO.

1997: Cisco transacted one–third of world's electronic commerce.

2000: Given Internet Industry Leader Award by U.S. Internet Council.

In selling the Internet around the world, Chambers often cites a University of Texas study, commissioned by Cisco, that predicts that by 2010 electronic commerce will account for roughly a quarter of the world's gross national product. Companies that fail to take advantage of the Internet's business potential, he warns, very likely will face irrelevancy.

In August of 2001, Chambers announced major changes in Cisco's organizational structure, changes designed to help the company better serve its customers. At the heart of the changes was a move from Cisco's line of business structure to centralized engineering and marketing organizations. In announcing the restructuring, Chambers said, "Our line of business structure has served us very well in the past, when customer segments and product requirements were very distinct. Today, the differences have blurred between these customer segments, and Cisco is in a unique position to provide the industry's broadest family of products united under a consistent architecture designed to help our customers improve productivity and profitability."

Chambers speaks with a slight southern twang, but nobody is likely to mistake him for a country bumpkin. He was once described as "a West Virginia choirboy who will eat you for lunch." The Cisco CEO expresses unshakable confidence in the future of his company, predicting that "there's no reason Cisco can't be the most successful company in history. Perhaps the highest market cap, but also the most generous with its employees, with payback for its shareholders and also the best giver to the community." One indicator of Cisco's generosity to its employees came when Forbes magazine named it the third–best company to work for. ABC News' 20/20 magazine show dubbed Chambers the "best boss in America."

In addition to being a big booster for the Internet, Chambers has been a major cheerleader for the development of San Jose, the California city that serves as Cisco's headquarters. He has proposed massive office complexes on the northern and southern edges of the city, expansions that would allow Cisco to triple its workforce in the San Jose area. Perhaps the biggest project planned by Cisco has been the construction of a $1 billion corporate park in San Jose's Coyote Valley. The complex would house up to 20,000 Cisco employees. Chambers isn't above using strong–arm tactics to get what he wants for Cisco. After he announced his plan for the Coyote Valley office complex in 1999, he made it clear that he could take Cisco's business elsewhere if the necessary approvals weren't handled expediently. "It takes one phone call to North Carolina," he said. "It's a much easier place to do business." Although Chambers' threat ruffled the feathers of some of San Jose's city fathers, "a lot of us were cheering," said San Jose Chamber of Commerce President Steve Tedesco. "Finally somebody could tell the city like it is."

Social and Economic Impact

Chambers has not only guided Cisco to phenomenal success, but he's been a passionate advocate for electronic commerce and the Internet. He's traveled the world to convince government and business leaders how important it is that they embrace the new Net economy. "We're living through the second Industrial Revolution," he tells all who will listen. And for those who may be tempted to ignore his warning and let the Internet bandwagon pass them by, he warns: "You can be Amazoned in a moment."

Chambers has molded Cisco into one of the biggest and most successful companies of all time, while at the same time ensuring that the company's employees look upon their employer as concerned and sensitive about their needs. In this arena, he's been amazingly successful, having won the plaudits of ABC News' 20/20 as "America's best boss" and having Cisco consistently rated among the best places to work in countless surveys. It's not hard to understand when you hear Chambers talk about his personal credo as Cisco's CEO: "Never ask your employees to do something you wouldn't be willing to do yourself."

Chambers hasn't neglected his civic duties either. He has a long and admirable record of philanthropy, ranging from sponsorship of the world's first Internet–based charity concert to forking over $1 million for a San Jose area community center. Among the causes about which Chambers cares the most is education. A couple of years back, he contributed a quarter of a million dollars of his own money to help get a measure making it easier to build and repair schools on the California ballot. An enthusiastic supporter of the Republican Party, he has served as an adviser to President George W. Bush and also co–chaired the Technology Network, which pushes for legislation that will foster the growth of this country's high–tech sector.

Sources of Information

Contact at: Cisco Systems Inc.
170 W. Tasman Dr., Bldg. 10
San Jose, CA 95134–1706
Business Phone: (408) 526–7208
URL: http://www.cisco.com

Bibliography

"Cisco Sends Mixed Signals." Communications Today, 9 August 2001.

"John T. Chambers: Cisco's Live Wire." Business Week, 11 January 1999.

Ostrom, Mary Anne. "John Chambers." Silicon Valley, 30 July 2000.

Reinhardt, Andy. "John T. Chambers." Business Week, 27 September 1999.

Shinal, John. "Networking: Why Cisco's Comeback Plan Is a Long Shot." Business Week, 21 May 2001.

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