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Changes Run Deep at Cisco

The departure of Chief Development Officer Charles Giancarlo last week might signify the start of a new management era at Cisco Systems Inc. (Nasdaq: CSCO).

Long considered a possible successor to CEO John Chambers, Giancarlo, 50, announced he's retiring to join Silver Lake Partners . That's the second noteworthy departure Cisco's seen this year, as Mike Volpi left in February. (See Giancarlo Quits Cisco, Paddles to Silver Lake and Volpi Takes the Helm at Joost.)

Giancarlo isn't even being replaced. The executives reporting to him, collectively referred to as a development council, will be reporting to Chambers effective January 1.

And that change might have significance beyond Giancarlo's career plans. Chambers has been talking big about collaboration as a newfangled Web 2.0 feature, but really, any business of Cisco's size needs to move towards a more collaborative management style, says analyst Tom Nolle of CIMI Corp.

"They're giving more autonomy over to the business units, which is a hallmark of professionally managed organizations," Nolle says.

He's not saying Cisco was unprofessional before. Rather, it was an example of "inspirational" management, driven by the cult of personality surrounding one leader. Think Steve Jobs in the early days of Apple. Or now, for that matter.

By creating organizations like its development council, Cisco might be moving more toward that kind of "professional" management, versus the "inspirational" style, Nolle says. And one hallmark of the former approach is that there's no clear-cut hierarchy of succession.

On a conference call with reporters yesterday, Chambers -- who's committed to stay with Cisco another three to five years -- said the question of succession is just too far out to answer.

"I do think that most likely it will be filled by somebody from within," Chambers said of his eventual successor, adding that there are usually a "half dozen" candidates being tracked by the board at any given time. He said he wouldn't dismiss the idea of an outside candidate, "but that's a long way off, and we'd most likely have three or four candidates ready at that time," he said.

"We have a lot of interesting young turks," Giancarlo said on the call, although he and Chambers wouldn't divulge any names.

Whoever it is will need patience, certainly. Giancarlo is "the third person to give up because there's no way is John Chambers going to leave," says analyst Dave Passmore of the Burton Group . (Passmore counts Don Listwin as the first -- see Listwin Leaves Cisco and Ex-Execs at Large.)

During a conference call last week, Giancarlo admitted that timing was a primary factor in his decision: "I went home one day, and I spoke to my wife and said, 'I now fully realize what is meant by a biological clock.'"

But even if Chambers hadn't stuck around, Nolle questions whether Cisco would have been ready to put Giancarlo at the helm.

It takes only seconds with either executive to realize how different they are. Chambers is the "consummate inspirational leader" whereas Giancarlo "is a technical kind of guy who really wins people over with reason," Nolle says. "That kind of transition might have been difficult unless the company was really prepared for it."

As for Giancarlo's departure, specifically -- he might be missed on a personal level, but Passmore thinks Cisco will be unscathed.

"I don't think it'll have much of an impact at all at the company. Cisco has such bench strength with the people it acquired over the years, and it's such a big company," Passmore says. "It's not like Charlie had some pet project he was promoting. Form a technology standpoint, he was all over the map."

— Craig Matsumoto, West Coast Editor, Light Reading

marlin_brando 12/5/2012 | 3:50:28 PM
re: Changes Run Deep at Cisco And the winner is ...........Jayashree Ullal............................with her tremendous experience will be next chief commander of CSCO.
Pete Baldwin 12/5/2012 | 3:50:28 PM
re: Changes Run Deep at Cisco I filed this story just before taking the holidays off, so I haven't been around...

... but to answer the question: Not really. Chances are, Cisco won't make it obvious. I like the theory that Ned Hooper is being groomed for advancement (Chambers has apparently said this out loud). But he'll be one of multiple candidates. He's got to build street cred via his new organization first.

Were Chambers to pack his bags and leave right now, I'd bet on Rick Justice, since he's running sales -- a "rite of succesion" kind of thing.
jjakubson 12/5/2012 | 2:56:57 PM
re: Changes Run Deep at Cisco Seven,

Blast from the Past!!!!
paolo.franzoi 12/5/2012 | 2:56:57 PM
re: Changes Run Deep at Cisco
I heard it was BobbyMax.

seven
sjtechid 12/5/2012 | 2:56:57 PM
re: Changes Run Deep at Cisco
Craig, any idea?
PrivateCEO 12/5/2012 | 2:56:56 PM
re: Changes Run Deep at Cisco Easy. When the time is right CSCO simply acquires Joost and viola! Volpi is back and with some CEO experience to boot.

More than one senior CSCO leader has left and returned over time, sometimes via acquisition of start-ups they founded.

No anger or hurt feeling at CSCO when people leave. If they add value they can always come back...
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