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John Chambers, Cisco and its Internal Governance Systems
Background Note
Cisco was founded by a group of computer scientists, who had together designed a software system named IOS (Internet Operating System), which could send streams of data from one computer to another. This software was loaded into a box containing microprocessors specially designed for routing, and sold as a package to businesses.The company was incorporated on December 10, 1984, and was headquartered at San Jose, California, USA. Cisco was a pioneer in developing innovative forms of customer support using new technology. n the 1990s, it was known as one of the "4 Horsemen of IT"... In 1997, Cisco was organized around three specific lines of business to address two major new market opportunities: the service provider migration to Internet Protocol (IP) services and the adoption of IP products by small and medium-sized businesses through channel distribution. These three specific lines of business were Enterprise (IT departments of corporations, government and education), Service provider (telecommunications carriers and Internet service providers), and Commercial (small and medium size enterprises). |
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Chambers took over as CEO of Cisco in January 1995. Between May 1991 and December 1999, Cisco stock rose 33,991% from US$0.22 a share to US$75 at a compound annual growth rate of 97%. For a brief period in the 1990s, Cisco was the largest tech company in the world. It strategically acquired many of its competitors. It enjoyed a dominant position in the routers and switches markets and was generating close to US$10 billion annually in cash which placed Chambers in the league of leaders considered as celebrity CEOs. The dotcom bubble burst, and in December 2000, Cisco’s stock dropped to around US$17. In 2001, Cisco reported its first loss since becoming a public company.
