American tech giant Cisco exemplifies the importance of having the right leader at the right time. The current CEO is finding new strategic focus.

John Chambers was appointed CEO of Cisco in 1991. Within less than 10 years, it became the world’s most valuable firm, dominating the market for networking gear. It gained particular prominence in data networking for telecoms and other enterprises. Chambers took Cisco into diverse businesses, building it into the global conglomerate it is today. Despite some recent decline in market share, it still sells more than half of all new switches and routers. These products generate more than half its annual revenue of about $50 billion.

Chambers was succeeded by Chuck Robbins in 2015, an internal candidate who had been involved in sales for two decades. He is a different kind of leader, more inclined to focus on the company’s core business. Yet he is aware that being part of the technology sector naturally demands innovation. Regarding Cisco’s mainstay he said, “Networking is getting complex. We need intuitive networks that are secure and can learn and adapt.”

Robbins needs to keep Cisco relevant as more and more computing moves to the cloud. Seizing on this trend, the company recently announced a suite of new products centring on software and services, particularly those that automate the management of data networks.

Cisco still faces threats because, as The Economist reports, “the more computing is done in the cloud, the less firms have to buy their own gear, including networking equipment. Instead of paying for an ‘end-to-end network’ from Cisco, big cloud operators such as Amazon and Microsoft prefer gear that precisely fits their requirements.” More specialised vendors have bested Cisco’s cloud sales, and it faces further competition in software.

In response, Cisco is offering big cloud providers tailor-made products. It has also upped its software and services game. Earlier this year, the company bought two start-ups, increasing its capabilities in software and network management.

Cisco’s strategy rests on the expectation that computing will never be fully centralised in the cloud, but will live on many systems, says Rohit Mehra of research firm IDC. Cisco also sees added complexity coming out of the Internet of Things. Its newest software products are designed to address this by making more complex networks safe and “intuitive”, as Robbins likes to say.

Cisco is in a good position to meet this anticipated need, as it is already one of the biggest providers of cybersecurity products. However if, on the other hand, computing should become more centralised, there will be less need for Cisco to connect things. And in the business of managing and automating networks, it will likely face competition from big cloud providers.

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