This is a difficult subject to raise because John Chambers has been such a forceful and effective CEO of Cisco Systems. But the departure of his No. 2 executive and likely successor, Charlie Giancarlo, forces us to confront the inevitable: is it time for Chambers to move on?
Chambers is now 58 years old and is one of Silicon Valley’s longest-running CEOs. He and his board should be thinking very hard about who follows him. That person should be getting major exposure to the board and key customers. The successor should be getting a serious grooming.
Giancarlo is 50 and was executive vice president and chief development officer. He also led the company’s R&D efforts. But Chambers’ announceemnt earlier this year that he had agreed to remain CEO for another three to five years clearly had an impact on Giancarlo. He was lured out to be managing director at Silver Lake, the famous private equity firm. Earlier this year, Mike Volpi, 40, another candidate to eventually succeed Chambers also left the company.
So what does the succession pipeline look like now? It seems to have been seriously depleted. If both men could have been kept in the fold, Cisco could have had 15 years or more of smooth CEO successions.
Other companies are confronting the same riddle, but their boards are choosing to ease sitting CEOs into the sunset rather than risking their entire succession strategy. Steve Reinemund walked away from PepsiCo in his late 50s to make room for Indra Nooyi. Neville Isdell, 64, is stepping aside at CocaCola, as well. It’s happening not just in soft drinks, but in many other companies like UPS where Mike Eskew just stepped aside.
So the formula that Chambers and Cisco ought to be considering is this: within a year, Chambers should announce that he is retreating to the job of chairman of the board and he should maneuver the right internal candidate into the CEO’s position. As chairman, Chambers should stay for no more than two years. During that time, he should gear up his successor but then know when it’s time to get out of the way. The ultimate judgment about whether John Chambers was a great CEO or not may hinge on how well he makes his exit.
