Online Optimist
"No company should have a pessimistic president," said John Morgridge, chairman of Cisco Systems, Inc. "That's a job for the CFO." Morgridge spoke from his near-legendary experience as both CEO and chairman of Cisco, one of the most successful enterprises of the digital age. He shared his thoughts with the Dartmouth community during a frank speech in January 2004, which was co-sponsored by Tuck's Glassmeyer/McNamee Center for Digital Strategies and the William F. Achtmeyer Center for Global Leadership.
Cisco is the Silicon Valley startup story in spades: creating a garage prototype in 1984, getting its first venture capital-on the 77th pitch-in 1986, going public in 1990, and today boasting an overwhelming market share and more than $18 billion in sales generated by a lean staff of 35,000 employees. Morgridge joined in 1988 and, as CEO until 1995, created not only a wildly successful company but also a unique corporate culture and infrastructure that has helped Cisco survive successive market collapses since 2001.
"We are an Internet company," Morgridge said, referring not just to Cisco's networking products but to the way the entire organization works. Most of the company's service, support, supply chain management, training, and human resources are managed or delivered online.
This seems appropriate for a company whose culture is set by engineers, as Morgridge admitted. But he also insisted that the long list of Cisco's cultural attributes includes the item "no technological religion." Instead, the culture focuses on continuous improvement, market transition, and change. It also includes fun and, specifically, frugality. Don Valentine, the well-known venture capitalist who first bankrolled Cisco, has been quoted as admiring Morgridge as "cheaper than I am.... When you have dinner with him, don't let him choose the wine."
Such frugality also led Morgridge and John Chambers, Cisco's current CEO, to cut their salaries to $1 during a precipitous earnings slump in 2001. "When things collapse," Morgridge said, "the three top priorities are to stabilize your customers, restore the profitability of your products, and struggle to grow the top line." When employment cuts are necessary, "cut deeply enough at the start! Repeated layoffs just reinforce a negative spiral."
One topic-education-surfaced frequently during Morgridge's speech and at an earlier meeting with students. In fact it's been a central issue for most of his professional life. "Educated minds are our greatest resource," he said, while noting that "technology has not been integrated into most curriculums." He has focused an enormous amount of energy and resources on correcting that situation. Describing the Cisco Networking Academy Program, he said "we have the largest online education system in the world, with more than 10,000 academies, 437,000 students, and 25,000 instructors working in nine languages." The program teaches Internet technology skills, delivering content, assessment, performance tracking, hands-on labs, instructor training, and certification over the web.
When asked by a student to list the essential skills for success, Morgridge recommended a balance of sales skills (he started as a sales rep for Honeywell Information Systems) and engineering savvy. He also mentioned "basic, everyday math as personal quality control" and "writing-the skill to synthesize, summarize, and present in words." But as a leader, Morgridge said the most important skill is to learn about people. "I can't overemphasize," he said, "the importance of that whole set of human relationship skills, few of which, unfortunately, you'll learn in school."
This article appears in the summer 2004 issue of Tuck Today, the school's alumni magazine.
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