SAN FRANCISCO: Companies must embrace the digital era or risk extinction, according to Cisco executive chairman and former CEO John Chambers.
Chambers said at the BoxWorks 2015 event that 40 percent of Fortune 500 companies will not exist in the next 10 years owing to a failure to adapt to the digital era.
“The companies that succeed will be those that embrace digital transformation and manage it right. They will be those that don’t get comfortable doing what works for too long and are willing to make those changes,” he said.
"But this industry is brutal, and if you don’t make those transitions you will be left behind."
Chambers cited the examples of Uber and Airbnb as companies that are changing the way major markets such as transport and hospitality are operating by using technology.
“People think Uber is a taxi company but it’s not, it’s a technology company that uses asset sharing and that could be applied to any industry. They haven’t replaced taxis, they’ve increased the number of taxis,” he said.
“They are changing that market and that is why other companies won’t survive – and that’s healthy, it’s competition.”
Chambers said that his time at Cisco had seen the company transition many times, moving from a routing to a switching company, and then embracing telephony, video, collaboration and now the cloud, data centres and security.
He acknowledged that the firm did not always get it right – such as the Flip video acquisition – but that it is important to “come back stronger” from failures.
Chambers explained that this need to embrace digital change can be seen in the technology market with the growing number of strategic partnerships between firms such as Apple and Cisco and IBM and Box.
“The next transition is going to be around strategic partnerships and they will be harder to manage than acquisitions, but in the decade it’s going to influence the winners and losers in a way we’ve not seen before. Most won’t work, but those that do will change the industry in a big way,” he said.
Chambers also said that governments need to embrace the digitisation of services, citing India, France and the UK as those that have recognised this and are making the right moves.
However, he was less optimistic about the US, raising concerns that the current administration, and those campaigning for the next presidential race, do not place enough emphasis on how important the digital era will be to the future.
“This is the first time that our country, and especially our government, has not led in a technology transition,” he added.
Chambers' comments echoed those of Apple chief executive Tim Cook, who also spoke at BoxWorks and said that the future of digital business is mobile and that the best companies in the future will be the most mobile.
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