Exclusive Interview

Cisco’s New Reality

  • Why it matters

    Why it matters

    Donald Trump’s policies could directly impact technology companies with changes in the tax code, stricter immigration rules and regulation to bring jobs back to the United States.

  • Facts

    Facts

    • John Chambers, chairman of IT company Cisco and a Republican, has previously supported Republican candidates, but this time he voted for Democrat Hillary Clinton.
    • Employees in the technology sector tend to support the Democratic Party.
    • Republican Donald Trump will be sworn in on January 20, 2017, as the 45th U.S. president, succeeding Barack Obama.
  • Audio

    Audio

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Cisco chairman John Chambers has a reality check: Donald Trump, the next U.S. president. Source: REUTERS

On Tuesday night, November 8, John Chambers publicly stated he had voted for Hillary Clinton. The morning after – when the world awoke to the realization that Republican Donald Trump will be the next U.S. president – the chairman of IT company Cisco has to face a very different reality.

Mr. Chambers, who describes himself as a “moderate Republican,” was visiting Lisbon to attend a technology trade fair called Web Summit and conclude lucrative contracts with Portugal’s government.

The 67-year old IT expert, who held the position of Cisco’s chief executive and chairman between 2006 and 2015, told German business weekly WirtschaftsWoche, a sister publication of Handelsblatt, how Cisco and other companies will deal with Donald Trump as president.

Handelsblatt: Mr. Chambers, large parts of the Western world are amazed about the election outcome. What should the global economy expect from a President Donald Trump?

Mr. Chambers: If you watch what Cisco does well, we are very agile to transitions. So is our country. I think the real message that many are missing is if you watch why companies or countries are successful, it’s because the market transitions right. And they don’t stay doing the right thing too long. They reinvent themselves on a regular basis. They don’t get too far away from their costumers or their citizens. Both political parties in the US got too far away from their citizens. The majority of America was angry. They said to both political parties, we want change. And the parties did not listen very well. In the short term the markets will do what they do, they don’t like surprises. Then they will watch how our President Trump will outline his plans for the future, who he picks and keeps in key cabinet positions and how he will move forward and then the markets will react. He’s a business man of art and I’m optimistic about how this will develop.

Mr. Chambers mentions many figures and contracts Cisco has concluded with companies and governments worldwide to help them digitize their operations. He speaks of France, India and the United Arabic Emirates, as if Mr. Trump has never spoken of renegotiating trade deals or increasing U.S. import tariffs. This may also be about protecting Cisco’s stock price. The most important issue on governments’ agenda is digitization, the executive continued.

Mr. Chambers, Germany is rather worried about whether the United States will remain a reliable partner.

In the end, the United States will do what is right. My message is very simple: The relationship between Europe and the U.S. is extremely strong and always will be. Our political fights are brutal in the U.S. They are rough and tumble. If you don’t have the courage to do so and take the personal stress on you and your family, you can’t lead. You will find that the U.S. and Germany continue to have a great relationship. It’s in both countries best interest.

President-elect Trump has promised a huge infrastructure investment program. What should get priority?

Infrastructures where the virtual and physical come together – they are not separate anymore. That’s the way our country and any country will be successful.

Donald Trump has also announced something which should please your company and the tech sector at large: Companies which have parked billions of euro of profits overseas will only be taxed with a 10 percent rate if they relocate these funds to the United States. Cisco has more than $57 billion held abroad. Are you pleased?

It would probably have been resolved regardless of who had won. The U.S. has to have a tax policy that is consistent with international trade and that is fair and rewards companies so we can decide where to invest not based on our tax policies.

“This is unfortunately the new norm. And companies that are not agile and cannot adjust will not survive.”

John Chambers, Chairman, Cisco

The tech industry was very afraid of Donald Trump. What makes you so optimistic he will do the right things after everything he proclaimed?

I voted for Hillary and I did say that yesterday. But I did not support either candidate. I think it goes back to the tech industry being Democrats as a whole, and that’s fine. But … if something is really about your future, technology is agnostic of political parties. And actually even towards governments. So if you would have told me I would partner with a socialist party in France, I would have said, I don’t think so. And yet we have done so now very tightly. I think you will see the U.S. continue to lead on innovation. What will be interesting is, will Germany lead because Germany was the first one to have a digitization plan five years ago.

Your strategy relies on a system that Donald Trump has said he wants to to upend. One of his plans is to build a wall to Mexico and make companies bring back manufacturing jobs to the United States. Cisco has a $4-billion plan to invest in Mexico. How do you cope with this uncertainty for the next weeks or months?

This is unfortunately the new norm. And companies that are not agile and cannot adjust will not survive. The same thing with countries, so it is important that agility is key part of any corporation. We are really good at that.

Does this agility include bringing back manufacturing jobs to the United States?

We are very open to both ways. We would like to grow our headcount in the United States and around the world. So were are open to that. At the same time, we will partner in Germany, France, the UK, Italy to create jobs there, it does not have to be a win-lose game.

Many in the U.S. have warned of opposing or criticizing Mr. Trump during the election campaign. Because of his personality, Mr. Trump might choose to punish his critics if he becomes president. While he did announce his vote for Ms. Clinton, Mr. Chambers, who supported the Republican candidate Mitt Romney in 2012, has otherwise been rather mute during this election campaign. There only were a couple of interviews in which he said he was “moderate Republican and therefore a species on the verge of extinction.”

As a self-proclaimed moderate Republican, what is your biggest hope after this election outcome?

That our new leader will unite and not divide us and I think he will. It’s in his best interest and in our country’s best interest. And technology has to be politically agnostic and we need to be very careful as an industry not to take sides on political issues – only take sides on what is important to citizens and businesses. We’ll see if I am a dreamer a year from now. Will you do an interview with me again a year from now?

Certainly, Mr. Chambers. Thank you for your time.

The Cisco chairman has to go to his next appointment. He gives a hand to say goodbye and then he makes a extraordinary request: He asks if he can embrace the reporter. He may and we make a picture. We will see each other again next year.

 

This article first appeared in German business weekly WirtschaftsWoche, a sister publication of Handelsblatt. To contact the author: astrid.maier@wiwo.de

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