16 Sep Cisco Chairman Praises University Research
The rapid development of Internet and intranet infrastructure helped Cisco Systems – the company that developed the first multi-protocol router – achieve explosive growth in the late ’80s ad early ’90s. But subsequent growth, according to Cisco Chairman John Morgridge, has come from careful expansion of the company’s product line. Morgridge spoke in Milwaukee Monday at the annual Marquette University Business Leaders Forum Breakfast.
Morgridge joined Cisco Systems in 1988 as president and CEO. During his tenure, the company grew from $5 million in sales to over $1 billion, and from 34 employees to more than 2,260 employees. In 1990, he took Cisco public, and in 1995 was appointed Chairman. Today the company has more than $18 billion in revenues with nearly 36,000 employees operating in 65 countries.
Morgridge, a native of Wauwatosa now serving the San Jose-based networking juggernaut, maintains strong ties to Wisconsin, serving as director of numerous nonprofit organizations, including the Tech Advisory Board for Milwaukee Public Schools and the Wisconsin Alumni Research Foundation. Although Morgridge holds a bachelor of business administration degree from the University of Wisconsin-Madison and an MBA from Stanford University, he donated the Cisco Systems network Marquette University operates. He as also been generous to his alma mater, having provided material support for the building of Grainger Hall and the renovation of Red Gym, which houses the new Morgridge Center for Community Service. The center matches students up with volunteer activities, and helps professors incorporate service learning into their classes. Morgridge’s TOSA Foundation is also providing UW-Madison with networking equipment valued at approximately $7.3 million to assist with the school’s 21st Century Network upgrade.
Morgridge credited America’s universities — specifically Stanford University — with driving the development of the router technology that Cisco would later commercialize. According to Morgridge, universities were the natural place for the technology to develop – and not only because of the concentration of knowledgeable academic staff.
“Universities often have a diversity of incompatible equipment,” Morgridge said. “At the university, generous alumni donate equipment they couldn’t sell elsewhere.” Stanford profs had long been working on router technology. Stanford Artificial Intelligence Laboratory was one of the first of the 64 nodes on the ARPANET in the late 1960s, and the Stanford Medical School hosted the first non-defense-related node on the ARPANET.
But at Stanford, research was also being done on how to connect disparate hardware. By the mid ’70s, academics at the Stanford Artificial Intelligence lab and the Institute for Mathematical Studies in the Social Sciences were working on the problem. In 1980, Xerox Corporation granted Stanford access to its Ethernet technology – a move that created a need for routers to connect sections of Ethernet cable. Cisco founders Sam Bosack and Sandy Lerner had simply to license the router code, which at the time routed PUP, XNS, IP, and CHAOSnet protocols. Indeed, by the time Bosack and Lerner started their firm, multi-protocol routers were a relatively mature technology – but a technology that would ride a wave of high demand for the next two decades.
Two factors drove Cisco Systems from its inception in a private residence to its initial public offering at six cents a share to its current level of success, according to Morgridge: the Internet and a culture that empowers employees to serve the customer and to innovate. “Our employees understand that the customer comes first, and they are energized and empowered to respond to customer needs,” Morgridge said.
The product line expanded along with Cisco Systems’ customer base. “We started out serving large institutions,” Morgridge said. “The next market we pursued was the service providers — the telecom and cable services. Finally, we developed products for small businesses, including businesses that might be located in someone’s home.”
Providing a wide range of products and solutions allowed Cisco to accomplish more than winning a high share of each customer. According to Morgridge, the presence of an integrated system offers benefits of its own. “We are in a day when people have to be concerned with viruses and a number of other attacks,” Morgridge said. “By having a unified set of methodologies, your ability to respond to these attacks improves.”
New products will be driven by the expanding speed of data communications. High-speed connections, the profusion of wireless networking and optical as part of the infrastructure will all create new market niches, according to Morgridge. These new products might be developed in-house, or Cisco may acquire companies to fill the void, adding to the list of more than 50 companies Cisco has acquired in recent years. “Each time we acquire a company, it means we don’t have the vision within the company to develop a technology ourselves,” Morgridge said. “But we are getting a company that has already formed the engineering team and developed the technology. Buying a company means we are able to buy the time going back to accomplish that.”
Charles Rathmann is a regular contributor to the Wisconsin Technology Network and a Milwaukee-based business communications professional. Charles can be reached at email@example.com.