CES: Dealing With Disruption Necessary, Painful

Companies That Aren't Willing To Change Won’t Be Around For Long
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Las Vegas – International CES – Rather than digging their heels in and bracing for change, companies – from behemoths to startups – must be agile enough to stay ahead of the technological pace and be ready to hop into adjacent markets...If they want to survive the long haul, that is.

That was one of the key messages here Wednesday at a high power executive session aptly titled: Fast Innovation: Disrupt or be Disrupted.

One company that has had to change its ways is Cisco Systems, which recently underwent a big reorg to change the way it operates, including a reassembling of 70% of its engineering capabilities. And the latest shift was done not just to improve growth prospects but to help to ensure that it’s in position to survive.

John Chambers, Cisco’s CEO, predicted that only 40% of today’s Fortune 500 companies will “existing in a meaningful way” within the next decade, believing that, in high tech, if a company misses one big transition, it could find itself out of business within two years.

That culling of the Fortune 500 prediction “speaks to change,” he said, and the notion that some companies will fail to reinvent themselves in the years to come. Cisco, Chambers said, has changed more operationally in the last year than it has in any five year period. “Change is really hard, but it’s going to be required for survival,” Chambers said, later stressing that “it’s painful” when a company has to disrupt itself.

Chambers said Cisco took some lessons from Comcast, which has adopted an Agile approach that was largely born out of the software industry to accelerate its ability to develop and launch new products on a rapid basis. Some of that handiwork, which called for a commitment to having teams from engineering, business development, finance, sales, marketing and human resource  be on the same page at the same time, is found in X1, Comcast’s new cloud-based platform.

“We can now move in days and weeks and not months and years,” Neil Smit, Comcast Cable’s president and CEO, said, adding that the shift to Agile processes have helped to boost Comcast’s patent base by 30% each year over the last four years. “It has really invigorated the organization.”

But it takes a major commitment, particularly among large companies. “We are giants…but it requires a lot of power to make [us] move,” Werner Struth, chairman of Robert Bosch LLC, a company that big in automotive and mobile products, appliances and manufacturing products.

Panelists also discussed how it’s necessary for companies to enter adjacent industries.

For Comcast, one adjacency it’s targeting is WiFi, which is becoming increasingly important to the MSO’s broadband business. Comcast has deployed about 8 million WiFi hotspots (in the home and in business and metro locations), and the average Xfinity WiFi user now consumes 2.3 Gigabytes of data per month, above the cellular average of about 2 Gigabytes, Smit said.

Smit was also asked to predict if the pending merger between Comcast and Time Warner Cable will happen. His confident, yet terse, response: “Absolutely.”

Chambers also weighed in on the potential for broadband to be reclassified under Title II as the FCC pursues new network neutrality rules. He’s against it, holding that it could have a chilling effect on broadband deployments and upgrades if ISPs question the financial return they’d get.

“Well-meaning regulation can sometimes result in disaster,” Chambers said.

As for Comcast, Smit confirmed that the MSO plans to start some market trials of DOCSIS 3.1 this year, referring to cable’s emerging multi-gigabit platform for HFC networks.