Cisco Business Councils (2007), Unifying A Functional Enterprise With An Internal Governance System

Cisco Business Councils (2007), Unifying a
Functional Enterprise with an Internal Governance

System
Group - A9
Questions
Q) Why did Cisco centralize marketing and R&D in 2001?
• Cisco centralized R&D to promote more rapid technical innovation
by limiting overlap. Also, marketing was centralized to move the
focus from customer group specific decentralized function to a
centralized one.
• As one senior manager observed in the case, each product line was
repeated for each customer segment resulting into lots of
redundancy. Market downturn of 2001, warranted the need for
consolidation and avoiding redundancy.
Questions
Q) What were the trade-offs and biggest downsides of
reorganization?
• The biggest obvious downside of reorganizing company around
product and not customer groups was the risk of making the
company less customer-focused. Under the new org structure, each
functional unit was committed to a specific technology, which
entailed the risk of dismissing the customer.
Is execution where good strategies
go to die?
• Difference in Thinking Style.
• connection between participation and ownership.
• narrative around the strategy.
Problems related to execution with CISCO

• Collective groups of volunteers who wanted to participate, but could not execute
• The councils were initially led by a single executive, a structure that did not emulate the
philosophy of the councils.
• Many of the council leaders were also the functional leaders of the groups most
impacted and they wanted to fix problems directly rather than influencing the functional
groups.
How Cisco managed to overcome those?
• Chambers stayed committed to the councils.
• Establishing the importance of a council in every speaking opportunity.
• Communication focused culture.
• Councils were revitalized after changes had been made to the governance
models- “Three-in-a-Box” leadership model was developed.
From Strategy to Implementation:
Seeking Alignment
• People and Incentives
• Supportive Activities
• Organizational Structure
• Culture and Leadership
People and Incentives:
Under people and incentives there are a few questions that need to be answered that are whether the
people have the necessary skills to make the strategy work. Whether they support the strategy. Is their
attitude aligned with the strategy and also whether they have the resources they need to be successful.
• To answer these, we have a few quotes from the case which would prove that there was proper
alignment.
1) “It’s about getting the right people in place to operate in this environment,” “We look for people who can
learn the methodology and then teach it to other groups, and at times, we may need to make changes.”
2) ‘A second CSS (customer satisfaction surveys) initiative was the Low-Score Follow-Up Program. Under the
program—which uses a cross-sectional survey—goals must be met in order for account team members
to receive a bonus. Furthermore, if a low-score is recorded in any survey, a notice is triggered and sent to
the respective account team.’
• These prove that there was proper alignment between the people and incentives which helped them to
implement the strategy.
Supportive activities:
Things that the organisation does, like the pricing, the way they handle customers etc
whether all that support the strategy.
The cross-functional councils would bring the leaders of different functions together
to collaborate and focus on the needs and issues of specific customer groups. Cisco
could enjoy the benefits of being a functional organization while retaining its
customer-centricity.’
Also, cisco tried to integrate their new products with the already existing products
which helped them to solve the customers problems and also increased sales at the
same time.
Organisational structure:
This states whether the units are optimally organised to support the strategy.
• In the case we get to know that before the re-structuring there were several units
that worked on requirements of different customer group. This led to redundancy
of engineering and innovation. After the restructuring, Cisco expected the new
structure to promote more rapid technical innovation by eliminating overlap in
R&D. The old structure inhibited the exchange of ideas because engineers worked
in separate silos.
Culture and leadership:
This is about whether the strategy is well matched with the culture and leadership of
the organisation.
• In the case there were multiple instances where the employees of cicso have said
that customer satisfaction is engrained in their culture. Also we know that mr
john chambers provided the correct leadership as one of the top management
executive quoted “One thing that Chambers believes in is that it takes five to
seven years to do anything important,” “So, the position we’re in today is a result
of the efforts over the past five or seven years. The biggest lesson that we’ve
learned out of this is that significant change requires patience. That even while
we were ‘thrashing’ at the beginning to figure out how to make these councils
work, we stuck with it until we ultimately figured it out.” This proves that the
culture and leadership was also aligned with the strategy.
Presented By-
Anik Garai – 20PGPM007

Bhaskar Saha – 20PGPM013
Rishav Saha – 20PGPM040
Soutreyo Saha – 20PGPM055

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Functional Enterprise with an Internal Governance

Problems related to execution with CISCO

Anik Garai – 20PGPM007

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