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How Networking Thrives On Networks

September 7, 2009

As a company that has built its success around the internet, it is perhaps not surprising that Cisco leads the way in thinking about the power of networks and network technologies. That thinking permeates the way that its people think – and also how they organize and perform their work.

A recent article in The Economist (‘The World According To Chambers’, August 29th) describes the Cisco strategy “to become the main supplier of the essential elements of an increasingly connected economy, and to be a shining corporate example of how to use them”.

The product and acquisition strategy is itself interesting and should be studied for insights to how our working lives and roles may change in an increasingly networked world. But my comments here will focus more on the innovations that Cisco has introduced to its organizational model.

Of all the companies that I deal with, Cisco seems to me the most advanced in developing a model for the future (other contestants please step forward). First, when the dotcom bubble burst, it eliminated traditional lines of business and moved to a set of centralized business functions. This eliminated much of the confusion for customers by transforming the way that markets were segmented; but of course strong business functions often become bureaucratic and fail to cooperate with each other. These tensions lead most companies to move back and forth between centralized and decentralized organizations.

Cisco took a different path and has built a system of cross-functional committees that handle different markets or business processes. It is a structure that seems to be working. Such an approach relies on collaboration between the various stakeholders, which in turn may depend on the right performance measures that incent teaming behaviors. Apparently individual performance in teams determines 30% of a manager’s bonus; and failure to work well with others leads to much diminished career opportunities.

For groups like Legal, Commercial Management and Procurement my observation is that there is a real sense of ownership, an understanding that they exist to serve the greater good. I see no evidence of territorial disputes. Instead, time seems to be spent challenging traditional assumptions or methods and a determination to understand market and stakeholder needs. A collaborative committee results in a sense of shared ownership for results; and peer pressure ensures that each function is anxious to perform.

Of course, I have never worked in Cisco so I can only comment on what I have seen and the experiences that IACCM has had in its conversations with Cisco members. I am sure that its contracts and contracting practices still have room for improvement – but I suspect thatĀ its staff would themselves be the first to acknowledge this and to be asking what it is they need to do.

The new organizational model – which I see as the most mature version today of shared service concepts – depends on using Cisco’s network technologies to support internal networking. According to The Economist, the annual travel budget has fallen by almost $300m due to the use of Telepresence and other virtual meeting tools. Cycle times have been slashed and the cost of inclusion is so low that reasons to exclude participants from decision-making almost disappear.

I will continue to observe Cisco’s progress, but for anyone wishing to explore new organizational models, this is certainly one of the company’s to study, especially given John Chambers’ goal of making Cisco “the best company in the world”.

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