Cisco has gone from a nimble technology innovator with huge market cap to one struggling to hold onto declining market share and maintain relevance. This paper outlines management strategies used during its ascent, problems facing the company recently and recommendations for the future. (1)
Cisco’s approach to its culture and structure was suitable to accomplish its strategy and deal with a competitive market. Because the networking industry is rapidly changing, Cisco needed to adapt to the changing market in order to become a leader and accomplish its strategy
The way Cisco adapted to such a market was to implement an organic organizational structure that promoted creativity, openness and flexibility. The organic structure by nature is less formal, significantly decentralized in decision-making, and communication channels are both horizontal and vertical to keep up with rapid market changes (Francesco, 1998).
Cisco’s organic structure is based on five core values: dedication to customer success, innovation and learning, partnerships, teamwork and doing less with more. Cisco found that to be successful, it had to meet its customers’ demands, as CEO Chambers stated: “We let the customers decide.” When the customer decides, the company must change along with their demands.
Therefore, Cisco trusted its most important asset – its employees – to provide the necessary knowledge to continually adapt to the need for new technology. Employees were encouraged to “think out of the box” and not be afraid to make mistakes. Moreover, Chambers took pride in removing obstacles in the vertical communication channels, giving all employees the opportunity to know what was going on. Finally, he emphasized the absence of exclusionary terms such as “executives only.” Each example illustrates how Cisco adopted an organic structure to fit its strategy of rapid adaptation to a constantly changing market.
In looking at the Giordano Holdings Ltd case, it is possible to draw parallels between two companies in very different industries making use of the same organic structure to fit their strategy. Giordano’s strategy was very similar: to become a market leader. To do that, it also implemented tools such as trial-and-error, made use of decentralization in decision-making and focused on customer needs to stay alive in a highly competitive market.
Cisco’s approach to dealing with its external environment was either to develop its own technology within six months or to “buy itself into the market” through acquisitions. Yet again, the organic structure that fostered creativity and trial-and-error helped Cisco make its self-imposed six-month deadline. If it did not reach the deadline, it acquired other businesses and sought a speedy assimilation through trained teams and programs. (2)
Cisco’s organic culture and structure have had a direct impact on workforce productivity. In fact, its strategies were so successful that it had one of the lowest turnover rates in the industry.
In addition to other immediate perks such as office space and free soft drinks, new employees were set up on the company’s intranet, a tool used to stress Cisco’s culture and values. Mimi Gigoux, HR director in corporate acquisitions, made it policy to be direct and honest with new employees from the start. She also pointed out the positives: retention plans, compensation, vacation days, tuition reimbursement and other benefits.
Incentives and benefits were essential to retaining Cisco employees, as evidenced by the dispersion of stock options. A full 40 percent of options were in the hands of non-managerial employees – employees who had been with Cisco for more a year had over $125,000 profit in unexercised options. With incentive to see the stock price remain high, employees took their work personally because they realized their efforts could directly impact the stock price. That said, it was not uncommon during these heady...
Please join StudyMode to read the full document