MBA 610AE: Organizational Behavior
Professor Tammy MacLean
November 16, 2011
Cisco Systems (2001): Building and Sustaining a Customer-Centric Culture
Introduction/General Problem Statement:
Doug Allred was Vice President of Customer Advocacy organization of the Cisco’s corporation. This organization was erected to consolidated all functions that directly touched the customer but sales to provide high-quality customer service. Since August 2001, the IT market turned down and brought severe challenges to Cisco as the company had to lay off 18% of its employees and reorganized its structure, transforming from decentralized organizational structure with three business units to centralized organization. However, these changes stabilized the volatile situation of the economy but threatened Cisco’s customer focus, a key element of its competitive advantage and a principle of its core operating processes. In order to overcome the disharmony between the structure and the culture, Cisco introduced a Customer Focus Initiative to hold the favor of its key customers. Nevertheless, Allred had no confidence that this action would fix the perceived gap between the structure and the culture.
The main problem in this case is that how to keep enough resources to be used on the customer focus, which is the core component of the Cisco Company, under the reintegrated decentralized structure.
At the beginning of the establishment of Cisco, Lerner, who is one of the founders, “realized that success was developing cutting-edge technology that was relevant to the consumers”.i Thus, she set up the organization which was called “ Customer Advocacy” to centralize all of the functions of the corporation that directly touched the customer. This means every member of this company, no matter which department he/she was in, he/she should keep in mind that the customer satisfaction was his/her greatest pursuit. The early success of Cisco was attributed to the concentration of resources. Since no other competitors did the same thing, Cisco maintained the best relationship with customers in the telecom industry.
Nevertheless, as the size of the corporation continued to grow, the problem of this culture became visible. “When will you have time to develop anything if you are spending all of your time with your customers?”ii Thus, Cisco tried to improve this culture not only by increasing the IT budget, but also by decreasing the direct staff service from different departments and using a centralized Technical Assistance Center to solve the consumers’ problems. Even though this action released some resource to be paid to the technology research, but Cisco still keep enough attention to the demand of the customers. Thus, the structure was still consistent with the culture.
However, by 2001, Cisco ran into the burst of internet bubble. The collapsed profit compelled Cisco to take actions to stabilize its basic survival. In order to save the resource and product, Chamber, the CEO of Cisco tried to “shift the corporation from a decentralized operation to a centralized one focused on technologies”.iii He decentralized the Customer Advocacy’s power to marketing and engineering to make departments pay more attention to technological development and the market.
It is undeniable that the new structure helped Cisco to eliminate the overlap in research and resource so that Cisco could hold its market share. But it also threatened the core culture of Cisco, for the decentralized structure could not have enough ability to handle the whole process of customer service. The large amount cost of technological innovation also resulted in the high priced product. Even though Cisco created the Customer Focus Initiative to try to serve leader customers better, as the SVP of Customer Advocacy, Allred still felt anxious that this reorganization would reduce the customers’ loyalty. He was also afraid that since the products...