Cisco Products and Specific Customer Groups
Cisco Business Councils (2007): Unifying a Functional
Enterprise with an Internal Governance System
Harvard Business School
June 11, 2010
Ranjay Gulati
Synopsis
In August of 2001, just months after Cisco System reported its first loss a a public company ($ 2.7 billion), John Chambers, president and CEO, announced a major restructuring that would transform Cisco from a decentralized operation organized around customer groups to a centralized one focused on technologies. This restructuring not only risked destabilizing the large, complex organization during an economic downturn, but more importantly, threatened Cisco’s ability to remain customer-focused, a hallmark of the company’s culture and success since its first product was created in 1986. In order to maintain communication and stimulate ongoing collaboration among the newly independent functional areas, Cisco introduced coordination mechanisms that enable the companies to remain customer-focused.
Introduction
John Chambers became president and CEO of Cisco Systems in 1995. Over the course of the next several years, the decisions he made and the changes he implemented challenged traditional business practices, and resulted in incredible growth for the company. When Chambers first started, Cisco was generating annual revenues of $2.2 billion; just six years later, the company was generating annual revenues of $22.3 billion.
All of those results, however, were threatened in the 2001 market downturn. Earlier in the year, the explosive growth in the sales of hardware supporting the Internet began to show serious signs of slowing down, and Cisco Systems, like the rest of the technology industry, was facing the repercussions of the demise of the Internet boom and the first economic downturn in more than a decade. Start-ups, which had enjoyed the benefits of a buoyant stock market, and telecommunications companies began cutting back their overextended
IT and network budgets. As a
Enterprise with an Internal Governance System
Harvard Business School
June 11, 2010
Ranjay Gulati
Synopsis
In August of 2001, just months after Cisco System reported its first loss a a public company ($ 2.7 billion), John Chambers, president and CEO, announced a major restructuring that would transform Cisco from a decentralized operation organized around customer groups to a centralized one focused on technologies. This restructuring not only risked destabilizing the large, complex organization during an economic downturn, but more importantly, threatened Cisco’s ability to remain customer-focused, a hallmark of the company’s culture and success since its first product was created in 1986. In order to maintain communication and stimulate ongoing collaboration among the newly independent functional areas, Cisco introduced coordination mechanisms that enable the companies to remain customer-focused.
Introduction
John Chambers became president and CEO of Cisco Systems in 1995. Over the course of the next several years, the decisions he made and the changes he implemented challenged traditional business practices, and resulted in incredible growth for the company. When Chambers first started, Cisco was generating annual revenues of $2.2 billion; just six years later, the company was generating annual revenues of $22.3 billion.
All of those results, however, were threatened in the 2001 market downturn. Earlier in the year, the explosive growth in the sales of hardware supporting the Internet began to show serious signs of slowing down, and Cisco Systems, like the rest of the technology industry, was facing the repercussions of the demise of the Internet boom and the first economic downturn in more than a decade. Start-ups, which had enjoyed the benefits of a buoyant stock market, and telecommunications companies began cutting back their overextended
IT and network budgets. As a