Cisco 2012: Reorganizing for

Efficiency and Flexibility (HBS)

Group No: 4
Animesh Kumar
Ashish Kumar
Progya Paromita Mondal
Prameet Barua
Chandni Kumari Sinha
Bikash Ranjan Sahoo
Agenda
1) What are the different types of organizational structure that Cisco
adopted over the years? Explain with diagrams
2) What were the strategic considerations for adopting each of these
structures?
3) What are the strengths and weakness of each of each of these
structures?
4) How did these structural changes affect the performance of Cisco?
5) What parameters did Cisco use to measure its performance?
6) What structural changes can Cisco undertake to integrate Holland’s
business? Explain the pros and cons adopting the particular approach?
Q1.What are the different types of organizational structure
that Cisco adopted over the years? Explain with diagrams.

Lines of Business (1995-2001)

Functional Organization (2001)
Councils (2002)
Boards (2007)
New organizational model (2011)
 CEO

SERVICE PROVIDERS ENTERPRISE SMALL COMMERCIAL

• This structure was based on Cisco’s three primary customer segments

• It was created to meet the differing requirements of each segment
• It enabled Cisco to create specialized product offerings for each customer segment
• Each of these businesses developed and marketed a complete product line,
complemented by the sales and engineering team as well.
FUNCTIONAL ORGANIZATION

CEO

MARKETING OPERATIONS

SALES ENGINEERING

COMMUNICATIO
FINANCE
NS
SERVICES

• In August 2001, Cisco shifted from a decentralized organization to a centralized one,

which was aligned by functions and focused on technologies.
• It implemented this structure, so as to promote more rapid technical innovation by
eliminating overlap in R&D and engineers were instructed to design technologies
with more common parts
COUNCILS

OPERATING COMMITTEE

ENTE COM CON

CDO SMAL
RPRI MERC SP
L
SUM 5 Segment
SE IAL ER
SALES Councils
EMERGING SOLUTIONS COUNCIL
SERVIC
E Innovation
CONNECTED ARCHITECTURE COUNCIL
OPS
4 Cross-Segment
CMO EMERGING COUNTRIES COUNCIL
Councils
FINANC CONNECTED BUSINESS OPERATIONS
E COUNCIL
Operational Excellence
COUNCILS

• In 2002, Chambers introduced the cross-functional executive-level committees

referred to as councils, starting with three councils namely Service Provider,
Commercial and Enterprise councils.
• Each council included senior members from all the functions
• Business councils were accountable to the operating committee
• Councils were encouraged to develop plans which included goals for vision, strategy
and execution.
• An year after the introduction of the first three councils, another council was formed,
which was the Business Process Operational Council.
• In 2006, Cisco added Consumer and Emerging Segments Council
Boards
COUNCILS

BOARDS

WORKING GROUP

• In 2007, Cisco added 20 ‘Sub-Councils’ or ‘Boards’ that operated under leaders, who were
one or two levels below the executive councils
• These Boards were also cross-functional and comprised of about 15-20 employees
• They were led by a team of two Vice Presidents and had a specific mandate
• Chambers hoped that this kind of a structure would enable Cisco to have more flexibility to
investigate new opportunities
• By 2009, Cisco had approximately 50 councils and boards and Chambers hoped the
structure would provide speed, skill and flexibility to quickly move into 30 new market areas.
NEW ORGANIZATIONAL MODEL

Business Entities (Products) & Services

Enter SP SP SP Tech
Emer Adv
prise Securit Data Colla
N/W Center Vide Routin Mobilit g Serv Serv
y b
AMERI o g y Tech
ENTERPRISE

CAS
WW SP
GTM

EMEA
WW

APJ/C

• The New Organizational Model resembled a matrix with two axes, internally referred to as
‘Pivots’
• All the engineering groups were listed across the top and the geographies were shown down
the left side and this had an overlay which highlighted the customer segments.
• Each box of the matrix was designed to optimize three measures of performance which
were revenues, bookings and gross margin which were jointly owned by the engineering
lead from the business entity and the regional sales lead from the geography.
Q2. What were the strategic considerations for adopting each of these
structures?

• To meet the differing requirements of each of the segments

LINES OF • To create specialized product offerings
BUSINESS

• To promote more rapid technical innovation by eliminating overlap in R&D

FUNCTIONAL • To remove product redundancy

• To bring leaders together to collaborate and focus on the needs and issues of specific consumer groups
COUNCILS • To maximize the efficiencies of the functions and to minimize the risks of losing focus on the customer

• To execute on multi-faceted growth strategy

BOARDS • To enable leaders to have more flexibility to investigate new opportunities

• To increase accountability and speed up decision making

NEW ORG • To increase revenues, bookings and gross margin
MODEL
Q3. LINES OF BUSINESS

ADVANTAGES DISADVANTAGES

Innovation flourished
rigid and inflexible.

Quick decisions
autocratic system of management
accountability of delegated tasks

The division of work is not based on any

stable form of organization
scientific plan
overall cost of running the organization is
low
nepotism or favoritism
unified control and undivided loyalties.

can suffer from a lack of specialization

unity of command
 FUNCTIONAL ORGANISATION

ADVANTAGES DISADVANTAGES

Knowledge and Experience One dimensional-work

Efficient and Precise

Requires a high degree of
specialization
Sense of security
Difficulties in inter-
departmental communication
Clear idea of the hierarchy

Sharing of knowledge Rigid structure

 4. How did these structural changes affect the performance of Cisco?

Lines of Business Functional Organisation New Organisational Structure

Marketing and Engineering were brought under Worldwide Field Operations

chief Marketing and development officer.
Services around customer segments and delivery
Engineering was reorganised into 11 groups models

Central marketing organisation was created to Speed up decision making and increase in
integrate products and technology into solutions accountability

Cross functional “solutions engineering team”- to Holistic view of customer satisfaction

bring different technologies to lab
Optimizing: Revenues, Bookings and gross margin
Eliminating overlapping of activities
Performance Measurement Parameters

More Inspection

Half yearly reviews

Summer of 2011 Track of commitments,

Three Year Plans actions, accomplishments,
with cross functional corrective measures
input
Increase in No use of Vision Slides
Complexity Use of Word Documents
Made it difficult to with Complete Sentences
manage that way
Trade off decisions were
Historically required with time
Targets were set
functionally

Finance ensured that everything was in

line
Measurements Based on Category - Growth, Profitability, innovation , customer experience, partner
experience , employee experience. Owner – Business Entity Leaders , Geographical region leaders and
Functional Leaders
 Performance Measurement
Parameters
Growth Bookings, Revenue, Customer Overall
Market Share Experience Satisfaction,Customer
Loyalty

Gross Margin, Simple Partner Partner Wallet

Profitability
Contribution Margin Experience Share,Partner
/Efficiency
Profitabilty

Employee Voluntory
Time to New Market Revenue
Experience Attrition,Employee
Market Attainment
engagement Index

More autonomy to teams, Minimum planning at corporate levels, Breaks business into small
manageable units leading to More Accountability and Granular level improvements.
 What structural changes can Cisco undertake to integrate Holland’s
business? Explain the pros and cons adopting the particular approach?

Enterpr Securit Data Collab SP SP SP Emerg Tech Adv

ise y Center Video Routin Mobilit Techno Service Service
Networ g y logy s s
king

America
s
WW Enterprise
WW SP
GTM

EMEAR

APJ/C

Innovation Focused Team Innovative Products

The new structure will have a mandatory fund and resource allocation
from all 10 verticals for innovative products like of Holland’s

Will ensure that the innovative products

have sufficient funds and resources
whenever it needs .This ensures that
CISCO never says no to any innovation
Advantages
or ignores any innovative products.

Departments may take it as a burden and

may allocate their most useless resources
to this team or this may act as a rest pool
Disadvantages for employees who are not happy with
their current work.
This mandatory allocation may reduce the
resources available to the departments
when they actually need that.