Key Insights From The Extraordinary Leader

Posted By Admin @ Feb 28, 2022

Tittle: What has Cisco done to maintain its unique culture? What are the pros and cons of doing so?

Case Study

Civil Engineering


 It is important to know that Cisco has always focused on their customers, and customers have always been their first priority. That’s why they developed great technology, which was good enough to meet the demands of customers. To continue with their great customer focus, they had a unit, which was named “Customer Advocacy”, and the purpose of this unit was to touch all areas relevant to customers. So, they continued to maintain its great culture, by providing advanced services and technical support. Then another great decision to keep customer focus in the right direction was to bring the IT department under the supervision of Customer Advocacy, which helped to align so many things in an effective manner.

 The other great thing about the unique culture of Cisco was its strategy of empowering employees. They developed a culture, where great values were developed for employees. Access to management was easy, and everyone was included in the process. That’s why, in 2001, when a list of best companies to work, was released by Forbes, Cisco was included in this list. The other important step taken by Cisco was to link employees’ performance directly with the satisfaction of the customer, which always kept employees focused and committed to their jobs. They knew that they will have to satisfy customers, so they started giving their best. These kinds of pros were associated with Cisco’s unique culture. In some situations, this strategy can come up with some cons as well, but it was not the case for Cisco, because this strategy was a useful one for them in a given circumstances (Gulati, 2001)

2. Why has John Chambers decided to reorganize in 2001? What are the trade-offs?

 Everything was going good for Cisco until the economic downturn of 2001, which also affected the sales and performance of Cisco. They were facing problems in selling their products. They had a customer-focused approach since its beginning, which proved successful too, but issues were building up due to its decentralized organizational structure. The business line, as well as, products were facing the issue of redundancy and overlapping because things were not centralized. It was time for the company to take major decisions regarding its organizational structure, so John Chambers realized the situation, and made a great decision to centralize the structure of Cisco.

 The company had a decentralized structure, where different product segments were focusing on different customer segments to satisfy their needs, but meanwhile, overlapping was happening, and time & money of company was being wasted. The problem was that if one business unit has produced a product for customer satisfaction, then the same product was also developed by the other business unit, and because there was no centralized system, so both business units could not coordinate with each other. So, company realized that a centralized structure was needed on an immediate basis, and efforts were started to do so. They came up with a structure, which had cross-functional teams. So, the focus was taken away from customer groups, and it was given to technology so that more range of customers is served, rather just a few groups are being served. The new structure was great for them, as it gave them great agility and flexibility, and the production process was faster than ever before. So, customers’ demands were met accordingly, and the company started moving in the right direction.

3. Are there any functions that are likely to be impacted more than others by this reorganization, in terms of their customer-centricity?

 It is important to understand that earlier, each function was focused on its customers, and customer-centricity was their way to move forward. But this was being done with a decentralized structure, which means that customer-centricity was going to face some issues with the restructuring of the structure. The company certainly gained so much in terms of productivity and efficiency, but they were losing on the side of customer satisfaction. A new structure was not aligned well with the functions performed by its previous organizational culture, where the focus of everything was the customer. Now, the company was focusing on its productivity, innovation, and technology, and they were trying to boost their product sales, but customer satisfaction was being compromised in this process. A centralized organization works in a manner, where management has several layers, so decisions can be impacted by these layers. If one decision was made to develop a product or make any changes, then it has to follow a certain suggested pattern like going through different levels for approval, and once the approval is given, then process or function is done. It means that a lot of time was needed for a decision to take place in real terms. Therefore, it was taking more time to fulfill the demands of customers. Earlier, if a customer had any problem, and a business unit came to know about it, they would have immediately started working to deal with the problem, because they did not need approval from certain layers of management from top to bottom. It is important to understand that such kinds of issues are normal when such major changes are being made by a company.