Cisco System Case Study

Cisco System Case Study

Cisco System Develops a Collaborative Approach to Organizing

Dalbert Walters

Done in Partial Fulfillment of the Course

Dynamics of the Organization

Cisco System is famous for their internet routers and switches on which the internet was built. In 2001 the dot.com crisis saw Cisco System overall stock value lost over $400 billion. This has force CEO John Chambers to reevaluate the company, hence the reorganization of the company organization structure. Cisco started off with a control and command approach to organizing up until the mid-2000s. The control and command approach was where the CEO and the company’s top ten corporate managers made the important decisions for the company. After seeing Cisco’s market value decreasing, the CEO John Chambers decided to take a different approach on the structure and control systems of Cisco. Chambers established a collaborative approach where those in the lower-levels of management were involved in important decision making for the company. Essentially, Cisco moved from a mechanistic structure to an organic structure.

By making this change, the company was able to produce quicker innovative ideas. Chamber created five pillars which drive his collaboration approach to organizing, this approach focus on value, tear down barriers and created new organization architecture for Cisco System. The collaboration started with the CEO himself, changing the leadership style from the excessively command and control leader. Collaborative leadership is where others get involve in decision making, listening to ideas, finding common ground and striking compromises. John Chamber’s collaborative approach measure senior managers base on how well they collaborated, as a result 15% of the company top management left because they did not like the new approach. Prior to 2001 individuals worked in independent business units, Chambers changed the structure. He created a more organic structure which allows different teams and divisions to plan long-term strategies together.

Despite the fact that Cisco was making billions in revenues, their CEO recognized the need for change because he realized that the mechanistic approach was not good enough to overcome the company shrinking market value. The CEO implemented a collaborative approach and organic culture was the answer which would allow everyone at the company to get involve in decision making. John Chamber created cross-functional teams, developed measureable short term and long term goals and emphasized speedy product development. The company was confident that the reorganization will make them a global leader in both communication technology and internet hardware and will bring innovation to the market quicker than their competitors.  

Greiner’s model describes the phases that companies will go through as they grow. Each growth phase is made up of a periodic of relatively stable growth followed by a crisis which is very familiar with Cisco situation. Larry Greiner developed this model in 1972 with five phases of growth and added a sixth phase of growth in 1998. Growth through creativity is the very first phase of growth, this is where the entrepreneur creates products and opening up markets. This phase ends when there is a leadership crisis and this is when professional management takes over and bring in more formal communication. Growth through direction phase is where growth continues with formal communications and the company focus on separate organization functions. At a point the products and processes will become numerous and the phase will end with an autonomy crisis. Growth through delegation is where mid-level managers freed up to react to new products or in new markets. Top management only focus big issues, this phase will end with a control crisis. Growth through coordination and monitoring is where the business reorganized into product groups. Work becomes submerged under increase bureaucracy and this phase will end on a red-tape crisis and a new culture and structure must be introduced. Growth through collaboration is the fifth phase, this is where staff group and re-group in teams to deliver projects in the new structure. This phase will end with an internal growth and further group can only come by developing partnerships. The sixth phase which was introduce by Larry Greiner in 1998 deal with growth through extra-organization solutions. This phase describe that growth can continue through merger, outsourcing, networks and other solutions involving other companies.