by Jim McGee
December 16, 2008 at 4:54 pm
· Filed under Enterprise 2.0
The current issue of Fast Company has a cover article on Cisco and their ongoing efforts to reorganize into something that is an excellent case study of what Enterprise 2.0 may look like in an established organization. It shouldn’t be any surprise that the quintessential networking company is on the leading edge of network thinking applied to organizational design. At the same time, Cisco is a large, successful, hierarchical, engineering-centric organization that isn’t likely to be terribly interested in organizational fads.
Here’s the argument in a nutshell:
Chambers has greater ambitions, even now, in the midst of turmoil. Or, perhaps, especially now. He has been taking Cisco through a massive, radical, often bumpy reorganization. The goal is to spread the company’s leadership and decision making far wider than any big company has attempted before, to working groups that currently involve 500 executives. This move, Chambers says, reflects a new philosophy about how business can best work in a networked world. "In 2001, we were like most high-tech companies, with one or two primary products that were really important to us," he explains. "All decisions came to the top 10 people in the company, and we drove things back down from there." Today, a network of councils and boards empowered to launch new businesses, plus an evolving set of Web 2.0 gizmos — not to mention a new financial incentive system — encourage executives to work together like never before. Pull back the tent flaps and Cisco citizens are blogging, vlogging, and virtualizing, using social-networking tools that they’ve made themselves and that, in many cases, far exceed the capabilities of the commercially available wikis, YouTubes, and Facebooks created by the kids up the road in Palo Alto.
The bumpy part — and the eye-opener — is that the leaders of business units formerly competing for power and resources now share responsibility for one another’s success. What used to be "me" is now "we." The goal is to get more products to market faster, and Chambers crows at the results. "The boards and councils have been able to innovate with tremendous speed. Fifteen minutes and one week to get a [business] plan that used to take six months!" As storm clouds form for the rest of the business community, he says, "We’re going to gain market share." ["How Cisco's CEO John Chambers is Turning the Tech Giant Socialist", Ellen McGirt]
What makes this case study useful and interesting is its emphasis on organization not technology. There’s an undercurrent in the article that everything is all a bit "socialist" somehow and isn’t that a surprise, which I found annoying at points. The more interesting point is that a bunch of engineers and big-organization executives are essentially concluding that hierarchy isn’t scaling well enough to meet their goals.
More than anything else, this story provides a well-documented case study that is an existence proof to other skeptical executives that the combination of Enterprise 2.0 technologies and the right organizational principles and practices can succeed.
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Having worked at Cisco for more than a decade in two stints between 1990 and 2003 I would have to caution you against drawing any conclusions for Enterprise 2.0 applications from the Fast Company article. Chambers is an excellent salesman and the article is “shaping the battlefield” for new technologies and applications from Cisco. You cite
“The boards and councils have been able to innovate with tremendous speed. Fifteen minutes and one week to get a [business] plan that used to take six months!”
but I would be very cautious that this was anything more than hyperbole. This sentence in the article goes to the heart of my misgivings:
“Taken to its ambitious conclusion, Chambers wants customers to remake their companies in Cisco’s image, a prospect possible only because of their dependence on Cisco technology.”
There is little proof of a new level of competitiveness beyond a couple of anecdotes and a cost reduction benchmark comparing the organization at the height of the bubble:
“Across the company, Ricci says, fiscal 2008 saw “a tenfold increase in new projects.” And he points out that operating expenses have been trimmed from about 38% at the height of the tech boom to between 35% and 36% today: “We’re shaving 2% to 3% of profit off of every dollar of revenue we get in.”
it’s always easy to start new projects, and anyone who hasn’t cut expenses from how they were operating at the height of the bubble probably didn’t survive.
One of the hallmarks of a real test case would be some false steps and clear lessons learned. Most new technologies don’t work in the beginning and require a long period of experimentation and process re-design. This story is just too wonderful. And I say this as an everyday user of Office 2.0 technologies.
Excellent points. I very much appreciate the insights of someone with both inside knowledge of the organization and hands on experience with the technology.
The challenge in any public “case study” is how to effectively read between the lines and correctly discount claims. Its especially hard to get the “failure stories” that are the most instructive. On the other hand, simply discounting every public success story as no more than thinly disguised marketing doesn’t help. I think of these examples as a series of data points that over time let us triangulate in on some underlying lessons.
Certainly, there is little hard data anywhere on the impacts of Enterprise 2.0. Nor am I sure that there is any effective way to get it at this stage of development. One of the primary values of this kind of story, at this stage, is to potentially tip the scales toward experimenting and learning and away from demands to “prove it” before we can really say what “it” is.
“On the other hand, simply discounting every public success story as no more than thinly disguised marketing doesn’t help. I think of these examples as a series of data points that over time let us triangulate in on some underlying lessons.”
That was not my intent. Like you, I believe that the “Office 2.0″ web-based technologies will prove transformational of business practices in the enterprise. But precisely because we are believers we have to look carefully at any story that appeals to our pre-existing biases.
Cisco lays down a number of markers in the story for results in the next 18 months that will be worth revisiting toward the end of 2009. If a third party, for example a customer of Cisco’s, were talking about the benefits of using Enterprise 2.0 it would be more noteworthy, if only because Cisco is selling the technology and stands to benefit more directly from their adoption.
I think because of our personal biases in favor of Enterprise 2.0 and Cisco’s financial incentives we have to take a little harder look at their claims than those of an “end user early adopter.”
What’s the most useful balance between tracking what Cisco is doing as both a large scale organization and a technology vendor with an interest in promoting Enterprise 2.0 as well as taking advantage of it? Perhaps the next question is how can we get Cisco to tell us more about what’s worked and what hasn’t worked in their early adopter efforts.
I also thought your observations in on this topic are worth referencing here. I especially liked the reference to Clarke’s 3rd law.
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