You certainly haven’t missed the abundance of articles devoted to CISCO in recent times. The American giant is perhaps the first example of a global 2.0 business, or at least one to be so successful in its approach. A lot has been written on the subject, which you can easily find thanks to our friend Google, but I particularly recommend this one.
For a more comprehensive understanding of what happened at Cisco, we might as well turn to the good Lord rather than his saints: so I invite you to listen to a speech by Cisco CEO John Chambers, delivered to MIT students on October 15.
[UPDATE 19/01/2023 The video has since disappeared, but he gave pretty much the same speech again shortly afterwards, with only the questions at the end differing].
What can we draw from that ?
To begin with, I’d like to emphasize the logic of Chambers’ approach, which isn’t tool-oriented in the least. Of course, at one point he cites statistics on the use of blogs, wikis and other tools made available to his employees. But in no case does he present them as an end in themselves: increased use of the tools is seen only as proof of the organization’s successful transformation, with ROI to back it up. Let me summarize his thinking: we decided to work in such and such a way for such and such a reason, and the graft has taken, as illustrated by the extensive use of the tools that support this mode of operation, all for such and such a benefit.
It all started with the crisis. Chambers tells us that CISCO has gained market share following each of the last major economic crises. According to him, the advent of a crisis means that we must immediately start positioning ourselves on what will make for recovery, which is symptomatic of a business that never stops learning from its past, and knows how to be part of a perpetual evolution geared towards the future. And since we’re entering a period of crisis, it was essential to understand right away which levers would turn it into an opportunity.
Innovation and operational excellence. To succeed today, you need to demonstrate excellence in the way you do business. To succeed tomorrow, you need to innovate. Chambers notes that the two notions have often been pitted against each other, as a business cannot be both at the same time. On the contrary, Cisco’s example tends to prove that success lies in neither of the two possibilities: it’s important to be both innovative in your business model and excellent in the way you operate.
Fear of change is a constant. A system based on permanent change makes people uncomfortable. There’s no point in trying to avoid it – it’s inescapable. However, it is important to know how to evacuate this fear and make change possible and secure. And according to Chambers, this is achieved through the means of communication. This is logical, if you’re convinced that it’s important to explain, discuss and allow employees to interact and adjust with each other at all times.
It doesn’t matter what the competition is doing. In difficult situations, the logical attitude of many businesses is to adopt a wait-and-see attitude, with everyone sticking to their guns and waiting for the other to move before following suit. This is not Cisco’s way of doing things, where we prefer to focus internally on understanding the direction of the market. I see this as a sign of the importance given to both human and social capital. Human capital, because we trust internal talent to find ways out, and social capital, because we make better decisions together than alone. Responding to a question from the audience, Chambers admits that as a “command and control” adept, he had to force himself to listen to others and let things happen, but that in the end, the decisions he made were better than those he took before, alone.
What’s important for Cisco is to grasp market transitions, and that’s what makes the difference between leaders and followers. It’s not a matter of cost or industrial tools: it’s first and foremost a matter of knowledge, intelligence and reflection. Obvious…but it’s worth repeating.
No success without a new business model. Chambers hits the nail on the head with a sentence that sums up the need to change the way we organize production, the way we think of a business as operating in its market. In his view, there are many markets to be discovered and conquered. But these markets are no longer countries, but ever-changing business models that need to be tamed. The growth drivers are there, but they require us to take a fresh look at our environment, and let go of our certainties.
Towards full service. Some speak of SaaS as a new Eldorado? For Chambers, it’s “Everything as a Service”, and even “Service as a Service”.
The future is the group. Having set the scene, Chambers begins to delve into the organizational implications of what he has just said. In his view, the future lies not in the individual, but in the group, the community, which brings to mind my earlier thoughts on social capital. In concrete terms, for him, this means being part of some thirty communities (councils) whose content is pushed to him according to his needs. The intelligence of the group at the service of the decision-maker, but also a strong concept for those wary of “knowledges organizations” where information can overwhelm the individual. I often talk to you about reversing the flow of information, so that it goes to the individual according to his or her needs, instead of turning the individual into a gold digger while drenching him or her in useless mud. Chambers also follows this path: for him, the second phase of the Internet is not the individual seeking information, but “information finding me” according to need.
We can’t do without transforming the organization. Further proof of the emptiness of tools in the face of organizational inertia. Chambers had to profoundly transform his business. Cisco was a vertical, hierarchical business, focused on achieving individual objectives. From now on, 30-50% of leaders’ time must be spent implementing cross-functional projects, and they are evaluated and rewarded accordingly. A concrete application of the adage in which I believe so much: “Tell me how you’re evaluated, and I’ll tell you how you work”. Of course, it hasn’t been easy. Part of the management team could excel in one area but not at all understand the logic of the new one (I like the analogy with the basketball player who performs well in one system but not in another), or even refuse to do so. As an alignment fundamentalist, I often say that once you’ve decided that a particular way of operating is essential to achieving your objectives, if you don’t play the game, you’re out of the game, especially as far as management is concerned, which has to play the role of transmission belt and can’t play against the business. Chambers has taken this logic to its logical conclusion: 25% of top management has been asked to pack their bags.
In response to a question from the audience, he explains that leaders are now trained accordingly, with a focus on appropriate forms of leadership, and that they are told how they should spend their time. At the same time, appraisal and reward systems have been reviewed.
Organizations can’t avoid a transformation. One more proof that tools is useless in a context of organizational inertia. Chambers has to deeply transform the organization, Cisco being a vertical and hierarchical company, focused on personal production and objectives. He had to built a cross-functional from scratch. Now 30 to 50% of leader’s time has to be dedicated to cross-functional implementations, they’re assessed and rewarded on this basis. It’s one more application of my favorite adage “tell me how you’re evaluated, I’ll tell you how you word”. Of course it was not that easy. Part of the leadership team, of the managers, may excel in a system and not understand how to behave, what to do in another one (I like the analogy with basketball players who are good in a system and can’t adapt to another). The “alignment integrist” I am often says that once a mode of work has been defined and considered as the best way to meet the objectives, who doesn’t play the game puts himself offside, most of all if they are managers who have to act like driving belts and can’t play against their company. Chambers enforced this logic to the end : 25% of the leaders had to leave the company.
Answering to a questions of the audience, he explains that now leaders are trained according to that, with a focus on the needed form of leadership, that they’re told how they are expected to spend their time. In the same time, evaluation and rewarding systems has been updated too.
Community treatment of strategic issues and alignment. I was talking about alignment. It’s logical that the operating logic of councils should be aligned with the business’s strategic objectives. If we add to this the new transversality of leaders we mentioned earlier, Chambers can now choose any one of them, express his vision…and let him do it. Communities are built up as needs arise, and within a month a business plan can be proposed. And, let’s not forget, these decisions are more relevant than those taken by conventional committees. “Speed and scale” seems to be the watchword at Cisco. This is mainly due to the fact that it involves people who are closer to the action. Which brings me back to the service-oriented organization implementing adhoc structures based on both strategic and field issues.
ROI? The ROI of this new way of working is obvious. If “better decisions” still seems too unquantifiable a criterion for you, perhaps the fact that the business is able to address 26 major issues per year where it previously only addressed…..deux will fulfill your expectations. Are we talking productivity? A case in point? The medium business council thought it impossible to address the small business market. A “small business” council was set up and came up with a business plan in just one month. An excellent example of an organization that creates opportunities based on its needs, not its certainties.
Internal and external. I’ve already told you about I-prize. It’s the epitome of an outward-looking community, enabling a business to get ideas from the outside that it didn’t have itself. New business, new product, new motivated and committed employees. Did you say crisis and cold feet?
A global vision. Finally, Chambers talks about tools. In a few slides, he shows that blogs, wikis and co are experiencing a vertiginous increase in usage. But this wasn’t an objective, it’s more a consequence. What’s more,” he points out, ”we shouldn’t think of Web 2.0 in terms of tools, but in terms of a global scheme. And do it intelligently: at Cisco, we’ve made the effort to translate consumer web usages into professional ones. Are you afraid of Facebook because you don’t want your employees to spend their time talking about their hobbies? In business, it’s the description of skills and experience that counts. Etc. For those who are put off by the effort, rest assured: whereas the deployment of an ERP in the 90s required 3,000 people and almost “crashed” the business, in Chambers’ own words, here it took just one year and 50 people to get everything up and running. It’s all about vision, process and culture. But culture is the hardest thing to change. The real challenge, the tipping point, lies not in the ability to find new operational logics, but in making them “manageable”.
Corporate Responsibility” as an axis for future development? Cisco is now one of those businesses that understand that their future development depends on the joint development of their environment. This gives me food for thought, but I don’t yet have the answer. After Danone, a company with a strong “bottom-up” culture and pioneer in the field of social business, here’s the second example of a company with an “inverted pyramid” that’s positioned itself in the niche. Does this mean that businesses capable of making this change internally (or with it in their genes, like Danone) are better placed to embrace the co-development approaches that may well be essential to tomorrow’s economy? Perhaps it’s worth asking the question?
No need to add anything, is there?
In any case, it’s proof that: “Yes, it’s possible”. Provided we revisit our certainties.
