Cisco - Innovation as the Engine of Growth
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Case Code: BSTR462 Case Length: 17 Pages Period: 1984-2014 Pub Date: 2015 Teaching Note: Not Available |
Price: Rs.500 Organization: Cisco Systems, Inc. Industry: Networking, IT Countries: Global Themes: Technology and Innovation Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Four Pillars Of Innovation
As of 2012, Cisco spent around US$ 5.5 billion on Research and Development (R&D). The company developed through its R&D some of its most successful products and services. Almost two-thirds of Cisco's revenues came from the sales of products it had developed internally. In the early 2000s, Chambers had issued the diktat that all employees needed to work and develop products in collaboration with each other. This was done to eliminate the earlier system, wherein product groups operated in silos and rarely interacted with other parts of the organization. ...
Innovation through Acquisitions
Instead of developing technology from scratch, the company tended to address the issue of creating new products and improving existing ones through the acquisition of other companies, product lines, technologies, and personnel. The company believed that it needed to keep up with rapid technology changes by acquiring innovative startups. Cisco acquired companies developing new disruptive technologies and those in areas experiencing major transitions, but which added value to its offerings. Padmasree Warrior (Warrior), Chief Technology and Strategy Officer of Cisco, added, "Cisco is a company made up of acquisitions. Innovation exists beyond our walls. Companies will disrupt us and we want to embrace these companies soon."...
Innovation through Partnership
Cisco leveraged partnerships with external programs that encouraged startups in certain technology areas to spot innovations happening outside Silicon Valley. Some of the partners included UC Berkeley SkyDeck, Chicago Innovation Exchange, CommNexus/EvoNexus, and Kairos Society. In Europe, Cisco partnered with a leading startup community organization called 'Pioneers'......
Innovation through Integration
Integration' became a key consideration for Cisco in the late 2000s, mainly following its need to properly assimilate the culture that was a key part of acquired companies. Warrior added, “So integration means when you acquire something, how does that product work with an existing platform that’s already there, right? That’s one challenge. The other challenge in integration is much more cultural."...
Open Innovation
Over the years, Cisco held numerous competitions to encourage innovative ideas. Through these competitions, it sought to leverage the 'wisdom of the crowds' i.e., a varied group of people who were supposed to have a greater chance of coming up with an innovative idea, when compared to people on project teams who most often worked as a single mind.
In 2007, Cisco began the I-Prize competition, where US$ 250,000 was awarded to a winning team of innovators, who presented an idea that could provide Cisco with the next big business opportunity. Marthin De Beer, Senior Vice President of Cisco’s Emerging Technologies Group, said,...
Looking Ahead
Cisco claimed that around 70% of the Internet was run using its technology and almost half of its sales came from routers and switches, which directed Internet traffic. However, the company was increasingly coming under threat from new competitors such as providers of networking software and cheaply priced unbranded equipment providers. In addition, customers were outsourcing their data centers and networking needs to cloud service providers.
Exhibits
Exhibit I: Market Leadership Position of Cisco in Various Sectors as of 2014
Exhibit II: Key Product Innovations in Cisco's History
Exhibit III: Key Acquisitions by Cisco
Exhibit IV: Information on the Work of Startup Hubs with Cisco EIR
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