Abstract

In the first half of 2011, John T. Chambers (Chambers), the Chairman and CEO of Cisco System, Inc. (Cisco) introduced changes to Cisco’s strategy and also pared down the controversial management structure at the company which had been subject of much debate over the preceding few years. Earlier in 2011, the company had reorganized itself, forming cross-functional teams to break free of the “silo culture” earlier prevalent in the company. Over the years, it refined the model and came up with an organizational structure comprising councils, boards, and working groups. This structure was put in place to support Cisco’s transition from being just a seller of routers, switches, and other technology to being a company that was the most trusted business and technology adviser to its clients. The structure was supposed to lend Cisco the speed, scale, flexibility, and rapid replication required to remain innovative in a rapidly changing industry. However, the opinions of analysts were mixed. Critics felt that the complex multilayered organizational structure would impede innovation rather than speed up decision making. Owing to Cisco’s below average performance in 2010 and 2011, the opposition increased with critics claiming that the strategy and the structure had confused employees, slowed down decision making, led to an exodus of key executives, and resulted in Cisco losing market share in its core businesses. But Chambers’ decision to reduce the number of Councils from nine to three led to more debate as critics contended that the company should have done away with the council and board structure altogether.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand key issues and concepts in reorganizing
• Understand the strategy/structure relationship
• Understand organizational design considerations and the pros and cons of different types of organizational structures (functional/multidivisional/matrix, etc.)
• Understand the importance of grouping and linking mechanisms
• Discuss and debate the pros and cons of Cisco’s organizational model based on councils and boards

Keywords

Organizing, Reorganizing, Organizational design, Formal and Informal organizations, Different types of organizational structure, Functional structure, Multidivisional structure, Matrix structures, Grouping mechanisms, Linking mechanisms, Operating governance, Decision making, Individual and Group decision making, Decision making by Committees, Strategy/structure relationship, Cisco