Cisco – Innovation as the Engine of Growth





Case Details Case Introduction 1 Case Introduction 2 Case Excerpts

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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 (See Exhibit II for Information on Cisco’s most innovative products).

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.

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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. .......

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 (See Exhibit IV for More Information on these Startup Hubs). 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

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........

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. .......

Exhibit

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