photograph by Nigel Parry
"You won't have to depend on the CEO anymore," says Cisco's John Chambers. | photograph by Nigel Parry
The open-source nature of the culture has yielded a litany of surprising results. For instance, while PCs are the official desktop hardware at Cisco, Mac users in the company have created their own unofficial help desk using the company's social tools, outside the official purview of the IT department. Mitchell's team created its own "rogue deployment," as he puts it, called C-Vision, a YouTube inside the firewall that has become one of the company's most popular communication tools. Most of the videos are short product reports, sales ideas, and engineering updates, all created deskside and published directly to the network with the click of a mouse. No filter, no lawyers. It is a petri dish for ideas and exchange.
"We are always looking for the applications that help people really have water-cooler talk, something that we thought was impossible in a global business," says Jordan (whose group takes over rogue ventures like C-Vision if they become superpopular, to scale them and protect against network overload). "Collaboration this way helps a world community solve big problems," says vice president Jim Grubb, Chambers's longtime product-demo sidekick. "If we can accelerate the productivity of scientists who are working on the next solar technology because we're hooking them together, we're doing a great thing for the world." And, of course, selling more routers and switches.
-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-
It has come as a mildly unwelcome surprise to Chambers that his blog -- in video, which he favors because he is dyslexic -- is only the second most popular at Cisco. He pauses almost imperceptibly, smile frozen in place. "Second?" he asks. "What's the first?" The two handlers sitting with us begin shuffling through papers.
We are sitting in the cramped 10-by-10 meeting room behind Chambers's office. It is my third encounter with Chambers, and nearly a month after Mitchell told me about the staff blogs. When I walked in, Chambers invited me to sit in his ergonomic chair at a small table as he cleared away the remains of three Diet Cokes (he drinks them constantly). He has been warm and polite throughout our conversations and remains that way, though with the blog business, it is clear he is a bit piqued.
The company's No. 1 blog, I tell him, is apparently about collaboration, which seems to mollify him. I offer that I've been told the third most popular is "some random director" in the middle of the pack, who blogs about how to position Cisco products against various competitors. (The random guy turns out to be Michael Beesley, a director of engineering in the edge-routing business unit, five layers down in the reporting hierarchy. Among his greatest hits are "ASR Completes Security Testing" and "ASR 1000 Customer List." Heady stuff.)
Chambers bursts into laughter, a hee-haw that longtime employees imitate to perfection. "You see?" he says, wiping his eyes. "The neat thing is that all this," he waves his hands, "just motivates people higher." He turns to his wranglers. "I want to meet that guy!"
Chambers can afford to laugh. Despite the stock's decline, Cisco's financial flexibility is high, thanks in part to that $26 billion cash bulge (an amount more than a few financial institutions wish they had). "Not only do we have the $26 billion," he says, "we now have 26 new market adjacencies that are not relevant to our revenue today, but they will be three to four years from now." And that, he says, vindicates his decision to reorganize the company.
When I ask if he is considering using the money he has on hand to buy back Cisco stock ($17.86 as of October 29), or bottom-fish for acquisitions, he says brightly, "All of the above." And might some cash be used to help clients (via Cisco Capital Finance, the company's financing arm)? "We know how to handle leasing in tough times, so it's one variable, yes." According to The Wall Street Journal, Cisco financed more than $4 billion of purchases in the last fiscal year. Its strong cash position means that it can continue to step in should a customer experience an unexpected credit crunch. "In Russia, our leasing portfolio is more than $700 million, with one small write-down for only $200,000. So it's not just bringing it to the market, it's bringing it in a way that will make money."
He talks of the dark days of 2001 more candidly than I expect, in no small part because they are behind him, but also because they led to the emergence of today's radically different Cisco. In the company's old "cowboy culture," strong personalities were rewarded for jostling one another out of the way to get Chambers's approval. After he launched the reorganization into boards and councils, "there were times when everyone, even the CEO, was very uncomfortable," he admits. The internal economy of the old Cisco was very much market based. Chambers chose to redistribute the wealth: Executives are now compensated on how well the collective of businesses performs, not their own individual product units. (Playing well with others is also an increasingly important part of rank-and-file employees' performance reviews.) There was a wall of cultural resistance for these changes, Chambers says, and some 20% of his execs left. "Explaining to people why we needed to change things was the hard part."
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Recent Comments | 120 Total
December 2, 2008 at 4:05pm by Traci Fenton
Thanks for the great article. Cisco socialist? Nope, I think they're becoming a model of a democratic company. Can this work outside of Cisco? Yes, and it already has. Our company, WorldBlu , publishes annually The WorldBlu List of Most Democratic Workplaces, which ranges from small to Fortune 500 companies (eg: Linden Lab, Pandora, BzzAgent, DaVita, Great Harvest Bread Company, Zingerman's and more).
It would be great to have Cisco apply for our award -- and hopefully make the List, further reinforcing that this is indeed the future of work.
Traci Fenton
Founder + President
WorldBlu, Inc.
December 6, 2008 at 10:34am by Dominik Zynis
Interesting article Cisco has been trying to do the collaboration thing for quite some time now, looks like it may be paying off.
I applaud Mr. Chambers for democratizing some of the decision making at Cisco which contributes to the use of their own technologies and allows them to practice what their sales people preach. However, the author of this article did a disservice to Cisco investors by claiming that the company is becoming socialist, and given its employees false-hope. Turning a corporation into a Socialist would ultimately mean that the corporate Gini coefficient for Cisco employees would show a drastic movement at a large expense to Mr. Chamber's and other top executives' yearly earnings.
I don't think we are there yet.
December 7, 2008 at 8:20pm by Barton Friedland
It's interesting how ideas take hold and are, like things, popular, based on who uses them and how they are presented. However, both the style of the article and the photography make it more of a marketing piece than a case study. Still, as a marketing piece, it does a great job explaining why these ideas are so important. For a more in-depth view, see Margaret Wheatley's work. Ricardo Semler's Semco has used this approach for years and many of the fundamental concepts discussed are seen in lean manufacturing and agile software development processes. It is good to see these steps taking place as well as further support for these principles to become more generalized. This follows from the thesis of our paper on strategy, organization, and process: http://www.luminousgroup.net/docs/Strategy,%20Organization,%20and%20Proc...
December 10, 2008 at 6:24am by James Gilbert
OK, you got the word "socialist" into big letters to get attention, but c'mon Ms. McGirt, socialists do the opposite of what Cisco is doing: They centralize everything. So, you're either being disingenuous or naive. One wishes Mr. Obama and our Congressional leaders would learn from John Chambers, but then that would empower the American people instead of themselves.
December 13, 2008 at 7:21pm by Nicholas Pontius
Great article. This is what is meant by a Learning Organization (ie: the 5th discipline). As a leader I want to know more about the boards and councils that were frequently mentioned. How do they work, Who is responsible and how is leadership shared at these boards and councils.
January 6, 2009 at 5:58pm by William Farnsworth
I found the article well written and a compelling read but I have to agree with Mr. Gilbert’s comment. I realize that socialism is very much in vogue these days so calling a system that is clearly portrayed as free enterprise, a socialist enterprise seems to be a bait-and-switch. On the other hand, if Ms. McGirt’s article can persuade industry and the federal government to practice Cisco’s brand of “socialism” there might be hope for us yet.
January 11, 2009 at 12:59am by Mark Dust
This is not "socialism", it is a great example of Shared Leadership. We must get away from the traditional top down leadership methodology which has been followed since the early 1900's. During the industrial revolution the top down approach worked very well because usually management were the only ones with an education. The workers were largely uneducated immigrants that didn't speak English. Today's companies are largely made up of Knowledge Workers who are highly educated and can lead themselves. The only false impression in this article is that Cisco is the only company that has discovered the power of Shared Leadership and John Chambers is the "guru" of this type of leadership. Several people are publishing research on Shared Leadership. One of the foremost thinkers on shared leadership is Craig L. Pearce. He has contributed many articles and books to this field of study. Check out Shared Leadership Reframing the Hows and Whys of Leadership, Craig L. Pearce and Jay A. Conger. Another author to explore this area is Charles C. Manz. He has published around 20 books on Self and Shared Leadership.
January 26, 2009 at 5:48pm by Paula Cassin
Ellen, I would agree with a lot of the commenters here - this is clearly not an example of 'socialism'.
In a socialist model, everyone pools their efforts and are rewarded based on 'need' rather than talent or skill or contribution. This is why they tend to fall apart- individuals inevitably stop making an effort when the rewards aren't there.
I assume that the company's leaders still are being remunerated at top-dog levels much higher than the rest of the company, in line with their responsibilities. What's happened is their individual incentives have been aligned to foster innovation and partnership and keep them from competing with peers for resources. Now they are aligned directly to their company's survival and ability to evolve, rather than to their division's budget numbers or outputs.
The more interesting part is the decentralization of decision-making that's underway. I'd be interested to know how employees are remunerated or incented to work this way - are they being rewarded individually (or even as individual teams) for the success of their efforts, or is it considered part of the job to collaborate and work on a myriad of fluid projects that constantly morph.
April 4, 2009 at 9:27am by David Weigelt
The writer of this article definitely does a disservice to herself and Cisco in her characterization of Cisco as socialist. That said, this is a nice glimpse into how democratizing leadership and innovation can transform a company and reap financial rewards. David Wolfe, the author of Firms of Endearment is currently working on a new book for which he explores how corporations needs to shift from Newtonian thinking to what he calls "Organic" or "Quantum" thinking. As the owner of a small company, I would love to hear how this works for small companies and how companies that operate in this manner assure that there will be tangible outcomes at the end of the day. My friend and mentor, Mr. Wolfe, would tell me that this is very Newtonian thinking on my part. I guess that's where 70/30 ratio (Shared Leadership vs. Command and Control) comes in.
--David Weigelt, CEO of Immersion Active and Co-Author of Dot Boom: Marketing to Baby Boomers through Meaningful Online Engagement
April 13, 2009 at 8:00am by Bob Jacobson
Good article, thoughtful comments.
The "socialism" tag isn't as off-base as some commenters make it out to be. Modern socialist theory and John Chambers' theory aren't that far apart. Its dogmatic to associate socialism only with the Soviet model of state socialism or our own sad experience with corporate socialism in the financial sector. Applying Cisco's model to socialism would improve it as much as it will improve management and innovation in a corporate setting. Smart is smart in any context.
April 13, 2009 at 8:02am by Bob Jacobson
Good article, thoughtful comments.
The "socialism" tag isn't as off-base as some commenters make it out to be. Modern socialist theory and John Chambers' theory aren't that far apart. It's dogmatic to associate socialism only with the Soviet model of state socialism or our own sad experience with corporate socialism in the financial sector. Applying Cisco's model to socialism would improve it as much as it will improve management and innovation in a corporate setting. Smart is smart in any context.
August 17, 2009 at 11:35pm by Nathanial Ann
Cisco socialist? Nope, I think they're becoming a model of a democratic company.
Good article, thoughtful comments.
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August 25, 2009 at 1:25pm by pauls simes
Cisco has been doing a lot with with business voip in Atlanta and their phone systems which are replacing standard PSTN systems.
September 18, 2009 at 8:24pm by Anthony Burton
Honestly, I think he is doing a good job at running the company. Times are changing and so do the people who lead businesses. Hopefully all will go well.
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October 5, 2009 at 5:23am by Arnold Johnson
Chambers was actually voted the Most Powerful Person in Networking by Network World magazine amongst other accolades, such as the Distinguished Industry Leader Award from the IEEE and the My Boss is a Patriot award and the Above and Beyond award by the Employer Support of the Guard and Reserve (ESGR) for Cisco's exemplary treatment of employees deployed to military service. What a guy... Chris editor of alli reviews
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Finding the right Ip pbx for a small business can be a daunting task. Articles like this help clarify the technology issues.
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October 14, 2009 at 5:47am by Kaewjung Narak
Of all of the maturing tech giants that have struggled to keep investors interested in recent years (think Microsoft, Intel, Oracle, IBM), Cisco has arguably done the most impressive job of maintaining profits while building new growth opportunities. Darren editor of collectible action figures
October 17, 2009 at 11:23am by Howard Carl
An interesting take on things. I love the description of Cisco as "the plumber of the technology world". It's so apt, in a positive way. John Chambers and Cisco have clearly learned from the 2001 debacle, something many companies never recovered from. Howard the car broker.
October 28, 2009 at 8:49pm by Jim Smith
This is interesting. At least the CEO isn't making them all take illegal drugs.
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November 12, 2009 at 10:33am by terry rae
This is a great tale of how Cisco was able to sustain in global crisis. It gives insight into the management which was spread over 500 employees with a lot of discretion in making decisions. The department and the heads of the organization were integrated and worked collectively, thus reducing cost and saving resources. It believed in sharing knowledge within the organization and this was achieved through information shared on their extranet, which also promoted creativity and innovation. Cisco not only increased its profit but enhanced the idea of CSR by providing support to its business partner in times of natural calamity.
November 12, 2009 at 10:34am by terry rae
This is a great tale of how Cisco was able to sustain in global crisis. It gives insight into the management which was spread over 500 employees with a lot of discretion in making decisions. The department and the heads of the organization were integrated and worked collectively, thus reducing cost and saving resources. It believed in sharing knowledge within the organization and this was achieved through information shared on their extranet, which also promoted creativity and innovation. Cisco not only increased its profit but enhanced the idea of CSR by providing support to its business partner in times of natural calamity.
November 12, 2009 at 10:34am by terry rae
This is a great tale of how Cisco was able to sustain in global crisis. It gives insight into the management which was spread over 500 employees with a lot of discretion in making decisions. The department and the heads of the organization were integrated and worked collectively, thus reducing cost and saving resources. It believed in sharing knowledge within the organization and this was achieved through information shared on their extranet, which also promoted creativity and innovation. Cisco not only increased its profit but enhanced the idea of CSR by providing support to its business partner in times of natural calamity.
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This is a great tale of how Cisco was able to sustain in global crisis. It gives insight into the management which was spread over 500 employees with a lot of discretion in making decisions. The department and the heads of the organization were integrated and worked collectively, thus reducing cost and saving resources. It believed in sharing knowledge within the organization and this was achieved through information shared on their extranet, which also promoted creativity and innovation. Cisco not only increased its profit but enhanced the idea of CSR by providing support to its business partner in times of natural calamity.
November 12, 2009 at 10:35am by terry rae
This is a great tale of how Cisco was able to sustain in global crisis. It gives insight into the management which was spread over 500 employees with a lot of discretion in making decisions. The department and the heads of the organization were integrated and worked collectively, thus reducing cost and saving resources. It believed in sharing knowledge within the organization and this was achieved through information shared on their extranet, which also promoted creativity and innovation. Cisco not only increased its profit but enhanced the idea of CSR by providing support to its business partner in times of natural calamity.