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Cisco’s Organization Culture 1

CISCO’S ORGANIZATION CULTURE

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Cisco’s Organization Culture 2

Table of Contents

Abstract ........................................................................................................................................... 3

Problem Statement .......................................................................................................................... 4

Case Analysis .................................................................................................................................. 4

Communication ........................................................................................................................... 4

The ‘Customer First’ Approach .................................................................................................. 5

Foundation of Organization Structure ......................................................................................... 6

Work Culture ............................................................................................................................... 7

Frugality ...................................................................................................................................... 9

Alternative Solutions .................................................................................................................... 10

Learning Through Acquisitions and Partnerships ..................................................................... 10

The Recruitment Process ........................................................................................................... 11

Recommendations ......................................................................................................................... 12

Reference List ............................................................................................................................... 13

Cisco’s Organization Culture 3

Abstract

Cisco System, Inc. is the leading multinational technology company headquartered in San Jose,

California. The company had proved market leadership in the industry since when it was formed

in 1984. Cisco adopted an organizational culture that favored it all years. Arguably, a company’s

performance can be dictated by its corporate culture, which defines its success or failure. The

organizational structure in Cisco has installed a system of working that no other company uses,

from prioritizing customers to employees’ interaction with the management. Besides, employees

are given a chance to innovate freely. Working in this organization is also differentiated from

other firms. Also, the recruitment process is different from other firms, such that Cisco targets

professionals who are satisfied with their present jobs in other organizations. Cisco has earned

market leadership due to using differentiated organizational culture.

Cisco’s Organization Culture 4

Cisco’s Organization Culture

Problem Statement

Cisco Systems, Inc. is the leading multinational technology companies in the world. The

firm, which is headquartered in San Jose, California, develops, manufactures, and sells

networking hardware, high technology products, and telecommunications equipment. The

company went public for the first time in 1990 when it was first listed by NASDAQ and had

$224 million market capitalization. Notably, in the year 2000, Cisco was the most valuable

company in the world, recording more than $500 billion market capitalization. In essence, the

company can be termed as the best business and whose culture other companies should copy.

The success of this company can then be linked to its managerial strategies and organizational

culture, considering that it was not the first to develop and sell computer networks. Remarkably,

everyone at Cisco is committed to the company’s open culture, open communication, teamwork,

frugality, and striving for business excellence. Arguably, the organizational culture of any

company can be used to define its success or failure. How can Cisco maintain its market

leadership amid the growing competition from entrants, such as IBM, Juniper, and HP?

Case Analysis

Communication

The organizational culture at Cisco offers a chance for open communication from the

management to the junior workers. In current business realities of globalization, collaboration in

work, which is promoted by open communication, has been emphasized. At the same time, new

technologies have been introduced to support open communication and cooperation within the

firm. Cisco uses open communication as one of its cultural value to promote collaboration and

teamwork. The company is deploying communication technologies to enable greater

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collaboration among employees, especially using online tools and integrated conferencing

(ICMR 2005). This form of communication has allowed the company to disseminate ideas to the

whole firm, and this has significantly promoted teamwork. Open communication improves

employee productivity as workers are well informed of the concept. It also increases confidence

in employees to handle tasks without fear as the management is aware of what one is doing. This

culture has also enhanced technological innovation in the firm as bright employees who have

some ideas are given an opportunity to speak up their views. The company assesses the viability

of such ideas and decides whether to invest in them. In addition, it encourages teamwork and

cohesion among employees towards the well-defined goals of the firm. Not to forget that open

communication allows employees to share ideas and solve problems effectively. Also, it helps

easy dissemination of relevant information in the whole firm. Chambers remarks that open

communication is one of the best cultures that a company can adapt to realize success together

(Flower 1997). Therefore, other companies should borrow this culture from Cisco.

The ‘Customer First’ Approach

Cisco values its customers and gives them the first priority. From the beginning, the

company created good customer relations in which everything can be stopped for a customer to

be served. The company keeps track of regular clients and any feedback by a customer is highly

valued. Employees who attend customers are always encouraged to air their comments so that

the company can proactively identify the problems and take appropriate measures. Employees

are encouraged to make sure that problems are detected and covered in time, not necessarily to

wait on annual customer’s survey. The survey should find most of the problems solved,

especially ones that affect customers. They are also encouraged to collaborate with each other in

solving problems instead of leaving problems to certain individuals. The company has also urged

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employees to take the initiative of solving personal problems so that they can enhance resolution

mechanisms. Ideally, prioritizing customer needs brings vast advantages to the company. To

begin with, clients are satisfied with the firm’s services, and there is the likelihood of returning

with new customers. This is taken as a strength of the firm to handle its customers. The firm also

takes annual surveys which assist in analyzing the viability of investments made to satisfy

customer needs. The return on investment helps the company to initiate other investments on

customer support (Lawson & Samson 2001). Notably, a firm’s growth and existence rest upon

customers who buy its commodities to keep it going. That explains why Cisco has always

established a convenient way of handling customers (Duffy 2010). Therefore, companies should

incorporate the ‘customers first’ initiative in their culture to give good services. What is more,

they should endeavor to cope with problems in time upon customers’ comments.

Foundation of Organization Structure

In essence, a good company organizational structure can be used to define its success.

Cisco defines its organizational structure well, with everybody given respective duties. This

allows the firm to track success and use their record to trace investment areas. The company has

various positions, with the senior-most being the Chief Executive Officer, who is also the

president of the firm, Mr. Chambers. Other very significant heads who make the most critical

decisions in the organization like Mr. Kirtane, who is the Director Country head of human

resource (Cisco). The CEO, Mr. Chambers, for example, brought in the idea of open

communication, which has significantly transformed the company. He brought in less

formalization in the firm, and this encourages innovation, which is the backbone of the

organization. It also inspires openness that helps in cutting down organizational problems before

they grow to become major issues. This also killed the boundaries that span between individuals

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working from different divides of the organization, thus helping in work harmonization. It also

encourages workers’ cohesion and sharing, thus increasing knowledge. Not to forget that

workers are also encouraged to give their all their effort when working as a team. He has also

helped the organization to subdivide jobs into different categories to enhance specialization that

is linked to numerous advantages, including increased knowledge and expertise (Nelson & Quick

2007). The whole management then interacts for a centralized decision-making process.

However, Cisco has decentralized decision-making such that many resolutions are made before

the senior management knows (Hutheesing 2004). This is good because although the company

maintains a chain of command, the junior management staff and employees feel ownership of the

firm when allowed to make decisions on behalf of the firm. Notably, a functional organizational

structure with all the seven key structure elements identifies and guarantees success. Therefore,

an organization that aims at being the industry and market leader should have a well-defined

organizational structure incorporated in its behavior.

Work Culture

The way every company sets its working culture defines its success in the industry. Many

firms in the world follow the same set of procedures to determine their working and fall in the

same category, even in output. However, Cisco differentiates its working culture from other

corporations by making all workers feel ownership and share authority. For example, if an

employee has an innovative idea, one does not need to communicate to the senior management

like in other firms. They only consult employee decision-making team who give the green light

to the innovation upon verification. This is an excellent way to encourage employee

involvement, which is significant in work culture in this company. They give employees the

authority to make decisions for the firm before passing every layer of management. The

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company senior management argues that authority, accountability, and responsibility are all on

the same layer of management. Therefore, they should be given at the same level, which is very

different in other organizations. They hold the employee accountable for the result but no

authority or responsibility to make the choice to achieve the results, thus demoralizing

employees drive to come up with innovative ideas (Paulson 2002). In Cisco, employees are

encouraged to be innovative, and the company sponsors their ideas.

Notably, at Cisco, work is done in an extraordinary way that suits the workforce. With

permission of the management, any employee can reward any other with an on-spot bonus that

rises to $2,000 for going an extra mile. This encourages employees to always strive beyond the

company’s set limits to bring in additional improvement. The management, unlike in other firms,

operates with employees’ empowerment motto that states, ‘do not ask for permission to do

anything but else ask for forgiveness later.’ The motto encourages employees and assures them

of the company back up in the case of a mess in the process of executing trials of an idea one

wants to instill in a program. It gives a go-ahead message to all employees to come up with ideas

and try them without fear.

This characteristic makes Cisco the best place one can work in. Employees are also

encouraged to give suggestions and at the same time, ask questions, which is a value that goes

side by side with workers’ empowerment (ICMR 2005). The company believes that

empowerment is all about continuous, informal, and open sharing of information.

The company ranked high in areas like workplace quality, personnel retention, and the

strength of its integration management. Notably, the company which was found to have been

formed by many acquisition and partnerships maintained approximately 98 percent of workers in

the company it acquired. However, the company surveys and gives information to potential

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employees before the deal is closed to verify whether they can cope with the new culture. Cisco

has an informal micromanagement discussion on employment.

New employees are now given the grant to buy stocks in the company upon employment.

The company also allows all workers to buy shares at a discount of 15 percent to encourage them

to share ownership of the firm. Also, employees get extra services, such as access to a fitness

center together with a long-term health program. They are also encouraged to take care of the

company’s resources as if they were theirs. Cisco enjoys employee loyalty to the point that it

uses fewer funds while doing more due to workers’ hard work.

Frugality

On saving, the company has adopted the culture of saving everything that can be saved.

They say that they are very careful on spending because they are all shareholders and they need

their company to save enough. If an opportunity to save money shows up, they save because the

company earns them benefits directly from corporate frugality. The firm gets more frugal when it

comes to spending. For example, Kirtane states that none of its employees takes first class flight

when a new office is opened, and this saves the company a lot of money (ICMR 2005). Cisco

uses every coin carefully so that it can make to pay their workforce and register positive growth

(Gawer & Cusumano 2002). For example, they complained of their CEO using a daily parking,

which they termed expensive yet the difference was just one dollar a day from the alternative

they gave. Frugality is a very vital aspect as a company can be making profits but all of it ends

up in spending (ICMR 2005). Therefore, it is recommendable that all companies should be

prudent in their spending and observe corporate frugality to make good profits.

Cisco’s Organization Culture 10

Alternative Solutions

Learning Through Acquisitions and Partnerships

For Cisco to reach its current stature, it involved a series of continuous learning.

Benchmarking was part of its learning culture to challenge its processes. These opportunities

allowed the company to validate the effectiveness of its strategies and attain crucial best

practices. Among its key strategies to get a competitive advantage, Cisco bought companies that

had competencies in new technology. The acquisition was better and cheaper than creating the

whole technology concept in its firm, which could take time to install facilities and to train its

employees. Moreover, this could have used huge sums of money. Therefore, they bought

companies that had emerging technologies to cut off the cost of investing the technology in their

facilities. At an investment of $5.5 billion, Cisco bought 14 companies in 15 years. The

acquisition did not stop at that. Between 2000 and 2004, the company bought many more others

that had a competent technology (ICMR 2005). This assured Cisco market leadership all that

time.

Partnerships were another way that assisted Cisco to adapt to new technologies. The

company formed strong strategic alliances with companies such as Bearing Point, Accenture,

Callista, HP, EDS, IBM, Erickson, Intel, Microsoft, Motorola, Sony, and many more. These

partnerships were essential as they assisted Cisco to change in business and technology. The firm

had an alliance with global business schools which conducted Cisco leadership series. The series

went for a whole one week and were intended to develop and improve leadership skills among

Cisco employees.

Moreover, the acquisition gave the company a chance to get new personnel as it acquired

firms with skilled employees. On the other hand, the partnership allowed the firm to get

Cisco’s Organization Culture 11

technologies that it could not make or acquire from anywhere else. Acquisitions and partnerships

are a wise way to invest in the technology industry (Nguyen & Kleiner 2003). Other firms in this

sector should accept partnering with others to develop further in technology. However, this

approach is an expensive affair that requires the firm to cough up huge amounts of money to

acquire established and upcoming tech establishments. What is more, acquisitions could work to

dilute the epic of Cisco’s organizational culture.

The Recruitment Process

Cisco’s recruitment policy also formed part of its culture. In the 1990s, Cisco was hiring

employees at an alarming rate of 1000 new employees per month (ICMR 2005). They had a

strategy to do this as there were no better communication facilities like today. The recruitment

team would identify a potential worker and design a hiring process to attract them to the

company, where they get employed if they show up. Then the company set standards to use in

the recruitment process. Potential candidates were supposed to be enthusiastic about the Internet,

show frugality, and were not supposed to be obsessed with statuses. The company also used a

different status in employment. It targeted passive applicants and people who showed

satisfaction in their present jobs. Ideally, these people were rare, and Cisco sighted on how to get

them. Rather than advertising in newspapers like other companies would do, Cisco advertised on

Internet platforms and added only their targets to lure them into joining Cisco. Also, Cisco

discovered that professionals were watching cartoons a lot and decided to link its adverts in

Dilbert web page. However, given this recruitment strategy, Cisco faces the risk of a bloated

wage bill that could cripple its operations in the future. Moreover, keeping such a workforce

motivated in all their activities is an uphill task.

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Recommendations

Organizational culture is a critical parameter that can be used to define its success or

failure. The failure or success of any organization depends on its culture to keep in front of the

competitors. Notably, Cisco has been using effective strategies in doing most of the operations.

The first aspect that is associated with Cisco is communication. In the firm, communication is

open or channeled in such a way that everybody is given a chance to raise concerns without strict

formalities. This form of communication is not common in many organizations but has accrued

Cisco success as every employee feels involved. The other concept that Cisco has used to

differentiate its organizational culture is the ‘customer first’ aspect. In Cisco, a client is given the

priority with all other things being left out. The element has helped the company to maintain its

market and significantly increase it as customers come in with others. It is encouraged that this

concept is quickly instilled in employees of the acquired firms as they represent potential

breakpoints for this revolutionary idea. The organizational structure in Cisco is another aspect.

The structure is well defined with layers of management flowing from the president of the firm

to a regular worker with all maintaining an efficient channel of communication. The work

culture in Cisco is well defined, with the company has given all workers freedom to innovate and

try new concepts freely. The company values employees’ involvement in running the firm, and it

has ideally assisted in reducing costs while increasing savings and hence supporting its frugal

culture. Considering the thriving nature of Cisco, its organizational culture is a useful reference

for any company. Therefore, one can recommend other companies to borrow this culture from

Cisco to achieve their goal.

Cisco’s Organization Culture 13

Reference List

Cisco, 2018, ‘Homepage.’ Available from < www.cisco.com />. [24 Apr. 2018].

Duffy, J 2010, ‘Cisco’s tope 10 rivals.’ Available from <

https://www.networkworld.com/article/2191771/data-center/cisco-s-top-10-rivals.html>.

[28 Apr. 2018].

Gawer, A & Cusumano, MA 2002. ‘Platform leadership: How Intel, Microsoft, and Cisco drive

industry innovation.’ Harvard Business School Press, vol. 5, no. 1, pp. 29-30.

Hutheesing, N 2004, ‘Born again Cisco.’ Available from <

https://www.forbes.com/2004/06/30/cz_nh_0630soapbox.html#21c376444433>. [24 Apr.

2018].

ICMR, 2005, ‘Cisco organization culture.’ Available from <Icmrindia.org>. [24 Apr. 2018].

Lawson, B & Samson, D 2001, ‘Developing innovation capability in organizations: a dynamic

capabilities approach.’ International Journal of Innovation Management, vol. 5, no 3, pp.

377-400.

Li, AJ & Cole, BA 1995, ‘Standby router protocol.’ U.S. Patent, vol. 5, pp. 473-599.

Nelson, DL & Quick, JC 2007, Understanding organizational behavior. London: Cengage

Learning.

Nguyen, H & Kleiner, BH 2003, ‘The effective management of mergers.’ Leadership &

Organization Development Journal, vol. 24, no. 8, pp. 447-454.

Paulson, E 2002, Inside Cisco: The real story of sustained M&A growth. Oxford: John Wiley &

Sons.

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