Ben Worthen of The Wall Street Journal wrote a very revealing article this week on the Cisco management structure designed by Cisco CEO John Chambers. Today, Cisco makes 70% of its decisions collaboratively by having its executives work on committees—dubbed councils and boards in Cisco-ese, up from 10% just two years ago. As shown by the Journal's Cisco organizational chart below, Cisco now has 59 internal standing committees with 750 senior employees participating, however, the number of senior employees participating in Cisco's committees is expected to grow to 3,000: Already the Journal reports Cisco has experienced difficulty executing with its new committee management structure:
"The company's new management structure has at times slowed its response to rivals' moves, according to people familiar with the matter. In late 2007, for instance, H-P started promoting a warranty for its switches that provides free upgrades and support. Under Cisco's new structure, a decision about how to respond to H-P's offering was delayed as it worked its way through multiple committees, these people said. Cisco didn't match H-P's promotion until this April, and during that period Cisco's market share fell. A Cisco spokesman said changing the warranty was a complicated issue and that the new management structure allowed the company to get support from all parts of the company. He added Cisco expects to win back market share with some new products."
At the 2:50 time mark in the video below, watch CNBC co-anchor Mark Haines aggressively grill John Chambers over Cisco's convoluted management structure (also take note on how Chambers' eyes begin darting back-and-forth sideways during the grilling):
In a stunning revelation (at least in my opinion), Chambers bragged to the Journal:
One way he teaches his direct reports to delegate is to "spread them thin," he says. Eventually they "realize they can’t keep their head above water and if they want to swim they have to give [some responsibilities] to their teams." "Thirty [new businesses] is more than almost any senior executive thinks is manageable," Chambers adds. "The real point of going to 50 is to keep people open minded."
Also of interest to me this week, Silicon Alley Insider blogger Henry Blodget (who in 2003 was charged with civil securities fraud and then barred from the securities industry for life) blogged about Cisco's new management structure: Has Cisco's John Chambers Lost His Mind?
"Until today, we had nothing but respect and admiration for Cisco CEO John Chambers. Now we're wondering whether he has gone insane."
Scarily in my opinion, Chambers told the Journal that he got his idea for Cisco's new management committees, boards and councils from participating in a collaboration exercise at the 2007 World Economic Forum in Davos, Switzerland:
He was on a team with Arianna Huffington, among others, and the group was told to present a vision for life in 2015. Chambers was so impressed by the quality of the answers the group came up with that "by the end of the session I had come to the conclusion that…the future of organizational structure [was] around these councils and boards," he says. In April 2007, Chambers repeated the exercise with Cisco’s operating committee at a meeting in Monterey, Calif. There, three teams of Cisco employees came up with the same answer to a question about the company’s mobile strategy. "What it shows you is you can take your top 40 or 50 [people] and then your top 300 and then your top 3,000 and still arrive at the same decisions," Chambers says.
Finally, I've got a really simple concern, why would an acquisition candidate's management team (other than those wishing to cash-out) agree to be acquired by Cisco? Heck, what entrepreneurial team would want to join Cisco's convoluted management operating committees, councils, boards and working groups? Related stories: Change is Challenging - A Perspective on Cisco’s New Management Structure Exactly how new is Cisco's organizational structure? Chambers defends Cisco's management structure, strategy
What's your take on Cisco's new management structure, which is made up of operating committees, councils, boards and working groups? BradReese.Com Cisco Refurbished - Services that protect, maintain and optimize Cisco hardware Contact: Brad Reese | Twitter: http://twitter.com/BradReese
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