Cisco in 2012:

Reorganizing for Efficiency and Flexibility

Group 1 Section B
Aarohi Agrawal PGP/22/001
Anamika Singh PGP/22/007
Priyamvada PGP/22/040
Satvik Dube PGP/22/046
Shubham Sarwalia PGP/22/049
 Build-up to Problem

Decentralized to Cross-functional Sub Action plan :

centralized organizational councils/ Boards were Org Restructuring
structure to address introduced. Divestments
redundancies in the Boards have executive Resource reallocation
backdrop of the 2001 members below the Early retirements and
bubble burst council members. layoffs

1995 2002 2010

2001 2007 2011

Business-line based Declining performance

organisation (LoBs): Cross functional executive Margins declining due to
service providers, level committees called comooditization
enterprise, commercial. Councils. Increased competition
Differentiated Councils: 10 point action
requirements plans

Commoditization Faltering Inorganic Scale vs

Problems Attributed
of Core business strategy Flexibility
 Organisational Structure: Line of Business (1995-2001)

CEO Pros

✓ Increased focus on customers

✓ Clear decision making

Commercial
(Small/Medium)
Enterprise

Cons
SP

× Product redundancy
× Relatively costlier
× No apparent distinction between the
customer segments
 Organisation Structure: Functional (2001-2010)
Pros
Operating Committee
✓ Councils were responsible for Corporate
Councils Strategy and allocation of corporate resources
✓ Reduced product redundancies across
different LOBs

Communications
Boards ✓ Shifted focus to functions

Marketing
Services
Engineering

Finance
Operations 3 groups : SP, Enterprise, Commercial
Sales

Cons
× Complicated decision-making process
Working Groups × Funding for new ventures is difficult across
boards
× Council members were a part of multiple
councils
 Cisco : Product – Geography Matrix structure

Business Entities (Products)& Services

Ent Data SP SP Emerg Tech ➢ Engineering group was listed on

Security Adv series
Network Centre Routing Mobility Tech Services the top and geographies were
listed vertically
Americas
➢ Key customer segments on the
WW Enterprise

left, that is retained from the

WW SP

council structure
GTM

Europe
➢ Councils come up with 10 point
action plan
APJC

✓ Divisional structure can’t help here as the customers × 700 Council and Board executives working on
buy across multiple solutions business ideas through boards and councils
✓ Each box of matrix is designed to optimize : Revenues, Structure has no functional focus , Cisco is known as

Cons
×
Pros

bookings and gross margin Engineering and Sales company

✓ Simplified structure reduced council and board × New customer group/ segments is not addressed in
members this solution
 Flexibility of an organisation
• The biggest asset to an organisation is the people who work there, therefore this can create competitive
advantage through people. It’s best if the organisation is flexible in the number of people and the skills in the
workplace
• Organisation are becoming more flexible in specialization production, so making specialized goods.

Types of Organisational Flexibility

• Functional Flexibility- Functional flexibility basically states that employees will do jobs that go beyond what
they are actually there to do.
• Numerical Flexibility- This basically involves an organisation bring labour in or taking labour out in
accordance service or product demand.
• Financial Flexibility- Organisation can have changing sources of finance (debt/equity)
• Structural Flexibility- Organisation adapting to size, composition, responsiveness and the people . their
inputs and costs required to achieved organisational objectives and goals.
Recommended Structure : Three dimensional Product, Function and Geography

Board

Operations Finance

Network Security Data Centre Routing Mobility Technology

Americas
WW Enterprise

EMEA

APAC
 Analogs

Xerox: Changed its organization architecture by creating business divisions with self-organizing teams and
developing new reward and recognition systems -> Therefore was able to exploit its superior technology and
market capabilities.

GE: Not only re-structed its organization but also tried to change corporate culture to make organization
more innovative. It started its famous workout programme, best-practice sessions and change acceleration
programme.
 Antilogs

• Nokia

• By 2004, the CEO initiated a major reorganization in an attempt to restore the entrepreneurial drive that had allowed Nokia to shape the
industry only a decade earlier.
• The result was a “matrix structure,” one where horizontal platforms provided shared resources for vertical product lines.
• The restructuring only made problems worse: key team members left, and collaboration across business units collapsed.

• Dutch National Gas company

• Too many hierarchical levels

• Long horizontal chains
• Strict planning systems