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Cisco Internal Governance Case Study

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Background
In 1995, John Chambers joined Cisco Systems as president and CEO. After six years under the supervision of Chambers, the company went from generating $2.2 billion in annual sales to $22.3 billion. As a result of the market downturn in 2001, the company suffered its first loss and laid off 18% of its workforce. Chambers quickly realized Cisco was in need of significant organizational restructuring if Cisco were to survive and thrive the downtown. This change shifted the company from a decentralized firm that only focused its three work silos of Marketing, Engineering and Sales to segregated and specific customer groups to a centralized firm that focused on collaboration and relevant technologies for given customer groups. This shift in organizational restructuring significantly reduced product and resource redundancies – a major contributing success factor for Cisco’s market position today.

The Problem
The implementation of the cross-functional business councils greatly strengthened both Cisco’s competitive position as well as their organizational culture. However, Cisco now faces the problem of how to sustain and implement the new internal governance system across new and expanding business lines within the company in addition to maintaining the new collaborative culture while retaining its customer-centricity focus. Adjustments will need to be made to ensure that systems can be scaled to address new market transitions. The three councils that were originally created to foster open and transparent communication have developed but a plan for their future evolution relative to the company’s planned expansion needs to be outlined to ensure that the enterprise teams remain unified and functional. Purpose of Change
“While emerging markets and acquisitions were key in helping Cisco survive the [economic] downturn, the company’s 2001 organizational

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