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Group 4 Project - Cisco Systems
Kellie Cardona & Odalys Perez
Liberty University
BMAL 504 – Leading Organizational Change
Professor Ken Grumfield
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Part I
Cisco Systems Introduction
The target organization is Cisco Systems, a networking hardware company based out of
San Jose, California. Cisco was founded in 1984 by two computer scientists from Stanford
University, and their primary product was the router that controlled the flow of data between
networks (Datta, Avimanyu, 2009, p.56). Demand for Cisco’s products increased dramatically
with the increased usage of the internet, making Cisco a 500-million-dollar company by 1993
[CITATION Dat09 \p 58 \l 1033 ]. Unfortunately, the demand for hardware sales started to
plummet by 1999-2000, and the company was left at a crossroads. Undergoing a significant
organizational change turned the company around. The company began with 400 employees but
has grown to more than 70,000. On July 25, 2020, Cisco reported fourth-quarter and fiscal year
results up until this date. Cisco reported fourth quarter revenue of $12.2 billion, net income on a
generally accepted accounting principles (GAAP) basis of $2.6 billion or $0.62 per share, and
non-GAAP net income of $3.4 billion or $0.80 per share [CITATION htt20 \l 1033 ].
Analysis of Organizational Change
On August 23, 2001, Cisco announced a major reorganization and implemented the
change reasonably quickly over three months. Companies often implement reorganizations as a
strategic tool to “renew alignment between strategy and organization” (Gulati & Puranam, 2009,
p. 422). Furthermore, reorganizations allow for improved partitioning and re-integration of
activity within a firm (Gulati et al., 2009, p. 422). Before the big announcement, Chairman and
CEO John Chambers recognized that Cisco was fragmented, systems were outdated, and the
employees were siloed. The company’s IT was not where it needed to be for rapidly growing
technology needs. The explosive growth in sales of hardware supporting the internet began to
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slow by 1999, and Cisco needed to take an honest look at the company’s future direction and
develop a plan to get there (Gulati et al., 2009, p. 427). Therefore, Chambers set out to transition
the company from a command and control environment to a teamwork and collaboration
environment. Chambers understood that collaboration efforts would be a significant change for
the organization. Research supports that collaboration environments encourage discussion
among team members and is related to increased decision quality, work performance, and
decision confidence (Seeber, de Vreede, Maier, & Weber, 2018;2017, p. 939).
With the reorganization in place, new infrastructure would promote more efficient and
“cost-effective innovation because engineers who formerly worked in separate silos could not
exchange ideas, coordinate development, and generate through reuse of technological solutions”
(Gulati et al., 2009, p. 63). However, a change of this magnitude would present stresses and
strains the company had not previously experienced. Research suggests that work intensity
increases during a reorganization, which can negatively impact employee well-being, creating
even more pressure for leadership to manage (Harney, Fu, & Freeney, 2018, p. 236). The
process would take time, clarity, communication, structure and implementation would be easier
said than done. Before the reorganization could begin, the CEO had first to change his
management style. He had to resist the urge to take back command and control and give
opportunities for team collaboration actually to happen. Chambers notes this was the most
challenging aspect of the change process. In the end, the change resulted in improved
“communication, customer satisfaction, innovation, and productivity” at Cisco [CITATION
Dat09 \p 59 \l 1033 ].
Nonetheless, under Chambers’ leadership, the company’s revenue and profit soared more
than 3000% and survived numerous downturns that left competitors dead. “All change
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management requires change champions,” and for Cisco, that was the CEO [CITATION
Mer04 \p 25 \l 1033 ]. Chambers’ leadership through the change at Cisco is reflective of Jesus’
leadership that is modeled throughout scripture. In Proverbs, God considers it helpful for people
to have goals, whether it’s personal goals or professional, “If your goals are good, you’ll be
respected” (Proverbs 11:27, GNT). Chambers assessed the condition of the company and
developed goals to turn the organization around. “Any enterprise built by wise planning
becomes strong through common sense, and profits wonderfully by keeping abreast of the facts”
(Proverbs 24:3-4, TLB). His wise planning led the company to success once again.
The Bible doesn’t just encourage leaders to set goals, but it gives us a model for goal
setting in the story of Abraham and his servant in Genesis 24. When reading the chapter in the
New International Version, the word success is used five times. Through the passage, one can
learn how to set and reach goals. It seems as if CEO John Chambers understood this as well.
Throughout the Biblical story, the servant sets out to find a wife for Isaac, and he followed five
steps. These steps were useful in achieving the goal during Abraham’s time, and they work for
leaders today. The measures include determining your position - leaders must know where they
are before deciding where they are headed. Secondly, one must define their purpose and
discover the promise of how God will help achieve the goal. Then, leaders must describe the
profit, and that’s what Chambers did. He determined that the profit of reorganizing the company
would be greater than the stresses and strains of implementing the change. Lastly, leaders should
constantly bring their business goals to the Lord in prayer, just as the servant did in the story
(Genesis 24:15;52).
Part II
Diagnosis of Current Situation
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The major concern for Cisco at this moment is continuing the success of the
reorganization they undertook which at the moment has the company at the top of its industry’s
game. Once Cisco surpassed the financial issues, the company had faced in 2000, Chambers
realized there was more to do. He felt the focus needed to be on production and cross-functional
alignment. “According to The Wall Street Journal: “The old Cisco stressed increased revenue;
the new Cisco demands profits. The old Cisco favored speed and internal competition; the new
Cisco emphasizes deliberation and teamwork. The old Cisco devoured start-ups and raced to
build niche products; the new Cisco wants to create fewer, more-versatile products internally.
The old Cisco tried to do everything; the new Cisco is trying to figure out what not to do”
(Chatman, O'Reilly, & Chang, 2005, p, 149). Come 2001 and the company had no choice but to
lay off employees, change salaries and began to reorganize. The company started to put their full
attention on evolving markets. Chambers said “Now we can share ideas from high-end routing
with mid-level and low-end routing” (Chatman et al., 2005, p. 151).
The most recent status of has not changed since their reorganization. Which is probably
why they have been able to maintain themselves through the changes in the technology field.
They have been able to do this because they are willing to give customers what they want even if
“this means killing technologies that have been developed by the company and even when
engineers are convinced that their technology is better than what the customer wants” (O'Reilly
& Pfeffer, 2000, p. 51). "Understand one thing about Cisco," says Chambers, "we are technology
agnostics. We really don't care." These values have enabled Cisco both to really understand what
customers need and to be willing to provide them with the technology they ask for, even if it
means going out and acquiring it. "One of our strengths," Chambers says, "is the ability to eat
our own when the market grows fast” (O'Reilly et al., 2000, p. 51). The situation at Cisco is
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positive in the sene of keeping their funds growing and maintaining the concept of team work
within the organizaiton as well as keeping some sort of company values. However, do they have
the tools to face continous change which is present in the business world everyday?
Recommendations
A recommendation to Cisco is efficiently dealing with continuous change, Leading or
“change agents” as called by Jick and Peiperl due to the “complexity of change agendas,
resistance may arise from the diverse needs of multiple constituencies, all experiencing other
challenges simultaneously” (Jick Peiperl, 2011, p. 406). Resistance, frustration, pain, and
loneliness are some of the challenges faced during change. ( (Jick et al., 2011, pp. 406-407). The
trick is knowing how to properly handle those challenges with every new change, because they
will arise time and time again, just as change will.
Secondly another recommendation to Cisco is they must make it a point to be intentional
by desigining the service they want to provide their customers. This is key to how the customers
will perceive the company, and determine whether or not they will remain loyal customers. More
importantly, Cisco will need to design a service recovery system when there is a service failure.
More times than often, customers will remember, whan an organization did when things went
wrong; if the recovery is possible, the customer will be happy. For example, it does not make
sense to have a slogan that says “we are here to make you happy, and right under it a small line
reading “we do not provide any refunds for services.”
The third recommendation is in relation to being a leader that persuades others to stay
motivated and engaged. As Chambers made a point to change his leadership style, this positive
change needs to be across the organizationt. Recently, I saw a post on LinkedIn which stated the
following quote “Leaders become great, not because of their power, but because of their ability
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to empower others” ~ John For example, “ transactional leadership which is when leadership is
accomplished by influencing others and depends on having qualities that others are looking for;
“transactional leaders define the purpose of the organization’s existence to followers and then
provide them with the plans and means to attain goals” (Satterlee, Anita, 2009, p. 2). These type
of leaders motivate employees and keep them engaged.
Implementation Plan
“Where once talk was of achieving major transformation (albeit in order to stay in
business), now it is about learning and adapting in the long-term” (Jick et al., 2011, p. 503).
Cisco go through the ups and downs of their industry and now they are a powerhouse in the field.
It is a guarantee that change will come again, are they prepared for it? “The idea that we can can
control the world around us is in many ways (in some but not all fields) to the idea tha the most
we an hope to do is influence what happens” (Jick et al., 2011, p. 503). At this time of great
success, Cisco must implement this thought into their company culture “change is always
coming.” Cisco’s culture should look at change with hope as Christians do when we read
Hebrews 13:8 “Jesus Christ is the same yesterday and today and forever” (ESV). In times of
change and transitions, it’s easy to lose direction or to feel overwhelmed with uncertainty,
especially in an organization. But if “continous change” is embedded into the organizational
culture, leaders and their followers will simply take it on as another hurdle to jump and reach the
finish line until the next race comes along.
As previously mentioned, Cisco worked hard to achieve the level of customer satisfaction
they have. However, how much thought was put into designing service specifically to their
customers? “ Designing service requires the meticulous planning and organizing of your people
and your infrastructure as it relates to the customers you serve – both internal and external”
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(Institute, The Disney, 2013, p. 29). In today’s competitive business world, specifically in Cisco’s
industry, it is more crucial then ever for Cisco to design their service to outshine the rest.
“Customers currently will not hesitate to switch providers if they do not find what they are
looking for they perceive few barriers to switch in the presence of several differentiated
offerings” (Giovanis, & Tsoukatos, 2017, pp. 4-5). The implementation plan for Cisco to design
their service would start with a common purpose for their company. “A common purpose is the
essential foundation o which all other service decisions can be developed” [CITATION
The131 \p 33 \t \l 1033 ]. This is a simple one-two sentence phrase so everyone in the company
understands what the company does, why they are there, and whey their particular roles is
important.
The second part to desigining service is recovering from a service failure. Even once
Cisco has implemented their designed service and into the minds of the entire organization, the
reality is as perfect as they give out that service, something is bound to go wrong. We are not
perfect. “The manner in which an organization recovers from a service failure drives
differntiation” (Institute, 2013, p. 127). A Disney Cast Member stated in an interview that he
came across a child who was crying because Captain Hook did not wave at him from the Peter
Pan float and he was wearing his own Hook costume. The Cast Member, took the guest
information, and by the time they got to the room, there was a Captain Hook plush doll on the
bed with a card from Peter Pan saying “I’m sorry, Hookie was just a little cranky today.” That
was a moment the little boy will never forget and most likely, the family probaly has gone back
to Disney more than once. As Christians, we have many commands in Scripture about serving
others, Mark 10:44-45 is just one example on how important it is to provide service with
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minimal failure “And whoever would be first among you must be slave of all. For even the Son
of Man came not to be served but to serve, and to give his life as a ransom for many” (ESV).
The last implementation to incorporate into Cisco at this time is have all managers and
leaders, be the example as Chambers has been, and lead with persuation, understanding, and
fellowship. If there is a tentured employee that knows the ups and downs of the copmany more
than a new manager, the new culture must enforce that manager to “take notes” from said
employee. We have all heard it before “practice what we preach”. Leaders are the perfect
example of roles who need to lead by example. It should not only be the responsibility of
Chambers to change his management style, it is that of all the company’s leadership. It was hard
for him, but he did it “for the benefit of his people and the organization”. That, is what good
leaders do. When employees have these types of leaders they feel motivated, engaged and want
to be just like their leader. They want to make a difference in the success of their team and the
company itself. In order for management to be successful, meaningful and make a difference,
leaders must possess certain qualities. These traits are “Drive-a high desire for accomplishment,
desire to lead, honesty and integrity, self-confidence, intelligence, and job-relevant knowledge”
(Satterlee, 2009, p. 92). Communication is crucial to keeping employees engaged which is why
open and transparent communication between leaders and followers is a must for Cisco’s future.
“Be as intentional about employee communication as you are about custoemr communication”
(Institute, The Disney 2014, p. 83).
Summary
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By implementing the concept of continuous change into their culture, intentionally
designing their customer service along with a service recovery plan and having all leaders to
change their styles to one that employees will want to follow, Cisco will have a bigger guarantee
of continued success. By simple focusing on the fact that things went wrong a few times and they
fixed it and now they are the best in the industry, they can be setting themselves up for failure if
another big change comes their way. However, there is no analysis or implementation plan that
can better prepare Cisco for the future then one of the most hopeful and inspiring verses in
Scripture. “Therefore, I tell you, do not be anxious about your life, what you will eat or what you
will drink, nor about your body, what you will put on. Is not life more than food, and the body
more than clothing? Look at the birds of the air: they neither sow nor reap nor gather into barns,
and yet your heavenly Father feeds them. Are you not of more value than they? And which of
you by being anxious can add a single hour to his span of life? And why are you anxious about
clothing? Consider the lilies of the field, how they grow: they neither toil nor spin, yet I tell you,
even Solomon in all his glory was not arrayed like one of these.....” (Matthew 6:25-33 ESV )
References
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