Case | HBS Case Collection | January 2009 (Revised June 2010)

Cisco Systems (2001): Building and Sustaining a Customer-Centric Culture

by Ranjay Gulati

Abstract

Customer centricity has been an important part of the culture at Cisco Systems since its inception. While part of this is attributable to values put in place by the founders and retained by subsequent management, it is also closely interwoven with its organizational architecture that reaffirmed those values. Until 2001, Cisco had a decentralized organizational structure with three business units organized around each of its three main customer types: Service Provider, Enterprise, and Commercial. Each unit developed and marketed a complete product line for its specific customer group further reaffirming its belief in the centrality of distinct customers. A number of other systems, structures, and behavioral mechanisms reaffirmed the importance of customer centricity. The 2001 market downturn, however, brought new challenges as Cisco was forced to lay off 18% of its workforce and reexamine its organizational structure that was costly due to duplication of activities across each of the three customer-facing business units. Ultimately, Cisco Systems decided to transform the company from a decentralized to centralized organization. While recognizing that a centralized, functional structure was necessary to avoid product and resource redundancies, it also threatened Cisco's customer-centricity in that the centralization of R & D and marketing made them more distant from Cisco's customers. To overcome the perceived misalignment between its structure and culture, Cisco introduced a number of initiatives like the Customer Focus Initiative (CFI) to ensure that while the structure was turning away from customer centricity, the beliefs and actions of its employees maintained that focus. In doing so, management accepted the likely misalignment between its structure and culture and sought ways to compensate for this perceived gap.

Keywords: Customer Satisfaction; Organizational Design; Organizational Structure; Organizational Change and Adaptation; Change Management; Organizational Culture; Research and Development; Job Cuts and Outsourcing; Employees; Brands and Branding; Customer Relationship Management; Business Units;

Citation:

Gulati, Ranjay. "Cisco Systems (2001): Building and Sustaining a Customer-Centric Culture." Harvard Business School Case 409-061, January 2009. (Revised June 2010.)