Cisco Business Councils (2007): Unifying a Functional Enterprise with an Internal Governance System

In response to the 2001 market downturn, Cisco Systems implemented a major restructuring that transformed 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 risked making the company less customer-centric. To mitigate this risk, Cisco implemented a cross-functional system of executive-level councils that would bring leaders of different functions together to collaborate and focus on the needs and issues of specific customer groups. Each council employs a "Three-in-a-Box" leadership model consisting of an executive leader from the engineering or technology business unit, a member of the go-to-market team, and an operations resource director. Each council is also accountable to the Operating Committee, which is chaired by CEO John Chambers and determines the long-term corporate strategy and allocation of corporate resources. Many other companies have failed at facilitating collaboration across functions-particularly large organizations-but Cisco's system has been successful because the company remained committed to the system, required a consistent infrastructure while also allowing for flexibility, gave members decision making authority, and used council leaders who thrive in collaborative environments. The success of the council system led to the creation of 20 boards of "sub-councils" in 2007. The boards are charged with driving development efforts and customer reach further into the organization by addressing specific issues too narrow for the councils to address.