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

Ranjay  Gulati

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

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

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;

Format: Print

21 pages

Educators Purchase

Citation:

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

Why do some startups that have crossed the threshold of “product-market fit” and have a viable business model still fail? This article begins by exploring the argument that most startups need more professionalization to thrive. Founders resist putting in place structures and systems as they grow and that eventually leads to organizational chaos and ultimately, failure. But it then departs from this conventional view and explores the idea that while on the one hand too little structure in a high growth venture can lead to chaos, going too far on the other extreme with too much structure can also be equally detrimental and kill the soul of the startup. The article concludes by summarizing some ideas for startup founders on how they can learn the mechanics of scaling up effectively before they reach a point where they tip over too far, in one direction or the other. In an attempt to better understand this problem, the authors conducted a closed-group discussion with professionals, investors, and founders operating in various segments of the Indian startup ecosystem on which this article is based.

Faculty & Research

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

Abstract

Citation:

About the Author

More from the Author