John Chambers is an excited man. Of course if you've followed the CEO and chairman of Cisco ( CSCO) very long, you also know he is an excitable man. When things were heading south back in August of 2001, it was Chambers who said that technology sales were falling off a cliff due to a 100-year flood. In August of 2009, Chambers stated that he felt the economy may have reached its "tipping point." Just last week, Chambers announced that he could see "tangible results that the recovery, at least the initial phase of the recovery, is gaining momentum." Even with a simultaneous announcement of a first quarter profit loss of 19% and a revenue fall of 12%, Chambers was as optimistic as ever. While you can't claim he was solely responsible for a surge in the stock market the next day, he was certainly part of the reason for the sentiment. Chambers has a credibility that many CEOs dream of. Leaving the senior VP of U.S. Operations position for Wang Laboratories, he joined Cisco in 1991 as senior vice-president of worldwide sales and operations. He became CEO in 1995. In that time, revenues at Cisco have multiplied exponentially from a little over $1 billion annually to over $40 billion. He clearly has the technical background to be seen as understanding his business. More importantly, he has technical savvy combined with vision and guts. While it may be difficult to grow a business as successfully as Chambers has managed, it is even more difficult to grow a culture that is both innovative and unique. In his August address, Chambers also announced the replacement of Cisco's traditional, top-down decision making with a truly team-oriented system.
Many companies have team-based organizations at the employee or mid-level leadership level. But Chambers has taken it all the way to the top. In total, Cisco now has nearly 60 internal teams that represent everything from strategic decision making to product development to line management. Will it work? I don't know. And it is important to note that those who are most critical seem to be overlooking the fact that this change is for the development area -- the "business units" -- within Cisco. Sales, support, manufacturing, etc. have not been radically changed. That being the case, this management experiment has been underway at a smaller level for the last couple of years so it's also not as new as it may seem. Still, the concern of running business development "by committee" is a legitimate one and something that will be less than perfect for sure. But it will provide what Chambers wants: a forced opportunity to rethink the way business is done at Cisco. The other interesting criticism of late is that Chamber's leadership and unique management philosophies like these leadership councils have led to a departure of nearly 20% of executives over the last two to three years. This is, of course, presented as a bad thing. If Cisco loses its talent pool, how can it be successful in the future? A lot of experience and knowledge has departed with the loss of these executives. While the loss of experience is unarguable, it's not the real issue. If you are going to truly change a culture, and change it dramatically, you have to be open to the fact that some of the old guard will simply not fit into the new dynamic. That's not a bad thing, it's a fact of life.
A lack of willingness to see the old guard go has stopped many organizations from making the kinds of changes that may be necessary. And the fear of losing them has stopped many companies from making truly innovative changes to anything from product offerings to compensation. In the end, the success of the collaborative organizational structure that Chambers has instituted will be measured by the productivity and results of the company. That is how it should be. While it may seem from the outside that he is inviting a greater amount of bureaucracy into the company, it might also be that he is inviting greater engagement and involvement from those closer to the business. One thing is for sure. You can't say you despise the hierarchical nature of American business and then overly criticize somebody who is willing to change it. At least Chambers has the courage to give it a try.