Cisco: Social Media
1980s. With sales reaching $28 million, Cisco went public in 1990 and within a few years startedacquiring associated network technology firms. Revenues hit $1 billion in 1994 and thefollowing year John Chambers was promoted from EVP to president and CEO. Acquiringcompanies to gain technology or entry to new markets evolved into a full-scale strategy as Ciscodeveloped a system of policies and practices for successfully integrating entrepreneurial firmsinto the corporate fold with minimal loss of talent.Cisco became one of the ³four horsemen´ of the first Internet boom (along with Sun,EMC and Oracle), and in 2000 it boasted a market capitalization of more than $500 billion,making it the world¶s most valuable company. That valuation declined sharply as industrydemand for protocol-based telecommunications equipmentdried up in 2001. Chambers led amajor rebuilding and diversification effort through acquisitions in related technology segments,and Cisco also pushed significant internal product development.In recent years, acquisitions andinternal development focused on video technologies and entry into software segments such as e-mail security, policy management, and cloud-based email software. Expansion into multipleadjacent markets significantly broadened Cisco¶s slate of competitors, which grew to includeAlcatel-Lucent, Avaya, Motorola, HP and IBM and Microsoft.By 2010, Cisco had annual sales of $40 billion (
), and, fueled by more than 120acquisitions, it dominated multiple segments of the networking equipment and related markets(
). Observers credited Cisco¶s success to its strategy of anticipating and catchingmarket transitions and to its strong culture, many of whose attributes were embodied in the work practices of CEO Chambers, whoseoffice was no larger than that most managers(
Acore feature of the culture wasemployee empowerment, manifested in the freedom to speak candidly and to experiment with technology, both of which promoted grassroots innovation.Cisco¶s commitment to empower employees to use technology as they saw fit extended toallowing people to use non-corporate IT-supported hardware - such as Apple Mac computers andiPhones - a rare practice in large organizations.
Social Media/Web 2.0 Foundations
The foundation for Cisco¶s embrace of social media rested on the company¶s Web 1.0expertise, its culture, its evolving management philosophy and structure, and on its interest in promoting use of its own technologies.Cisco had extensive experience leveraging an array of Web 1.0 solutions, first introduced in 1995, to improve its performance, generating savings of $3.7 billion in FY 2008 from automating transactions and sharing information.Cultural qualitiessuch as empowerment, innovation and collaboration served as enablers, catalysts, and goals in theadoption, development and use of social media/Web 2.0 tools.
Similarly, a new managementmodel instituted in 2002 both facilitated and required social media-driven collaboration. By theearly 2000s Chambers recognized that too many major decisions were landing on his desk. Thiscentralized system potentially hindered timely decision-making, and it encouraged a growingtendency, according to one executive, for some decisions to face ³pocket vetoes«where peoplewould essentially disregard decisions out of a belief that µJohn didn¶t have all the rightinformation,¶ and they would do things anyway.´In an effort to decentralize decisions and leverage the power of collaboration to movemore rapidly, Chambers established a structure of councils and boards, empowered to makedecisions about growth opportunities in market adjacencies. The boards were comprised of
Social Media/Web 2.0. Although not all Web 2.0 tools strictly qualified as ³social media,´ the case usesthese terms interchangeably