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Guinan Cisco (1)

Guinan Cisco (1)

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Published by Sameer Patel

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Categories:Business/Law
Published by: Sameer Patel on Nov 23, 2010
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01/04/2011

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BEE SP0910
Sam Perkins prepared this case under the direction of Professors PJ Guinan and Sal Parise. It is intended as the basis for class discussion rather than to illustrate either effective or ineffective management.
Copyright © Babson Executive Education 2010. No part of this publication may be reproduced, stored in a retrievalsystem, used in a spreadsheet, or transmitted in any form or by any means ± electronic, mechanical, photocopying,recording, or otherwise ± without the permission of copyright holders.
Cisco: Social Media/Web 2.0
By mid-2010, Cisco Systems, Inc., a worldwide leader in networking and related IT gear,was also emerging as a leader in the use of social media/Web 2.0 technologies. Over the past half decade the company had implemented a series of programs to leverage multiple tools, such as blogging, Facebook, Twitter and YouTube - to promote engagement with external stakeholders,and it also had developed a set of innovative technologies and products to improve internalcommunication and collaboration among employees and teams. The enhanced ability tocollaborate virtually and remotely was a key enabler of a new management system that CEO JohnChambers instituted in 2002. That system, in turn, allowed Cisco to be the largest company in theworld with a single P&L and with centralized functions, a structure that promoted efficiency and produced substantial savings. Senior leadership envisioned that expanded collaboration, enabled by both technology and cultural adaptations, would create the opportunity for transformationalchange in how Cisco employees interacted, engaged in teams and performed work. How suchchange, however, might impact Cisco¶s efficient operations and, ultimately, its market leadershipremained unclear.While Social media/Web 2.0 created significant opportunity, its rapid expansion alsotriggered serious concerns about how employees were using the tools. Numerous companieswere confronting instances of employees posting inappropriate material that put both employeesand their firms at risk. Cisco¶s Amy Paquette, senior manager of a new group in corporatemarketing responsible for social media strategy and governance, described the concern:
 F 
or this organization, training and governance are a major focus. If you can¶t train your workforce to know how to behave in an online world, then you¶re setting up the employee,as well as the company, for trouble. But do we need to make training mandatory for theentire workforce? And how are we going to police the thousands of posts that go up eachday?
Company Overview
Cisco Systems was founded in 1984 by a group of Stanford University colleagues whowanted to send emails between departments with different local area protocols. Their development of a multi-protocol router set the enduring corporate philosophy of finding solutionsto address customer challenges. Early products were sold to universities and government offices but expanded to large corporations as the demand for network routers grew rapidly in the late
 
Cisco: Social Media
 
2
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 (
 Exhibit 1
), and, fueled by more than 120acquisitions, it dominated multiple segments of the networking equipment and related markets(
 Exhibit 2
). 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(
 Exhibit 3)
.
 
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.
1
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 
1
Social Media/Web 2.0. Although not all Web 2.0 tools strictly qualified as ³social media,´ the case usesthese terms interchangeably
.
 
Cisco: Social Media
 
3
representatives of each function and operated by consensus. The model was markedly differentthan the one it replaced, and not all executives were able to adapt, but the collaborative approachwas well-suited to leverage emerging social media and Web 2.0 tools, and it became firmlyembedded in the organizational culture. In addition to culture and structure, Cisco¶s explicitobjective to have employees use the communication products that it sold to enterprise customersalso played a played a major role in driving social media use, especially as the company increasedits focus on video technologies.
E
arly Social Media Activities
 Corporate Communications (CC aka PR) initiated the precursor of social media in 1999when it launched News@Cisco, the brainchild of a senior executive who had a vision thateverything related to communications was going to move online. Initially, News@Cisco was thehub for global distribution of online press releases and other news stories, but it quicklytransitioned from text-based to multimedia-rich material, introducing in 2000 the Cisco VideoPortal. In a conscious effort to promote video, the portal became a major component of the site,centralizing customer testimonials and videos from across the company. A major focus of thisactivity was changing the type of video that PR produced. In place of longer, costly, ³video newsreleases,´ which were distributed to broadcasters, the group pioneered short-form videos thatwere high production quality but featured a two-minute news-style format more conducive to on-line mass down load ± a model that other companies started to imitate.In February of 2005, under the guidance of CC, the Government Affairs team launchedCisco¶s first corporate blog - High Tech Policy (HTP). At the time, there were major issues, suchas Net neutrality and stock option expensing, that impacted the technology industry, and Ciscowanted to use a vehicle, outside standard PR, to engage people and have its voice heard on theseissues. More specifically, the goal was to reach influencers and key decision makers inWashington, D.C. and have a limited number of quality conversations rather than a massaudience. For Cisco, like other early corporate bloggers, the High Tech Policy blog was anexperiment, with little sense of the level, type of following, or responses it might generate.
New Media Group:
Institutionalizing/
Ex
panding Blogging and Formalizing Policy
In spite of the HTP blog and News@Cisco¶s initial groundbreaking activities, Ciscorecognized that it had not been keeping up with emergent activities in the on-line world, and inmid-2005 it formed the New Media Group (NMG) under the leadership of Amy Paquette andJeannette Gibson, both from PR. In addition to overseeing News@Cisco and HTP, NMG wascharged with reviewing and assessing new Web2.0 communication tools and functions and their  potential expanded roles at Cisco. Over the following year, Paquette and Gibson studied thegrowing blogging universe, identified additional corporate topics and began to develop policies to broaden and formalize the use of blogs in external strategy with three blogging goals:
y
 
Create conversations with customers, partners, employees, and the public.
y
 
Provide a platform to discuss Cisco¶s strategy and its technology vision, including theobjective of increasing visibility and connection with consumers. Although Cisco¶s business was almost entirely B2B, its long-term strategic vision included consumers, andin 2005 Cisco launched the
 H 
uman Network 
campaign.

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