Professional Documents
Culture Documents
Ella Dragolj
Cisco Systems Inc.
2020 Analysis
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Purpose of Analysis
The purpose of this report is to analyze Cisco’s 2020 value creation process for its
stakeholders. The key resources utilized by Cisco will be outlined, including the many
different forms of capital the organization relies on for that value creation. Stakeholders
are key in the process so they will be described within the report, and they play a large role
in holding Cisco accountable. Accountability is something that will be addressed, too. Risks
and externalities will be explained due to their big impact on an organization’s value
creation. Additionally, after all of these components of the value creation process are laid
out, recommendations will be made to improve the value creation process as a whole.
Who is Cisco?
Cisco Systems Inc., founded in 1984, is a multinational corporation that is a world leader in
Internet networking. Cisco is publicly traded. They built the Internet, and 85% of Internet
traffic goes through Cisco’s systems (Cisco, 2020a, paras. 4-5). Their systems connect
people and devices, which allows for quick, immediate transfers of information regardless
of time or location. Cisco has over 77,000 employees in over 95 countries, 19 million square
feet in real estate, and $49.3 billion in fiscal 2020 revenue, according to the Cisco 2020
Corporate Social Responsibility Impact Report. Cisco’s 2020 Annual Report states its
purpose as being one that powers an inclusive future for everyone. Cisco (2020b) highlights
its mission as being one “to inspire new possibilities for our customers by reimagining their
application, securing their data, transforming their infrastructure, and empowering their
teams'' (p. 2).
They aim to simplify and automate as much as possible to do so. Flexible delivery is also an
aspect of that. Trust and responsibility, technology for good, leading a conscious culture,
supply chain excellence, energy and greenhouse gas emissions, and circular economy are
the main areas in which Cisco’s corporate social responsibility activities are organized
(Cisco, 2020b, p. 12). All of this contributes to their efforts to make a more inclusive future.
People, society, planet, and ESG topics are the focus for creating value. Cisco has plenty of
social investment programs to ensure CSR performance and honesty. Internal and external
stakeholders drive CSR activities. Engaging all stakeholders and ensuring corporate social
responsibility (CSR) creates unique value for all stakeholders. The employees came
together to do what they could for communities during the pandemic, for example.
They built surgical face shields and came up with innovative ways for families to stay in
touch in hospitals. In relation, Cisco also believes they have a responsibility to keep their
technology connected, productive, and secure. This will help their customers digitize and
bring on new opportunities for the future; modernize their infrastructure. From now on,
especially after the pandemic, it is important to find new ways of working and new
business solutions with new waves of automation. Cisco wants to make, reuse, design, and
use technology that takes environmental and social impacts into account. A resilient supply
chain leads to success and a circular economy.
This means reducing demand on resources as much as possible and protecting human
rights during the product process (Cisco, 2020b, p. 82). Customers add a lot of new
connections to their enterprises causing more of a need for a multicloud environment for
their applications (Cisco, 2020b, p. 6). A secure network becomes even more of a necessity.
Change is happening, so Cisco hopes to give all its stakeholders new opportunities by
transforming their applications, security, analytics, infrastructure, and empowering teams.
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Cisco provides meaningful business value through this. They deliver intelligent platforms to
do so. Cisco is expanding investments in research and development for products, and in
optimizing the products they offer for healthcare, education, and other industry
applications (Cisco, 2020b, p. 6). Investments are also made in making sure the customer is
supported through workplace changes and network functionality.
Resources
Cisco is committed to utilizing all of its resources to create long-term relationships and
solutions to improve everyone’s lives around the world (Cisco, 2020b, p. 3).
Financial Capital
Cisco showed resilience in their operations in 2020 by shifting to more software and
subscription-based offerings for their services. This led to Cisco reaching its goal of 31% of
revenue being from software, and 74% of that revenue was sold as a subscription,
exceeding that goal (Cisco, 2020b, p. 3). Cisco’s fiscal 2020 revenue was $49.3 billion and
59% of it is coming from the Americas: $36 billion in product revenue and $13.3 billion in
services revenue (Cisco, 2020b, p. 4). Cisco had $15.4 billion in operating cash flow for
2020. Cisco’s service category that generates 55% of its revenue is infrastructure platforms,
with services then applications following. They delivered strong margins despite the
challenges that came with 2020 and the pandemic. When it comes to capital allocation,
Cisco has $1.42 of dividends paid per share in 2020.
Manufactured Capital
The 2020 CSR Impact Report mentions that Cisco has 19 million sq ft in real estate. Cisco is
helping create smart buildings and cities. This organization has large rack-mounted
equipment, silicon architecture, router families, operating systems, broad cloud-based
security platforms, multicloud and modern applications, software, optics, automation, AI,
and so much more (Cisco, 2020b, pp. 2-3). Cisco has SD-WAN, 5G and WiFi-6, AI, multicloud
environments, optical networking, and 400G speeds.
Natural Capital
Cisco determines its environmental priorities on sustainability and business value. They
consider the environmental impact of their operations, products, supply chain, and
services. They set public goals to address the impacts. Cisco has plans to reduce its carbon
footprint, due to customer product operation, through equipment improvement such as
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using less power (Cisco, 2020b, p. 14). Cisco also wants its employees to be active in its
environmental sustainability efforts. They give their employees volunteer opportunities,
educational activities, and online portals for those who want to join in on making an
impact. Cisco sponsors environment-related projects with universities, too (Cisco, 2020b, p.
14). Cisco produces a circular economy and supply chain excellence due to the technology
being produced taking environmental impact into account. This organization wants to
reduce its environmental impact of waste and manufacturing on stakeholders.
Human Capital
Cisco has a vital Human Resources department supporting 77,000+ employees. Any time
that there are questions about the Code of Business Conduct that person goes to HR, and
they are a key component in talent development. HR is looked at for ethics and
transforming Cisco into a conscious workplace culture focused equally on people, business,
and society (Cisco, 2020c, p. 5). Cisco wants to transform HR from a department that
maximizes internal resources only to one that thinks about its impact on internal and
external stakeholders. The overall workforce globally is 27% female and 73% male; the
overall workforce in the United States is 29% female and 71% male; most of the men are
Caucasian and most of the females are Asian (Cisco, 2020c, p. 43). Their pay practices for
executives are based on pay-for-performance. This is to ensure fair compensation and
good governance policies. Cisco has millions of users and is involved with over 500,000
organizations. They spent $9.7 billion on sales and marketing, which was a reduction from
previous years.
Relationship Capital
Cisco aims to utilize its technology to find solutions for big challenges like human needs
and disaster relief, education, and economic inequality. This occurs through long-term
partnerships and early investments. Cisco also teaches IT skills to millions through the
Cisco Networking Academy and investments in entrepreneurs using tech for social and
environmental impacts (Cisco, 2020c, p. 15). Cisco positively impacted 469 million people,
surpassing their goal to impact one billion people, through CSR activities and building an
inclusive future (Cisco, 2020c, p. 15). There is a huge commitment to CSR. Cisco relies
heavily on its relationships with stakeholders, and partners with a variety of global and
local organizations. The World Economic Forum (WEF) is one of those organizations and
provides many benefits such as world leader insights, CSR strategy influence, and best
practices (Cisco, 2020d, paras. 2). Other partnerships that have similar impacts include the
ones with the CEF, the Responsible Business Alliance (RBA), the Business for Social
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Responsibility (BSR), and the Conference Board’s Sustainability Council II on Innovation and
Growth (Cisco, 2020d, paras. 2).
There is a mutually beneficial relationship between Cisco leadership and its employees.
Employees bring talent and ingenuity to everything they do, and Cisco gives them
meaningful career and development opportunities in return, along with the necessary
resources to do so (Cisco, 2020c, p. 32). Cisco also created a Community Impact Portal, an
integrated platform online, providing employees opportunities with positive value for
communities (Cisco, 2020c, p. 63). Cisco ensures there is positive impact external to their
organization.
Symbolic Capital
Cisco has a seemingly endless amount of intellectual capital, knowledge, patents, and
more. Cisco has a huge IT capacity, Switches Technology, Catalyst series, hardware
platforms, etc. all included in its technology capital. It has a wide range of patents,
copyrights, and other intellectual property being developed or that has already been
produced.
Structural Capital
Cisco has an Executive Leadership Team including Chuck Robbins, Liz Centoni, Mark
Chandler, Eyal Dagan, Jonathan Davidson, Gerri Elliot, Francine Katsoudas, Kelly A. Kramer,
Stella Low, Maria Martinez, Todd Nightingale, Jeetu Patel, Mark Patterson, Irving Tan, and
Michael D. Timmeny. This leadership team is 53% diverse based on gender and ethnicity,
and 40% of the team is female, making it a leader in diversity for its industry (Cisco, 2020b,
p. 7). There is also a Board of Directors, with 75% being independent board members, and
a range of committees. The Audit Committee, the Compensation and Management
Development Committee, and the Nomination and Governance Committee members are
all independent (Cisco, 2020b, p. 10). The Board is mainly in charge of Cisco strategy. These
boards, committees, and teams work together to form the leadership in Cisco.
It is fairly hierarchical in that there are clear leadership positions, but there are also cross-
functional teams. The Board, for example, engages with others like the Executive
Leadership Team during reviews about strategy. There are ten people on the Board of
Directors including M. Michele Burns, Michael D. Capellas, Wesley G. Bush, Mark Garrett,
Dr. Kristina M. Johnson, Arun Sarin, KBE, Roderick C. McGeary, Brenton L. Saunders, Charles
H. Robbins, and Dr. Lisa T. Su with 40% diversity (Cisco, 2020b, pp. 10-11). Cisco’s FLEX
program is for upcoming HR talent and includes two full-time programs, where one is for
undergraduates and the other is for master’s graduates. Both provide high leadership
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Customers · Millions of
users Cisco inspires new
· Over 500,000 possibilities for its · Loyalty
organizations customers. This happens · Overall satisfaction
· $9.7 billion through their
· Interest in new
spent on sales and reimagination of
products
marketing, a application, data security,
and team empowerment. · Good reputation
reduction from the
previous year They want to drive the · Increased
most trusted customer engagement
experience with great · Responsive
people and technology. · Happiness
They are helping
customers digitize for the
future and modernize
their infrastructure. They
announced new
purchasing options that
are more flexible to allow
customers to pick
whatever way they want
to consume their
technology. Cisco’s
vision is to deliver highly
secure, software-defined,
intelligent, and automated
platforms. They are even
expanding their research
and development
investments in certain
product areas, so their
product offerings are
optimized across all
industries. Cisco prides
themselves on trust and
responsibility, so they do
their best to remain
transparent and
accountable.
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· CSR
management
· Sustainability
teams
· Environmental
teams
· Ethics and
integrity
· Compliance
tools (e-learning)
Through risks Cisco is taking, they are producing positive benefits for all of its stakeholders
like its employees, communities, and more. One of those benefits is a conscious culture.
Recommendations
Overall, Cisco Systems Inc. does a really good job of creating value for its stakeholders.
Cisco actively tries to adapt to changes and modernization while supporting its
stakeholders through the same process. Cisco is moving all its stakeholders toward its goal
of a more inclusive future. They provide a secure, quality service while still developing a
conscious workplace culture. Cisco needs to continue prioritizing corporate social
responsibility and integrating that in their organizational purpose. The aspects that make a
corporation reputable are represented in Cisco: fairness, product value, ethical behavior,
and transparency.
Remaining transparent and accountable are key components of Cisco’s value creation.
Cisco is committed to utilizing and being aware of all its different capital: financial,
manufactured, natural, human, relationship, symbolic, and structural. Capitals that could
have been discussed further in the annual reports were manufactured capital and symbolic
capital. Certain aspects of those forms of capital were addressed, but there could have
been more detail. The focus of this most recent year’s report seems to be on their inclusive
future and stakeholder impact, however. Cisco demonstrates connectivity through its
entire process of value creation because Cisco is aware of all of its resources, the impact it
has on those resources, and how all stakeholders can benefit from those resources.
Cisco is constantly developing and implementing ways to manage, maintain, and expand
their organizational value. Value which is derived from all of its resources. They understand
what drives value and how to create more. All of the different stakeholders and
technologies are interdependent. The value creation story was extremely comprehensive,
but it could have been more engaging. It could have potentially included more personal
recounts, and even a video to match its digitization priority. Modern organizations should
be able to make their reporting more interesting.
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References
Cisco. (2020a). Who is Cisco. https://www.cisco.com/c/en_au/about/who-is-head.html
Cisco. (2020b). 2020 annual report: Powering an inclusive future for all.
https://www.cisco.com/c/dam/en_us/about/annual-report/cisco-annual-report-summary-
2020.pdf
Cisco. (2020c). Powering an inclusive future for all: 2020 corporate social responsibility impact
report.https://www.cisco.com/c/dam/m/en_us/about/csr/esg-hub/_pdf/csr-report-2020.pdf
Cisco. (2020d). Stakeholder engagement. https://www.cisco.com/c/m/en_us/about/csr/esg-
hub/governance/stakeholder.html