Cisco Systems competes in a wide range of markets and is famous for

developing the routers and switches on which the Internet is built. In the early
2000s, Cisco made most of its $10 billion yearly revenue by selling its Internet
routers and switches to large companies and Internet service providers. Cisco,
now a computer networking giant, has been extremely successful over the last
several years, producing over $47 billion in sales and $7.9 billion in net
income by mid-2000s. As part of its business model, Cisco regularly
undertakes acquisitions to extend its technology base and product portfolio.
In the last decade, Cisco acquired over 80 firms as it extended its product
portfolio.
The Flip video camera burst onto the scene in 2007 and took off, selling over 2
million of the simple, small, and easy-to-use cameras to individual customers
in two years. Sensing opportunity in the digital video market, Cisco Systems
snapped up Pure Digital Technologies, the parent company of Flip, in 2009 for
$590 million.
Even with this experience with acquisitions, Cisco was unable to avoid failure
with Flip. Just two years later, Cisco announced that it was pulling the plug on
the Flip video camera and shutting down the Flip division.
John Chambers, the CEO of Cisco, had nearly 60 decision-making groups in its
structure, with several layers separating him from the individual markets.
After the failure of Flip, Chambers admits that until the late-2000s, he had a
“control and command” approach to organizing. He and the company’s 10 top
corporate managers would work together to plan the company’s new product
development strategies; they then sent their orders down the hierarchy to
team and divisional managers who worked to implement these strategies. Top
managers monitored how quickly these new products were developed and
how well they sold, and intervened as necessary to take corrective action.