Case study: Cisco Systems

The story
In 2000, Cisco Systems was a leader in hardware and software technology for routing traffic on the internet and corporate networks. Breakneck growth in revenues over a number of years had been matched by a heavy expansion in employee numbers.

Cisco had used a “buy” strategy for acquiring the management talent to handle growth – either when acquiring other companies or by recruiting externally.

The challenge
By the end of 2000, Cisco’s revenues and share price were plummeting as the technology boom went bust. In early 2001, Cisco had to cut its staff by 8,500 – nearly a fifth.

Cisco decided to develop a staff development strategy that would support the company’s shift from growth and acquisition to productivity and profitability.

The strategy
Cisco would implement a “build” strategy to nurture talent from within rather than “buying” it from outside. This would specifically develop strategic thinkers and future leaders.

A company-wide team was set up to create a new approach to nurturing and using in-house talent.

Cisco developed new technology that allowed employees to publicise their experience and career aspirations, information that managers then accessed for new work assignments or moving people between jobs.

The team launched Cisco University in 2003 as the focal point for all career management and development. The underlying premise was to provide the company with the ability to develop versatile and adaptable employees. For instance, an optics engineer could be helped to become a voice-over-internet-protocol engineer. The rationale was to create knowledgeable employees who could move quickly to areas of highest need, and a workforce that thrived on change.

Cisco University included using technologies to enable the improved sharing of knowledge as well as traditional learning opportunities. It allowed employees to have access to personalised career development planning and activities, as well as ways to pursue e-learning.

Cisco also focused on developing leadership in-house. It launched an executive coaching programme in which high-potential directors and vice-presidents would be coached by a team that included the executive’s manager, an external coach and a human resources executive.

A leadership series programme focused on specific levels of Cisco leaders, from vice-presidents to early-career managers. Internal faculty members taught sessions including case studies and simulations that featured current and future challenges and opportunities. Content included input from universities and consulting firms.

Cisco’s performance evaluation process was cut to two pages of paper from up to 12 in order to promote manager-employee dialogue. The company also integrated leadership into the process.

The results
Within three years, Cisco had successfully implemented its new strategy and was being recognised for its shift in approach. In October 2003, CEO Magazine ranked Cisco as 13th on its “Top 20 Companies for Leaders” list. By 2004, all the leadership series programmes were oversubscribed.

The lessons
Cisco’s experience illustrates the challenges that leaders face as organisations evolve in a way that requires managers to develop new capabilities.

One way a company can gain advantage is through its talent management strategy.

Any new environment requires existing competitors to think differently – including leveraging scale and efficiency, rather than going for unbridled growth.

Cisco’s ability to execute its strategy in a very competitive environment depended on developing leaders with a different skill set and who embraced a different organisational culture from the previous generation.
- Financial Times, 15 June 2011