Turning to "lessons learned, three lessons learned from Cisco's notebook"

Taking lessons, Cisco's three tough lessons

On June 23, August 14, Cisco announced its fourth major restructuring operation. As part of the restructuring, cisco will cut down a maximum of 6000 employees, and employees in China will also be affected. From 20 thousand to 75 thousand, Cisco reduced its total number of employees by downsizing, sales, and other means by about 30%, accounting for about of the total number of employees currently.

Prior to the announcement of layoffs, Cisco just released a financial report: Q4's revenue dropped by 0.5% to $12.42 billion, and its net income dropped by 1% to $2.25 billion. Its annual revenue was $47.14 billion, the decline was 3%, with net income of $7.85 billion, down 21.3% year-on-year. In March 28, 2001, Cisco's total market value reached $555.44 billion, making it the largest company in the world. In August 22, Cisco's market value was only $126 billion, less than 1/4 of the peak value.

The decline of Cisco has certainly led to the rise of emerging companies such as Huawei and the impact of events such as prism in the United States. However, in the final analysis, it is still a problem. A shark (Public Account: southsharker) believes that there are four painful lessons in Cisco's strategy, which deserves the lessons of all companies.

1. slow response, nostalgia for the past, and failure to timely transform.

Cisco has always been a leader in the network equipment industry. However, as time passes, the network device market has undergone great changes in recent years. This market is no longer the world of hardware, but cloud computing and low-cost software solutions. The rise of companies such as Google and Amazon has been a fatal blow to Cisco.

When Cisco is still immersed in the leading position of network hardware devices, the replacement of cloud computing has brought a disaster tolerance. At this time, it is no longer important for Cisco to gain more market share of network hardware equipment, because the emergence of cloud computing has suddenly killed the network hardware equipment market.

In fact, Cisco has not undergone any transformation, but has taken a wrong path. For example, chambers once proposed Cisco's transformation to "transform from the world's largest network company to the world's largest IT company ". Fully transformed from a device provider to a solution provider. In this direction, we still do not realize the rise of software and applications. Of course, Chambers finally realized this and proposed to transform Cisco from a network device (mainly a router and a switch) vendor to a software and service designer and vendor, however, Amazon and Google are already far ahead.

Even Huawei understands better than Cisco. At the end of 2010, Ren zhengfei, president of Huawei, proposed that "the cloud platform should catch up with and surpass Cisco in a short time, to catch up with Google in the cloud business. Then, the company's business is divided into four parts: operator, enterprise, terminal and other. Before that, Cisco claimed internally that "if we stop moving forward, Huawei will not be able to find any direction ."

2. M & A addiction, hoping to take advantage of M & A shortcuts to curb endogenous innovation.

2001 was a watershed for Cisco, where Cisco relied primarily on endogenous innovation, and later Cisco placed all its treasures on mergers and acquisitions:

In 2001, Cisco acquired pixstream, a hardware and software Digital Video Service developer;

In 2003, Cisco acquired the Linksys Group, a network device vendor for families and small enterprises;

In 2006, Cisco acquired scientific atlanta set-top box company;

In 2007, Cisco acquired another video conferencing system service provider WebEx;

In 2009, Cisco acquired the low-price flip camera vendor pure digi-tal technologies;

In 2009, Cisco acquired tengbo, a video conferencing equipment company.

These mergers and acquisitions are only a small part of Cisco's many mergers and acquisitions. In fact, Cisco acquired a company in an average of six weeks, showing the madness of its mergers and acquisitions. Numerous mergers and acquisitions make Cisco quickly become a company that spans multiple product lines, especially for Cisco's role as a network integrator, however, mergers and acquisitions have also led Cisco to find a shortcut for a company to quickly expand, so as to hand over innovation to external companies rather than internal departments. Chambers once proudly said, "buying is an effective way to make us grow faster ."

In Cisco's view, rather than having to bear many failed internal innovations, it is better to let external companies innovate, and then purchase by taking advantage of the world's largest market value advantage. This has largely restrained Cisco's innovation capabilities. Throughout the 2001 S, Cisco has no significant epoch of technological innovation, cisco's lack of innovation is not unrelated to the merger. In this sense, M & A is a dose of poison.

Another side effect of M & A is that Cisco gradually experiences the illusion that everything can be done and food can be eaten. A shark's guess is that in 2011, Cisco became the world's most valuable company, and also let Cisco float. As a result, major mergers and acquisitions started to kick off. Cisco felt like it was the dominant player in the market and industry. It could be done by one person, and the whole industry chain could be used without cooperation with other companies. However, even though Cisco's network equipment market is B2B, it still needs to be sensitive and flexible to the market. However, Cisco is becoming increasingly cumbersome as it continues to buy, losing sensitive market detection is also responsible for its final decline.

In this sense, M & A is a dose of poison.

3. due to the illness of a large enterprise, Cisco has been ruined by endless conferences and PPT slides because of the disadvantages of the committee model.

Numerous mergers and acquisitions allow Cisco to quickly become a large and heavy company with tens of thousands of people, and also make Cisco an enterprise with numerous cultural blends. In order to integrate numerous people and product lines, cisco's management difficulty has increased sharply.

To cope with diversified businesses, Cisco has carefully designed a committee system consisting of managers of different functional departments. This is a bold test. Generally, companies adopt top-down hierarchical architectures, while Cisco's committee model is a more flat and unshaped architecture.

At the highest level of the Organization, operating committee, including CEO chambers, is composed of 16 senior managers. On average, 12 council members, composed of 14 senior management personnel, reported to the operational committee. On average, nearly 50 "Management Board" consisting of 14 senior management personnel reported to the "Council" (four of them reported directly to the Operation Committee ).

This more unshaped structure enables Cisco to gather leaders from various business units to solve key problems, such as selling to small businesses. Of course, all these committees will take time, and it is estimated that some senior managers will spend 30% of their time dealing with the issues raised by the Committee. Too many committees have slowed down decision-making because there is no clear saying as to who is the final decision.

Moreover, endless internal meetings consume too much management time, rather than interacting with customers, suppliers, and key partners. This leads the company to invest in wrong ideas. For example, Cisco executives find that internal management tasks are too heavy, which forces him to cut his business trip by half and call the customer in place of meeting with the customer, this is undoubtedly devastating.

Cisco's secret should be a precursor to other companies.

Turning to "lessons learned, three lessons learned from Cisco's notebook"