Cisco Overhauling Management In light of Skidding Market Share
Cisco’s stock skidded by roughly 34 percent in the past year or so, and after four very weak quarters, CEO John Chambers is carrying out his intentions, which he outlined in a memo he sent out a few weeks ago.
Chambers has established a council-based management structure back in 2005, which was designed to enhance cooperation between departments, but created wall of slow-moving bureaucracy which has contributed greatly to Cisco’s decline. The company recently shut down its Flip business, lost over 10 percent of its share in multiple core markets, and more recently., 2 execs as well. Now, Chambers is overhauling the still number 1 networking company’s internal mechanism.
“Cisco said Thursday that it will streamline its sales, services and engineering organizations to focus on what it said are “the five areas driving the growth” of networks and the Internet: routing, switching and services; collaboration; data-center virtualization and cloud computing; video; and architectures for business transformation.”
In its previous efforts to regain some its lost hold of the market the company branched out to over 30 different areas, all while struggling with sluggish management policies, according to some former employees. Nevertheless, just a day before this announcement Cisco introduced its first datacenter container offering. When the news broke yesterday, some rated the product as a “me too” offering designed only to demonstrate the company’s competitiveness in this market, rather than to stand out of the crowd.
Cisco is going through a transformation, even though it may be a very gradual one. Nevertheless, the networking giant is the only company in the IT industry trying to reform around demand – another example is AOL. The internet company, which had its earnings call yesterday, seems to be interested in becoming a publishing company, and announced it has struck a major partnership for the promotion of its new ad format around the same time.
Hewlett-Packard is yet another example – a company going through a major transformation from hardware to cloud under CEO Leo Apotheker.
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