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Cisco Cuts Down on Councils

Cisco Systems Inc. (Nasdaq: CSCO) is not getting rid of its boards and councils, as many had hoped, but at least it's going to have fewer of them.

On Thursday, Cisco announced the restructuring it had promised a month ago. In place of councils and boards that numbered in the dozens, Cisco will have three councils: one for the enterprise business, one for the service provider business, and one targeted at emerging countries.

In addition to being just plain smaller, the new structure focuses operations along the lines of customer types. That's in contrast to the fervent cross-pollination that Cisco was encouraging earlier, where executives could reach into one another's organizations at will.

There's also a dramatic change in engineering, as Senior Vice President Pankaj Patel (who runs Cisco's service provider business) is now helping lead that organization, alongside Chief Technology Office Padmasree Warrior. Video remains a primary engineering priority, with Senior Vice President Marthin de Beer being assigned to bring Cisco's Medianet architecture into all of its newer businesses.

Cisco's sales force will now be organized by region -- the Americas; Asia/Pacific; and Europe, the Middle East, and Africa -- and by customer segment within each region. These field operations, as Cisco calls them, are still being run by Executive Vice President Rob Lloyd. Finally, Cisco's services group will reorganize similarly, with Chief Operating Officer Gary Moore still in charge.

Why this matters
Presumably, the announcement is a case of things being stirred underneath the surface. To outside observers, the impact isn't as overt as the extinction of Flip cameras, but you'd assume that Cisco has simplified some of its internal processes this way. CEO John Chambers did note recently that Cisco had confused its employees, an apparent nod to all the diagonal lines in the company's org chart.

Patel's assignment to the engineering team appears to be an indictment of Warrior's performance as CTO since arriving in 2007.

That Cisco is still using the word "councils" suggests that the company isn't giving up entirely on the councils-and-boards structure. Some investors will be disappointed; that organizational structure seems to be the most criticized aspect of the company, now that Flip cameras are on the way out.

For more
Our coverage of Cisco's organization and reorganization:

— Craig Matsumoto, West Coast Editor, Light Reading

Rush21120 12/5/2012 | 5:06:00 PM
re: Cisco Cuts Down on Councils

Craig, indeed a great album as with many they have.  Problem with large companies is visibilty.  Chambers relys on his management, which rely on their management , and so on.  With Chambers he doesn't want to appear as the one who does the misstep - so structuring it like this will mean his management will need to flatten it while getting it right.  Problem with that is your just a number and without sponsorship your a target. This is typical of most companies that growth out of size instead of value.

Rush21120 12/5/2012 | 5:06:00 PM
re: Cisco Cuts Down on Councils

It was inevitable Cisco would re-org, I would agree this doens't shake up Cisco as much as it should as it's still much to heavy on middle and top management; however it does make a statement by heading towards simplification.  The question will be how will this structure perform.  If it (Cisco simplification) does perform it will be as a result of minimizing or flatenning some of the excessive top level and middle managers.  This structure also seems to be a return to the past to me (worked for Cisco for 9 years), with control, well at least in appearance, being the focus point - time will tell.

Pete Baldwin 12/5/2012 | 5:06:00 PM
re: Cisco Cuts Down on Councils

Thanks, Rush2112. (Good album.) Yes, a big company that's trying to reorganize usually needs to trim some management layers.  Ideally, I suppose you would simplify the structure first, then start pruning... my gut says that's not what's happening here, though ...


It seems that lots of these big companies, every so often, need to restructure things along customer or market lines. Which seems like so obvious a plan, you wonder how they start deviating from it in the first place.

paolo.franzoi 12/5/2012 | 5:05:59 PM
re: Cisco Cuts Down on Councils

 


Craig,


All organizational structures for a large company have problems.  There is no perfect structure, so companies have to flip it around periodically to fix the current problem and get to the next problem.  This then reverts and life goes on once again.


 


seven


 

DocFord 12/5/2012 | 5:05:58 PM
re: Cisco Cuts Down on Councils

1. It appears that JC is trying to gain some type of control of what the public views as a rudderless ship.


2. I find it ironic that Chambers is making all these changes seeing that he became quite aggressive toward a female employee during last quarters meeting when it was suggested that Cisco was doing to much and that certain products and even ceratin councils should be removed.


3. It doesn't look too good when you have a VP reporting to another VP.


4. Hopefully by making these adjustments Cisco won't be viewed as a jet engine or washer & dryer away from looking like GE - which was really the whole goal Chambers had in mind when getting into all the comsumer products - just look at his mentor: Jack Welch.


Pete Baldwin 12/5/2012 | 5:05:32 PM
re: Cisco Cuts Down on Councils

Cisco earnings come out in about an hour. Anybody wanna lay odds on whether they'll announce layoffs?


Phil Harvey told me yesterday that CNBC's people were talking as if layoffs today were a given. But I get the impression that wasn't a case of "we know this is true" but more a case of "we speak loudly and carelessly because that's where the ratings are."


I'd think they would wait for more results of the voluntary early retirement before getting into real layoffs. Then again, maybe the volunteers lined up quickly enough for Cisco to make its decisions already ...?  I really don't know.

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