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Why Boards & Councils Failed Cisco

Craig Matsumoto
12/20/2011

5:25 PM -- Even if the boards-and-councils structure wasn't a bad idea, Cisco Systems Inc. (Nasdaq: CSCO) didn't have the chops to pull it off.

I know, that whole topic died months ago. (See Cisco Cuts Down on Councils.)

But it's on my mind again as I write up our 2011 Top 10 list on Cisco. (Coming soon.)

Just a few weeks ago, I was talking about the boards and councils with Zeus Kerravala, principal analyst with ZK Research . He'd spoken to Gary Hamel, a management guru who's preached ideas like boards and councils. Hamel told him that the structure -- where executives create ad-hoc organizations to pursue projects more spontaneously, dipping into one another's staffs at will -- requires a level of vigorous internal debate that Cisco couldn't generate.

"Now that new executives are coming in, after Chambers has become a celebrity, do they have the balls to stand up to him?" Kerravala says. "Volpi and Giancarlo had no problem. They were open with him."

He's referring, of course, to Mike Volpi and Charles Giancarlo, both of whom left Cisco, as did Jayshree Ullal. Kerravala's point is that the remaining staff and any new executives were more starry-eyed about Chambers. With fewer voices of dissent, the boards-and-councils structure was undermined, so the theory goes.

I can buy that argument. As I've said before, I don't agree with the characterization of boards and councils as management by committee. I think it's the opposite, something closer to anarchy. But it does need one person in control who knows what's going on without dictating what's going on, and I'm not sure Cisco reached that point.

I'm not convinced boards and councils are the wave of the future. But it's an interesting thought exercise to consider how the idea might have been applied differently.

Anyway, it's moot now, at least in Cisco's case.

— Craig Matsumoto, West Coast Editor, Light Reading

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