In 2001, as the dot.com boom turned to bust, CEO John Chambers of Cisco saw a massive $460 billion of Cisco’s overall stock market value evaporate before his eyes. Game over? Not really. At that moment, Chambers started a reinvention of the company — from a “cowboy” mentality where people worked in silos to a collaborative approach. It has paid off so far. Revenues are up 90% since 2002, while profit margins are up to 20.8% from 16.3%. And Chambers earned the #4 spot on our best-performing CEO ranking, published last month by Harvard Business Review. Not bad.
Chambers created the following 5 pillars to drive collaboration, an approach we can all learn from. These amount to what I call disciplined collaboration in my book Collaboration: focus on business value, tear down barriers, and create a new organization architecture. (Full disclosure: last autumn I met with the top 50 leadership team at Cisco to discuss collaboration; the information here is all from public sources, however).
The five pillars are these:
1. Change leadership style.
2. Change incentives.
3. Change the structure.
4. Change how you work.
5. Use new social media tools.
These are all hallmarks of systems thinking. No more top-down thinking. Make people want to collaborate. The structure needs to map human social networks. Bring multiple points of view to examine the problem.
But it also uses things like constraints and goals to keep on track. It uses diffused leadership rather than central but makes sure there are ways to give the successful groups their rewards.
It also includes selecting for people who want this sort of structure. Luckily, the ones who thrive here are exactly the types who will produce success.
Read about the development of the Mac to get an idea of what these people are like. And also see what happened when a typical hierarchical manager was put in charge. Order and proper respect for authority was more important than success.
Apple made a mistake by putting these people into a silo type of management structure after the Mac came out. Many of the developers of the Mac were gone in less than 18 months, including the founder of the company, Steve Jobs.
The structure that Cisco built for collaboration can produce wonderful things. But its requirements need to be understood and supported by management in order to succeed.