Organizational Behavior the First Step

Organizational Behavior

The first step in a case analysis is to determine the problem that the company is facing. The Cisco case describes the organizational structure of the company, but presents no specific problem to solve. The observable artifacts of the culture are the different teams and councils that comprise the physical structure of the organizational design. The motto of 'speed, skill and flexibility' is an artifact that explains the underlying rationale for this organizational structure. The company values efficiency, and the drive for improved efficiency in decision-making is what drives the current structure. There is evidence that despite its awkward appearance, this structure actually does improve efficiency in decision-making. The basic assumption that underlies Cisco's organizational structure is that decisions in organizations require the input of multiple functional components. Therefore, efficiency can be increased by bringing those components together. A sub-assumption is that managers in the organization can handle being a part of numerous committees, groups and councils -- managers are able to handle the complexity inherent in such a structure, allowing for the structure to be workable.

The competing values framework can be used to help explain Cisco's culture. The competing values framework juxtaposes flexibility and discretion with stability and control. Cisco's culture emphasizes the former, blending elements of clan and adhocracy. The clan culture has the general thrust of collaboration wherein managers engage in active participation on a number of fronts and are empowered to make decisions quickly within the framework of the various teams and councils. Cisco represents adhocracy in that the structure promotes growth and innovation, as evidenced by the company's entry into hundreds of new businesses in the past few years. Ultimately, the culture is more clan-oriented simply because it has an internal focus. Interactions with external actors are also governed by the culture, but it is the internal culture that characterizes these external interactions, not the external actors or the opportunities that the external interactions create. With such an internal focus, the clan culture is the best description of Cisco's culture using the competing values framework.

Cisco's vision is "Changing the way we work, live, play and learn." The mission is "To shape the future of the Internet by creating unprecedented value and opportunity for our customers, employees, investors and ecosystem partners" (Cisco, 2010). These statements are not congruent with the company's culture. They are generic aggregations of meaningless buzzwords that provide no real sense of what the company does or how it does it. The company's description of its culture from its website (Cisco.com, 2011) is much more valuable. The culture is described as having "connecting and collaborating" as a key element. Community is a buzzword used, but the company does little to elaborate. What can be seen in the textbook description of Cisco culture and organizational structure is that it is oriented towards collaboration, so in that way the description is congruent with the company's own view of its culture, and with the culture as described in the competing values framework.

Cisco changed its culture in response to a difficult year. The company re-drew its organizational structure to encourage a culture shift. The company focused its change efforts first on creating the structures it believed would be more effective and then asking for managerial buy-in. The company also made changes to its compensation system in order to encourage specific behaviors. The compensation system can be seen as an artifact of the culture, in that the pay becomes a physical manifestation for the managers of what the company expects of them. By creating an association between the outputs that senior management wanted to see and the compensation that the mangers wanted to see, Cisco was able to bring most managers around to the new corporate culture. Those managers who were less receptive to the change were presumably removed over the course of the first few years of the new change plan.

For the most part, I would probably not want to work at Cisco. The convoluted structure devalues individual responsibility, which to my mind removes incentive for individual excellence. A manager's output is dependent on others, but there does not appear to be a mechanism to hold underperforming managers responsible. When the team is entirely comprised of internally motivated individuals, Cisco's system will work brilliantly. However, the system encourages managers to be passengers, allowing the best managers to carry the teams to everybody's benefit. The result of this is that over time managers will be encouraged to be passengers and elite managers will leave for organizations where their compensation is more directly tied to their own abilities.

While the textbook description of Cisco's culture does not explicitly outline a problem to be solved, Cisco has to consider the long-term impacts of its current organizational culture and structure. The collaborative approach has increased organizational complexity substantially and but it has also reduced individually accountability. In the short-run, the company has been able to move quickly and expand rapidly. In the long-run, maintaining that organizational vitality is going to be challenging. With reduced accountability, the company may attract or retain underperformers. In addition, this system appears to work only when high levels of energy are present. As products and markets mature, Cisco will have trouble finding that energy internally.

It is also indicated that Cisco wants to move quickly and spent some of its capital. This is not necessarily the best approach. Spending money and making investments should not be the ultimate goal of the organizational structure and culture. Spending in the wrong areas either reduces the return on investment for the firm or introduces distractions such as unrelated businesses. Managers may be encouraged to focus on pet projects, simply because the current structure allows them to do so. What might serve Cisco better is a focus on the strongest projects. Managers need to avoid spreading themselves too thin, lest they lose sight of the key profit drivers for the business.