This paper examines Cisco Systems' Internet of Things (IoT) strategic business unit within a publicly traded multinational context. It analyzes the competitive market landscape for IoT, evaluates Cisco's growth strategies including the Partner Growth Gateway, assesses the organization's competencies and resource acquisition through strategic acquisitions, examines partnerships and alliances as growth levers, and evaluates execution capability against Thompson et al's strategy execution framework. The paper also explores Cisco's corporate culture and leadership structure under CEO John Chambers. Findings show Cisco is well-positioned as an IoT leader through customer-centric innovation, aggressive acquisition integration, and partner enablement tools that align with proven growth strategies.
The Internet of Things (IoT) is reported in the work of Schlautmann, Levy, Keeping and Pankert (2011) to be "one of the hottest topics being debated today across industries worldwide. The most diverse products—home appliances, medical equipment, cars and power meters, to name but a few—are getting connected to the Internet." (p. 35)
Industry experts have made varying projections regarding the scale of the IoT market. The estimates for the number of smart objects range from 22 billion (IMS) to 50 billion (Cisco and Ericsson) by 2020, up from six billion in 2011. Additionally, Beecham Research predicted that "global revenue from these objects will grow from 15 billion in 2011 to more than $30 billion in 2014." (Schlautmann, Levy, Keeping and Pankert, 2011, p. 35)
The IoT value chain comprises participants across multiple segments including connectivity providers, platform and middleware vendors, application developers, and system integrators. The areas with significant opportunities for smart solutions include energy, building information systems, moving objects, retail solutions, medical and health care applications, and mobile devices. Mobile device applications include smartphones, tablet PCs, and mobile computers. Medical and health applications span medical equipment, assisted living facilities, digital hospital systems (eHospital), and sports and training monitoring. Building automation encompasses appliances, security and surveillance systems, consumer electronics, and media infrastructure.
Smart objects enable consumers, businesses, and communities to "optimize and extend their function by exchanging information across the network." (Schlautmann, Levy, Keeping and Pankert, 2011) The key benefits of IoT deployment include improved operational efficiency, enhanced decision-making through real-time data, cost reduction through automated processes, increased revenue opportunities through new services, improved customer experience, and enhanced safety and security across connected environments.
According to an executive briefing by Nic Cuccia, the Internet of Things will offer significant advantages to health care systems and other sectors: (1) automated data collection from a wide range of consumer monitoring tools; (2) the ability to automatically integrate real-time data from consumer monitoring tools into the consumer's health care record; and (3) unprecedented longitudinal data for individual health care consumers with the ability to aggregate consumer data for individuals with similar symptom clusters and problem types. (2014, p. 1)
IoT is reported to affect competitive positioning by enabling: (1) tracking of behavior; (2) enhanced situational awareness; (3) sensor-driven decision analytics; (4) process optimization; (5) complex autonomous systems; and (6) optimized resource consumption. (Cuccia, 2014, p. 1) According to Regalado (2014) in the work entitled "The Economies of the Internet of Things," IoT means "there are huge opportunities to take away business from existing players in all different kinds of goods. Or for existing players to expand their markets if they are paying attention." (p. 1) Connectivity applications span "cities, health care, education, electricity grids," and other critical infrastructure. (Regalado, 2014, p. 1)
Cisco's seven stated strategies for growth include the following: (1) Use it, Know it; (2) Customer migration; (3) Competitive switch-out; (4) Hunting for new business; (5) Cross-sell and attach; (6) Focus on solution selling; (7) Developing new practice. (Cisco Partner Growth Gateway, 2013, p. 1)
Cisco's primary business model is rooted in understanding customer needs. Cisco is reported to have invested significantly in "understanding customer needs around data center evolution." (Cisco Systems, 2012, p. 1) This approach—providing for the ongoing and continuous needs of their customers through understanding how they need their systems to evolve—forms the foundation of Cisco's competitive positioning in the IoT space.
Chatman, O'Reilly and Chang (2005) report that Cisco has utilized human capital in the company to gain a competitive edge over its competition. Cisco's growth during the 1990s was phenomenal, and the organization's primary challenge became the need to "acquire the management talent needed to handle this growth." (Chatman, O'Reilly, and Chang, 2005, p. 138)
In the later part of the 1990s, Cisco developed a reputation for its "extremely aggressive acquisition strategy." (p. 140) Cisco's acquisition process involved identifying targets "as engineering companies that were first or second in their respective markets." (Chatman, O'Reilly, and Chang, 2005, p. 140) Through these acquisitions, Cisco integrated new companies' technology with their own and "supplemented it with its own marketing and support expertise." (Chatman, O'Reilly, and Chang, 2005, p. 140)
This acquisition strategy enabled Cisco to gain new knowledge, expertise, and human capital. When combined with their own capabilities and their excellent customer service reputation, Cisco harnessed a comprehensive set of resources and competencies that have positioned it as a technology leader. Kaplan, Norton, and Rugelsjoen (2010) note the importance of alliances in business in order to succeed. According to Kumar (2012), "an alliance or partnership is a relationship between two or more entities to pursue a set of mutually agreed upon goals or to fulfill a critical business need…" (p. 31)
Cisco has developed the Partner Growth Gateway as a strategic tool for enabling customer and partner growth. Cisco reports that their Partner Growth Gateway enables their customers with the ability to self-serve their needs "with all current and relevant Cisco assets." (Cisco Systems, 2014, p. 1) The Gateway "retrieves the relevant Cisco tools" to assist partners in uncovering unified communications (UC) opportunities with the installed base. (Cisco Systems, 2014, p. 1)
Partners and customers are able to "see the latest offers and promotions with relevant sales brochures and demand-generation materials for new UC products." (Cisco Systems, 2014, p. 1) The Partner Growth Gateway "integrates assets from all parts of the Cisco business" and provides "end-to-end support from the start of a sales cycle engagement to after-sales support." (Cisco Systems, 2014, p. 1) Based on partner and customer input, the Gateway generates "a customized Execution Pack with links to relevant Cisco assets" that assists the partner and customer in fulfilling their needs and brings about simplification in doing business with Cisco.
The Gateway places partners and customers in control "with a framework to plan for business growth" and enables them to execute their own strategies for growth at their own pace. (Cisco Systems, 2014, p. 1) The assets and resources available through the Partner Growth Gateway include: (1) Partner Enablement tools and resources; (2) Promotional offers; (3) Demand-generation tools and campaign assets; (4) Cisco Incentive Programs; and (5) Knowledge base of competitive resources. (Cisco Systems, 2014, p. 1)
The Cisco Partner Growth Gateway Advantage includes three key benefits: (1) Enhance growth and profitability—The Gateway's framework aligns Cisco assets with seven proven growth strategies and highlights relevant incentive programs to leverage for greater profitability. (2) Easier to do business with Cisco—A structured approach to building your Cisco business and enhanced direct access to Cisco assets simplifies the ease of doing business with Cisco. It saves time by finding what you need and showing how each Cisco asset can further your objectives. (3) Greater control—With Cisco Partner Growth Gateway, users chart the best course for their business by choosing the most suitable growth strategies and deciding when and how they want to execute these strategies.
The Partner Growth Gateway functions through a five-step process: (1) Exploration of each of the seven growth strategies; (2) Interactive online tools that prompt users to enter specific information based on their business priorities and competitive situation; (3) Generation of a customized Execution Pack listing current and relevant Cisco assets and incentive programs, aligned to business priorities and needs, organized according to the stages of a typical sales cycle; (4) Development of a plan of action based on the Execution Pack; and (5) Consultation with a Cisco Customer Account Manager (CAM) to refine the plan.
"Mapping Cisco practices to Thompson's ten-component execution framework"
"Customer-focused culture and John Chambers' transformational leadership role"
Cisco Systems has accomplished the goal of creating partnerships with its customers and through strategic acquisitions has gained additional knowledge and expertise. This has resulted in Cisco leading the way for the implementation of the Internet of Things (IoT), which represents the next advancement in technology applications and solutions across a broad range of society, including community, health, business, education, and security solutions.
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