January, 2010

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The Payoffs of Cisco’s Globalization Odyssey

Sunday, January 31st, 2010

In my last blog, I outlined Cisco’s ambitious globalization plans, its plans for establishing Cisco Globalization Center East in Bangalore as a corporate co-headquarters and its longer-term plans for building a network of globalization centers that will not only globally distribute the company’s workforce, but also its management team. This blog looks at some of the challenges Cisco faces in its globalization efforts and how it is addressing them, the opportunities its expanded global presences is creating and some of the lessons that its experiences may provide to other companies.

Challenges and Solutions

Cisco certainly faced many of the same challenges that all companies face when building a major presence in India. It had to navigate the government‘s infamous bureaucracy, compensate for and adjust to the country’s deficient infrastructure and inconsistent education system, and find a way of managing the 12½ hour time zone difference between India and the company’s California headquarters. It also had to adapt to cultural differences between Indian and Western employees. These include the difficulties that many Indian workers have delivering disappointing news and providing candid feedback, their deference to corporate executives and the disappointment and even shame they experience in adapting to the Cisco tradition of lateral organizational moves (versus promotions to higher level jobs and titles).

Cisco, like many other companies establishing an Indian presence, has addressed these traditional challenges. It faced greater challenges, however, from the tricky governance challenges that arose from the combination of two Cisco-specific issues:

  • Its highly matrixed organizational structure and its extensive use of councils and boards (see, for example, the July 2009 McKinsey & Co interview with John Chambers) which is highly dependent on frequent, often spontaneous communication and collaboration among managers and executives from all across the organization; and
  • Its decision to globally distribute its executive and management team, as well as specific functions to India and other countries.

Its first governance challenge was to ensure that all of its employees would accept and adapt to the increasingly central role that the Indian center would play in the organization. This required an immediate, high-profile validation of the role of the Indian organization and the need to incorporating it and its managers and executives into all appropriate decision processes. Cisco built the credibility of the Indian organization in three steps:

  1. Its high-profile promotion and launch of the facility as the greenest and most technologically advanced of all Cisco sites, its role as one of the company’s most important customer/partner demonstration and education centers and its being the home of what will soon be the company’s second largest R&D facility and by the actions of two particularly critical executive sponsors;
  2. The move of EVP Wim Elfrink and 20 other senior executives to Bangalore; and
  3. John Chambers’ ongoing elaboration of the importance of Globalization Center East and his hosting of Cisco’s 2008 company meeting in the complex.

The next challenge was to identify how to maintain, or adapt, the company’s traditional freewheeling, real-time communication and collaboration process when critical members of each team are located halfway around the world, with no shared work hours. Would communications patterns change or would more and more meetings be conducted (and decisions reached) without participation by remote group members?

Cisco’s own technologies, including its Unified Communications solutions, WebEx conferencing and TelePresence videoconferencing systems, certainly helped. But technologies alone are not sufficient to change established processes or corporate cultures.

Cicso began its global communications began in the normal way, trying to schedule meetings at times that were only minimally inconvenient for each party, such as 6:00, 7:00 or 8:00 AM/PM. There were, however, far too many conference calls for far too few time slots. And since there were typically far more participants in the U.S. and Europe than in India and China, calls were increasingly scheduled throughout the night (Indian time) and early Saturday mornings (Friday afternoon in California). India-based executives were getting worn out and were losing sleep and family time. Although Wim Elfrink had a Telepresence system installed in his home, this only moderately reduced the burden. Nor was Cisco prepared to provide this same, very expensive luxury/incursion for all its India-based managers and execs.

The solution? John Chambers ordered that no calls would be held after 11:00 PM in any time zone and that the burden of calls outside of work hours must be spread across geographies, so that everybody would end up making similar compromises.

The Opportunities of Globalization

While the launch of the Bangalore center presented some obstacles that had to be overcome, it also provided Cisco with some important new opportunities. As I discussed in my last blog, the first and the single most important reason for Cisco’s dramatically expanded Indian presence was to accelerate the company’s growth in Asian and other emerging markets. Cisco claims that this investment is already paying off, such as by providing a presence and allowing it to incubate Asian ecosystems that were instrumental in capturing big, strategic accounts. These include Smart Building wins in China, Smart City wins in Saudi Arabia and Smart Education wins in Qatar. (I’ll cover such projects in more depth in a future blog). It is also working on a number of other projects, such as Korea’s Songdo Smart City and Malasian WiMax (with YTL) implementations, that have the potential of creating other huge new global growth opportunities.

Cisco’s commitment to Asia has also allowed the company to extend relationships with current Indian SI partners and to create new joint market initiatives, as with Tata around security and Wipro in addressing Middle Eastern markets.

Establishing the Indian co-headquarters also gave Cisco a powerful new tool in developing a new generation of globally-aware managers and executives. The initial expansion has already contributed to globalizing the traditionally Western-centric corporate culture. Meanwhile, moving Wim Elfrink and other executives to India helped increase Cisco’s visibility into other countries and emphasize the importance the company places on doing business in emerging countries. Of course, it also provided a new high-profile opportunity to gain experience in other geographies. And, as a somewhat unexpected bonus, Cisco is already finding that many employees who transfer to India are more willing to remain in India or transfer to another Cisco emerging country site, than they are to return to San Jose.

The growing role of expats is also a critical tool in spreading the company’s culture to new offices and employees. This was initially done by sending U.S.-based employees to India. India, however, is now emerging as a training ground for Cisco employees in—and the transfer of new technologies and solutions to—other emerging countries, such as the transfer of Smart Grid and Smart Community experts and concepts from India to South Korea.

Leveraging Its Learnings

As I mentioned in my last blog, this is only the first step in Cisco’s plan to transform the company into a fully geographically distributed, global enterprise. Although it entered this expansion without a big, formal central design, Cisco has learned many lessons that will be increasingly institutionalized in future globalization efforts. It is also studying experiences of other global companies, such as Coca-Cola and, especially GE, to help facilitate its learning process.

This will not only help Cisco help itself, it will also help it to help its customers—companies that, like Cisco, recognize the need to decentralize their management structure and globalize their operations. Most companies, however, don’t have the technology, the architectural capabilities or the experience to engineer these transformations themselves. Cisco, in the spirit of its self-defined transformation from “Internet plumber” into “trusted business advisor”, is preparing to help these other companies as well as itself.

Posted in 21st Century Careers, Business Trends, Cisco, Creating the 21st Century Workforce, Globalization, Immigration and Offshoring, IT Company Strategies, IT Industry and Companies, IT Industry Trends, STEM Careers, Technology's Impact on Job Skills, Workforce Trends | No Responses »
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The Globalization of Cisco: Emergence of a Corporate Co-Headquarters

Sunday, January 24th, 2010

Globalization, as I have discussed in a number of recent blogs and reports, is rapidly becoming one of the defining attributes of knowledge work. It is also rapidly becoming one of the defining attributes of dynamic, growing companies.

But what is globalization? What are the attributes of a global company and what does the process of going global mean for a company’s employees?

Before describing what globalization is, let’s first examine what it isn’t. It is not labor arbitrage—the shifting of manufacturing facilities and process-based business functions (such as payables processing and accounting) to less expensive locations. Globalization is much more. It is a deep, sustained corporate commitment to decentralizing the company’s operations, diversifying its markets, distributing its business and management processes, and globalizing the corporate culture.

Consider the example of Cisco, a company that is effectively transforming itself from a U.S.-centric multinational corporation (MNC) into globally integrated enterprise (GIE). True, Cisco is not the first company to go global, nor does it have a huge global footprint, especially when compared with IT services giants such as Accenture or especially IBM. But like most of the company’s ambitions, its globalization ambitions are bold and unconventional.

Going Global

For years, Cisco has sold globally and operated overseas facilities. Yet, it based its corporate management team in the U.S., and made virtually all major corporate decisions there. The company’s plan to transform itself into a truly global company, with a global culture, globally-integrated management process and global growth strategy emerged in late 2006, with the board’s authorization of a plan to open a “second corporate headquarters” in Bangalore India.

This new globalization center is not about labor arbitrage. Cisco neither migrated existing operations, business processes nor functions from the U.S. to India. Although reduced costs are certainly a bonus of its globalization efforts, it created the Bangalore center to support net new corporate capabilities and to address three fundamental corporate goals, to:

  1. Accelerate growth in emerging markets (especially Asian) during a period in which emerging countries promise to grow much more rapidly than traditional developed country markets and to incubate some of the company’s most promising new growth businesses;
  2. Drive new levels of innovation by designing products in/for emerging markets and by exposing the company to new business opportunities and business models; and
  3. Capture increasingly scarce talent in a world where employable labor forces in general, and technically educated workers in particular, are growing much more rapidly in emerging countries than in developed countries.

Why Bangalore? First, Cisco, and a number of the companies it acquired, already had operations in the city. Second, and more importantly, India is a huge market and within 5 hours, one can fly from Bangalore to 70% of the world’s population and most of the world’s most dynamic and rapidly growing economies. Moreover, India has a large and rapidly growing base of well educated, English-speaking talent, some of the world’s best technical universities, and a judicial system that respects intellectual property.

The Roles of Globalization Center East

The center, which opened in 2007, is also one of Cisco’s showcase corporate facilities. It is the greenest building in the company and the first to be totally IP-enabled. It delivers a broad range of video service—including video healthcare—directly to employee desktops and serves as one of the company’s premier customer centers and a showcase for all of its new offerings.

More importantly, the facility, which currently houses 5,000 people, provides a full complement of corporate functions and a rapidly growing percentage of the company’s top executives. This includes large numbers of managers and directors, 14 Vice Presidents and Wim Elfrink, Executive Vice President of Cisco Services and the company’s Chief Globalization Officer.

While this executive contingent certainly includes people responsible for the company’s Indian operations, its overall emerging country growth and the company’s overarching globalization strategy, it also includes executives with broader corporate responsibility. Elfrink, for example, is responsible for the company’s entire services business, which accounts for 20% of Cisco’s total revenues. Other Bangalore-based executives manage global initiatives including Smart Connected Communities, Connected Real Estate and Advanced Services.

Bangalore-based executives are intimately involved in all types of corporate decisions. They sit on virtually all of the company’s councils and boards and sometimes drive initiatives that have only ancillary links to India or emerging countries, including the acquisition of at least one U.S.-based company. Bangalore is also taking the global lead in some of the company’s most promising growth opportunities, such as those around smart buildings, smart cities and smart grid.

Cisco’s 4,500 person Bangalore R&D center also plays an increasingly global role. Roughly 40-45% of its activities focus on designing new or adapting current products and services for emerging country markets, 40-45% on developing leading-edge offerings (including a central role in developing the company’s line of Nexus data center switches) for global markets and only about 10% focus on India-specific offerings.

The Future of a Global Cisco

Although the opening its Globalization Center East center was certainly a critical step in transforming Cisco from an MNC into a GIE, it is only a step. The company plans to grow the center from 5,000 to 10,000 people and to dramatically expand its role in developing new markets and products and in training a new generation of truly global managers and executives. John Chambers, for example, has committed to locating at least 20% of Cisco’s to talent in India by the end of 2010 and to ensuring that center will play a co-equal role in shaping the future of the entire company.

But regardless of how big and important the Indian operation is likely to become, it is only a first step to transform Cisco into a truly global company. It is likely to establish additional global centers in the future. China, meanwhile, will also play an increasingly central role. It is likely to become the company’s primary manufacturing hub and home to market initiatives such as Smart Cities.

Although each center will focus on technologies and growth opportunities of particular concern to regional customers and on global functions and processes to which the region’s talent is best suited, each center is also expected to play a central role in the management of the entire company. Each will house large and growing numbers of corporate (in addition to regional) executives and participate in the geographically distributed business model to which Chambers is committed, and to which he is now piloting in India.

Plans are great. But nothing, especially something as radical and unprecedented as Cisco’s globalization strategy, goes quite according to plan. As I will discuss in my next blog, the company has already learned a number of lessons from its initial efforts—lessons that will be critical not only to Cisco’s next globalization steps, but also in those of other companies.

Posted in 21st Century Careers, Business Trends, Cisco, Creating the 21st Century Workforce, Globalization, Immigration and Offshoring, IT Industry and Companies, IT Industry Trends, Workforce Trends | No Responses »
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Tom Kucharvy’s 2010 Research Agenda

Sunday, January 17th, 2010

The IT Industry’s Role in Addressing the U.S.’ Technology Skills Gap: How the industry can secure its own future while providing unique value to employees, customers and society

Over the last six months, I have focused my research around two broad questions:

  • What types of skills will U.S. knowledge workers require to build careers that will deliver the highest value and be most sustainable in a global knowledge economy?
  • What must individuals, schools and corporations do to prepare for these jobs?

I recently wrote a report “IT Companies as Catalysts in Creating the 21st Century Workforce”, which I summarized in my January 11 blog. While working on it, I was particularly struck by three key conclusions:

  1. The particular risks that the IT industry will face from a paucity of required skills and the unique role the IT industry can play in creating the next generation workforce;
  2. The combination of foundation skills (including IT, Internet, math and communications) that all knowledge workers will require and how these skills can be most effectively taught and learned;
  3. The critical role that multi-faceted academic (especially university)/private sector partnerships must play in designing and delivering curricula that prepare knowledge workers for tomorrow’s careers.

I have certainly learned a lot from my research over the last six months and, hopefully, readers have valued from my posts and reports. Ultimately, however, this research ended up doing what most research does—it raised more questions than it answered. Some of these new questions are forming the foundation of my 2010 research agenda.

Here’s a peek into what I’ll be working on in 2010.

Q1 2010 Research Agenda

My 2010 research will continue to examine the changing nature of knowledge work in the 21st century and the requirements for the U.S. to build a workforce that will be truly competitive in the Global Knowledge Economy. I will, for example, drill down into a number of issues that I have touched on in my 2009 research including:

  • The skills and attributes individuals need to compete in a world in which knowledge work is increasingly defined by global competition, the automation of increasingly discretionary tasks, a deluge of data and information and the need to collaborate in increasingly fluid physical and virtual teams;
  • The relative roles of academia and the private sector in developing these skills and in creating and enabling the environments in which individuals can contribute ever higher levels of value;
  • The increasingly central role that the IT industry is playing in redefining work requirements and environments and the unprecedented opportunities for IT companies to shape the workforce in accordance with their and their customers’ needs.

Among the primary issues I plan to explore are:

  • Emerging best practices for recruiting, developing and retaining effective knowledge workforces
    • What approaches are proving to be most effective for companies—especially IT companies—in building and maintaining effective development, sales and services teams?
  • Opportunities for building high-payoff private sector/university partnerships
    • What expectations, contributions and commitments must each party bring to effective relationships, what best practices are emerging for collaborative curricula, course and platform development, research and recruiting?
  • Private sector roles in addressing primary and secondary math and science gaps
    • Although university education is critical, educators must instill interest and teach the basic math and science skills on which university educations can build. What role can IT firms play in enabling and facilitating these efforts? What rewards can they gain?
  • Using technology to improve the education process
    • Which types of technologies and techniques can be most effectively employed in schools and universities and how they can best be acquired, taught, implemented and managed?
  • The roles of IT service providers in addressing customer skills shortages
    • How can IT service providers best help clients evolve their own workforces, supplement their skills gaps and prepare new generations of business architects, technical professionals and CIOs?
  • Building and enabling an “innovation workforce”
    • What are the combinations of technology, management practices, collaborative processes and industry skills that will be required and what role can the IT industry play in developing these skills within companies, in conjunction with universities, and across ecosystems and technology and community clusters?
  • The roles of government in addressing—and exacerbating—the U.S.’s technology skills and innovation gaps
    • Can federal, state and local government organizations play productive roles in laying the foundations for addressing educational needs and enabling potential growth industries, or should they just stay out of the way?
  • The IT industry as test bed and role model for new private sector skills initiatives
    • IT vendors are among the leaders in establishing successful private sector/academic partnerships and in developing systematic employee skills development programs. What role can they play as role models for, enablers of or coaches in helping other industries?

Although my primary interest is in understanding the skills that will be required for sustainable 21st century careers, and the roles that IT companies can play in preparing U.S. knowledge workers for these careers, even I do not live on workforce development alone. After 30 years in the IT industry, I still have a deep interest in, and retain an irresistible drive to express my opinion on any of a broad range of industry-related issues. So, interspersed with blogs about jobs, skills, university programs and the globalization of knowledge work, you can also expect occasional discourses on important IT company initiatives, industry trends and especially, the unique opportunities for IT service providers to address a broad range of business and societal needs.

Posted in 21st Century Careers, Business Trends, Community/Other Colleges, Corporate Social Responsibility, Creating the 21st Century Workforce, Education System and Institutions, Globalization, Immigration and Offshoring, IT Industry and Companies, IT Industry Role in Education, IT Industry's Role, Job and Career Opportunities, K-12, Other Schools, Skills Requirements, STEM Careers, Technology's Impact on Job Skills, Universities and Grad Schools, Workforce Trends | 2 Responses »
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IT Companies as Catalysts in Creating the 21st Century Workforce

Monday, January 11th, 2010

The following is a high-level summary of a more detailed report that summarizes the findings of six months of research into the changing nature of U.S. knowledge work and the requirements for creating a generation of knowledge workers who will not just be able compete, but will not be able to add differentiated value in a global knowledge economy. For a free copy of the full report, click here.

We’ve all seen the statistics and the anecdotes surrounding the declining technical skills of American workers. Although unemployment is at record highs, many positions go fulfilled for lack of qualified applicants. U.S. student interest and skills in science, technology, engineering and math (STEM) education is plummeting relative to other those in other countries and the U.S. is making it increasingly difficult—and unattractive—for talented foreign students and professions to enter and remain in this country. U.S. manufacturing workers lack the skills to work in new-generation factories and promising green tech firms are leaving the U.S. in favor of countries with larger markets and more sympathetic governments.

Unfortunately, most signs suggest that things will get worse, before they get better.

IT vendors and service providers that are based in or have operations in the U.S. face particular challenges:

  • They will find it increasingly difficult to find sufficient numbers of graduates with appropriate skills and will either have to implement “remedial” programs or increase their use of offshore talent;
  • If IT vendors/providers will have trouble finding skilled people, customer IT organizations are likely to face desperate skills shortages;
  • A decline in math and IT skills among customer’s business professionals threatens to limit appreciation for, experimentation with, and adoption of new IT capabilities.

But while IT vendors face some of the greatest challenges from a U.S. skills gap, they are also the best positioned of any major type vendor to address the problem. These vendors, after all, created and will continue to create the tools that are revolutionizing work. They are also pioneering many of the organizational and business revolutions that transform the work environment of the future. IT companies, for example, have been among the leaders in transforming, automating and optimizing traditional business processes, in disrupting revenue models of traditional industries and in globalizing knowledge work and business processes that few ever dreamed could go offshore.

It’s only logical. Companies that are this involved in shaping and defining the future of knowledge work, are also among the best positioned to understand the skills that tomorrow’s workers will need. Although many such companies are already using their large, established training organizations to directly prepare some of their customers and their partners’ employees, a growing number are going much further.

They are forming increasingly innovative partnerships with universities (and to a lesser extent, all types and levels of schools) to help foster the educating of next-generation employees. Schools, including some that traditionally shunned such collaboration as an infringement on their academic integrity, are increasingly welcoming this help as a means of better preparing their graduates for jobs in one of the most challenging job markets in memory.

These types of partnerships, which can include access to free or low-cost hardware and software, help in designing curricula, courses and Internet-based delivery systems and joint research, are beginning to yield some big benefits to the companies and schools alike. In the end, however, students are probably the biggest beneficiaries.

We are, however, only early in to the second generation of such partnerships. The real benefits—to IT companies, schools, students and to the IT companies’ customers and communities—are still around the corner. So, as discussed in some of our recent articles and reports, some vendors and some universities are already beginning to reap some big strategic and financial dividends from their initial partnerships.

Posted in 21st Century Careers, Business Trends, Corporate Social Responsibility, Creating the 21st Century Workforce, Economic and Political Forces, Economic Forces, Education System and Institutions, Globalization, Immigration and Offshoring, Innovation/Entrepeneur, IT Industry and Companies, IT Industry Role in Education, IT Industry Trends, IT Industry's Role, Job and Career Opportunities, K-12, Skills Requirements, Societal Forces, STEM Careers, Technology's Impact on Job Skills, Workforce Trends | No Responses »
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