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:
- 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;
- The move of EVP Wim Elfrink and 20 other senior executives to Bangalore; and
- 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.