Will Cisco Restructuring Stem Talent Exodus?

Susan Hall

Cisco has announced a restructuring to streamline its sales, services and engineering organizations to drive growth in five areas: routing, switching, and services; collaboration; data center virtualization and cloud; video; and architectures for business transformation.


During a quarterly earnings call, CEO John Chambers talked of "tough decisions" ahead and followed up by axing parts of its consumer business, including the Flip video camera.


A story at Bloomberg, however, points to the exodus of key executives dissatisfied with the council structure that Chambers put in place in 2005. Mike Volpi and Charles Giancarlo, both considered potential successors to Chambers, left in 2007. A rash of other executives have departed since.


The story quotes Robert Ackerman, founder of venture firm Allegis Capital, which has sold three companies to Cisco, saying:

They've got a culture that frustrates talented people. They've got a lot of talented people feeling like they're beating their head against the wall.

The article describes the council structure this way:

Unlike the traditional command-and-control management structure Cisco used to have, a series of interlocking councils would have the authority to tap resources from around the company without having to wait for Chambers's approval.

It also required petitioning groups of people for departmental budgets, which slowed decision-making and left managers without full control of their units, the story says.


In the restructuring, the councils are being realigned into three: Enterprise, Service Provider and Emerging Countries. The company press release also says:

Resource allocation and profitability targets will move to the sales and engineering leadership teams which will have accountability and direct responsibility for business results.

The Bloomberg story quotes Simon Leopold, an analyst at Morgan Keegan & Co., saying Chambers "definitely has a credibility problem." Julie Bort at Network World also questions whether Chambers is still the man to lead Cisco.

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