Doing Business in Real Time
About this Blog:
The global economy has a life of its own, it lives in real-time, and we are all part of it. Hello brave new world.
Cisco Gets Business Agility
Decision making is highly decentralized in agile organizations
Agility is no longer just an interesting idea to chat about while continuing to do business as usual. The days of the traditional pyramid shaped corporate hierarchy as a viable business model are coming to an end. The last twenty years have produced some winners and some losers and some of the biggest losers are companies that built themselves into huge conglomerates that were supposed to be too big to fail. Instead they are proving the truth of the saying, “The bigger they are the harder they fall.”
It’s not that companies can’t be big and grow revenue to many billions of dollars, it’s just that they have to swear off that fatal tendency to organize themselves as hierarchical pyramids where most people are powerless drones who just follow orders while the important decisions are made by a small group of powerful executives at the top of the pyramid. Given the pace of change, no small group of executives regardless of their smarts, hard work or fancy computer systems can make all those decisions in a timely or competent manner.
[ I do lively presentations on this and related topics - mhugos@yahoo.com ]
People at the top of corporate hierarchies are overwhelmed by the shear volume of decisions they have to make; they are too far away from the scene of the action to really understand what's happening; and by the time decisions are made they are usually too little and too late. Companies suffer the consequences of this performance by staggering from one bad decision to another like punch-drunk boxers who can't understand what's happening and can't understand why they keep getting hit.
Cisco got hit hard in the collapse of the last bubble - the dot com bubble - when their stock went from around $77 a share to around $11. But they took that opportunity to learn some lessons that lots of other companies are only now starting to consider. Because human nature is what it is, it often takes a smack-up-side-of-the-head event to send a wake up call and get us to consider new ideas and try out new ways of doing things.
Yet the good news is we really can learn from mistakes when we decide to do so. The cover story in the current issue of business magazine Fast Company chronicles what Cisco has learned, it’s titled “How Cisco’s CEO John Chambers is Turning the Tech Giant Socialist”. It’s not that they are really turning socialist. It’s that they are trying something new and before their smack-up-side-of-the-head wake up call, they would have dismissed it as unworkable and labeled it with an unkind word like socialist in order to justify not considering it.
Cisco used to be a traditional pyramid shaped corporate hierarchy where all the important decisions were made by 10 executives at the top of the organization chart. Then they fell on hard times. What has emerged in the last several years is an agile enterprise with a network organization structure (not a heirarchy) where decision making is decentralized out to some 500 managers and the whole operation is powered by Web 2.0 collaborative technology like blogs and wikis and social networking tools, some of which they’ve built themselves and are more powerful than the commercially available tools.
Now instead of a small group of executives telling everybody else what to do, people have authority to figure out for themselves what to do (hmmm... maybe Chambers read one of my posts from 2007 "Leadership for the Agile Organization"). People are
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