Organizational Behavior the First Step Case Study

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For the most part, I would probably not want to work at Cisco. The convoluted structure devalues individual responsibility, which to my mind removes incentive for individual excellence. A manager's output is dependent on others, but there does not appear to be a mechanism to hold underperforming managers responsible. When the team is entirely comprised of internally motivated individuals, Cisco's system will work brilliantly. However, the system encourages managers to be passengers, allowing the best managers to carry the teams to everybody's benefit. The result of this is that over time managers will be encouraged to be passengers and elite managers will leave for organizations where their compensation is more directly tied to their own abilities.

While the textbook description of Cisco's culture does not explicitly outline a problem to be solved, Cisco has to consider the long-term impacts of its current organizational culture and structure. The collaborative approach has increased organizational complexity substantially and but it has also reduced individually accountability. In the short-run, the company has been able to move quickly and expand rapidly. In the long-run, maintaining that organizational vitality is going to be challenging. With reduced accountability, the company may attract or retain underperformers. In addition, this system appears to work only when high levels of energy are present. As products and markets mature, Cisco will have trouble finding that energy internally.

It is also indicated that Cisco wants to move quickly and spent some of its capital. This is not necessarily the best approach. Spending money and making investments should not be the ultimate goal of the organizational structure and culture. Spending in the wrong areas either reduces the return on investment for the firm or introduces distractions such as unrelated businesses. Managers may be encouraged to focus on pet projects, simply because the current structure allows them to do so. What might serve Cisco better is a focus on the strongest projects.

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Managers need to avoid spreading themselves too thin, lest they lose sight of the key profit drivers for the business.

Overall, the current system at Cisco was introduced as a long-term fix to a short-term profit problem. There is significant risk that the current organizational structure does not have long-term legs, that over time the complexity will be too great to manage effectively and that the incentives are not sufficiently focused on individual achievement to allow the company to retain individual star talent. Thus, the key issue for Cisco is probably to ensure that the system can be maintained even as it continues to increase in complexity. Managers in the company today have become accustomed to the system and indoctrinated into the culture. However, it is recommended that more attention to be paid to the artifacts of that culture. The vision and mission statement are useless as far as conveying sense of direction for management or reinforcing culture -- that needs to change. The company also needs to provide more icons of culture to help reinforce how the culture helps the company. This may have been easy to understand following a few bad years, but after some good years -- or worse yet mediocre years -- it is more difficult for managers to understand why they need to put up with the system's complexity and lack of individual accountability. The value of the system needs to be reinforced, not just the structure of the system, in order to provide a continuous flow of energy through the company.

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