Opening Case

John Chambers is the CEO of Cisco Systems. His legacy at Cisco will not soon be forgotten. As one writer puts it, "Perhaps no CEO in history has risen so high, fallen so hard and come back so quickly."1 After Chambers became CEO in January 1995, Cisco's dominance and competitiveness in the industry was so strong that it led to the early exit of quite a few competitors. BusinessWeek named Cisco one of the Top 50 market performers, Fortune magazine designated Cisco one of America's "Most Admired Companies," and Forbes magazine called Cisco one of the "Leading Companies in the World." Business Ethics Magazine listed Cisco as one of its "Business Ethics 100 Best Corporate Citizens."2 However, it has not been a smooth ride the whole way. Beginning in early 2001, things started to change. A number of telecom companies and Internet service providers--some of them Cisco's biggest customers--were experiencing major declines in sales and profitability. As a result, they stopped buying Cisco equipment. The negative effect on Cisco's performance caused some industry experts to question Chambers' leadership abilities. Chambers remained unmoved. His strategy for resurrecting Cisco was twofold: first to downsize the company by making deep staffing cuts immediately, and second to implement a new organizational structure focused on cross-divisional teamwork and collaboration at all levels of the company. Underperforming products were eliminated as part of Cisco's recovery. In making his case for change, Chambers said the future belongs to those who collaborate. There is a great need for the type of collaboration that bridges traditional geographic, institutional, and functional boundaries, he said. In a world characterized by the need for corporate agility, global competition, and the rise of emerging markets, the focus on collaboration both within and among organizations is imperative. Chambers maintains that collaboration among functional groups and organizations will help companies become more productive and innovative.3 Cisco's recovery is largely attributed to Chambers' leadership and brilliant strategic mind. He is said to be an excellent communicator and motivator. Cisco's comeback has caused some analysts to suggest that Chambers has ascended to a rarefied level, up with the likes of former CEOs Jack Welch of General Electric and Andy Grove of Intel.4

Opening Case Questions:

1. What would be the evidence that Cisco is a team of employees and not just a group of workers?

2. What characteristics of team leadership does John Chambers possess that make him so effective? 3. What role did organizational support play in the success of cross-divisional teams at Cisco?

4. One of the characteristics of effective teams is that they are creativity driven. How important is creativity to Cisco's success?

5. Why did John Chambers see cross-divisional teams and collaboration as the solution to Cisco's problems?

6. What evidence is there that the cross-divisional team structure at Cisco has worked so far?

7. Do you think John Chambers is the type of leader who would embrace self-managed teams? Explain your answer.