Cisco’s new organization design

Cisco's CEO, John Chambers, is taking the company into new forms of organization design. At least, according to an article published in The Economist on August 29. It describes the new design, which combines a functional structure with cross-functional groups, as

'an elaborate system of committees made up of managers from different functions. The job of most of these groups is to tackle new markets. "Councils" are in charge of markets that could reach $10 billion. For "boards" the number is $1 billion. Both are supported by "working groups", which are created as needed. There are about 50 boards and councils with some 750 members. Cisco has given up counting the working groups, because they come and go so quickly. '

Cisco was featured in a Fast Company article a year ago (September 2008) where the same design was discussed:

"The goal is to spread the company's leadership and decision making far wider than any big company has attempted before, to working groups that currently involve 500 executives. This move, Chambers says, reflects a new philosophy about how business can best work in a networked world.

Pull back the tent flaps and Cisco citizens are blogging, vlogging, and virtualizing, using social-networking tools that they've made themselves and that, in many cases, far exceed the capabilities of the commercially available wikis, YouTubes, and Facebooks created by the kids up the road in Palo Alto.

The bumpy part — and the eye-opener — is that the leaders of business units formerly competing for power and resources now share responsibility for one another's success. What used to be "me" is now "we." The goal is to get more products to market faster, and Chambers crows at the results. "The boards and councils have been able to innovate with tremendous speed. Fifteen minutes and one week to get a [business] plan that used to take six months!"

It's a bold experiment and one that traditionally designed organizations should be watching closely – far too many of them are timid about thinking differently about their organisation designs – they're willing to consider innovation in service delivery or product design but much less willing to consider (let alone adopt) anything that might upset established hierarchies, power balances, and practices.