Would you give up some of your authority and responsibility if it resulted in accomplishing more?
For the better part of a decade, management gurus and business strategists have been advising business leaders to do no less.
Not surprisingly, there's been a lot of push-back against "decentralized decision making," which some business leaders view with suspicion. Relinquish power and influence after spending years trying to amass it? Not likely, many say.
But the debate about whether to share power or hold fast to it is evolving. Instead of choosing between a traditional command-and-control management model, or a more egalitarian one, smart business leaders are embracing the power of the "and." That's what we are doing at Cisco, where I have been served on the executive leadership team for the past 15 years.
For much of its history, Cisco operated with a traditional command-and-control management model. We relied on senior vice presidents, vice presidents, directors, and so on to make decisions, channeling power downward through a hierarchical pyramid of authority.
The benefits to this model were many. Among other things, the structure allowed Cisco to scale its best practices and drive accountability throughout the company. These disciplines served us well during the heady growth years of the 1990s, when billions of dollars and thousands of employees poured into the company and a few product lines drove the majority of revenue.
But the need for something more became apparent when the company expanded into telephony, the consumer market and beyond. Suddenly, important decisions began lining up on the desks of company executives like planes waiting for clearance at an airport.
That's when the leadership team decided to drive decision making deeper into the organization. But instead of abandoning our traditional management model, Cisco did something truly unique: It adopted a two-pronged model that combines the efficiency and accountability of a command-and-control hierarchy with the creativity and flexibility of a decentralized model.
This corporate structure isn't a choice between command-and-control or decentralized decision making, but a judicious blend of both. By blending the best of both models, Cisco can better anticipate opportunities and prepare for challenges, rather than merely reacting to them.
Here's how it works.
Adjacent to its traditional management structure, Cisco established a new leadership mechanism, which draws upon key influencers from across the company. Their mission: Set strategy across key customer segments and market transitions and make quick course corrections when needed. To accomplish their work, the influencers participate on cross-functional teams. These teams are accountable for revenue growth, profit contribution, customer satisfaction, and market share in their customer segments, while the traditional business functions maintain responsibility for efficient functional execution in support of these goals.
Thanks to these interlocking management models, Cisco has significantly accelerated its work.
Take emerging countries. In 2006, I helped create the Emerging Countries Council (ECC) to support Cisco's efforts in Brazil, Russia, India, China, Latin America, the Middle East and Africa. At the time, we had just launched our new Emerging Markets region, which reported into Cisco's traditional leadership hierarchy. That region had wide responsibility for almost everything that Cisco does in emerging countries. But what it didn't have is the authority to command other parts of the company to work on its behalf. That's where the council lent a hand.
The ECC worked with key functional leaders to set a vision and strategy, and then reached across internal silos to engage manufacturing, legal, IT, and other parts of the company. What is the best way to serve customers who speak Pashto, trade in Afghanis, and have technology needs in Afghanistan, where you need clearance from the U.S. Department of Defense just to make contact? The council helped figure it out. There were dozens of challenges like this.
The council established supply lines, institutionalized accountability and aligned functions. When the ECC determined that the sales efforts in the field needed additional financial support, the council secured an additional $58 million for emerging countries in 2007, a year of tight budgets.
Results were immediate.
In its first full year, the emerging countries business grew by more than 30 percent, and momentum continued thereafter. Over the first two years, Cisco entered more than 30 new emerging countries.
Could such a dual management model benefit your company? I believe that it can. The key is operating both models simultaneously and leveraging each for the betterment of the other.
Authoritative leadership or democratic decision making? At Cisco, we're doing both.
Inder Sidhu is the Senior Vice President of Strategy & Planning for Worldwide Operations at Cisco, and the author of Doing Both: How Cisco Captures Today's Profits and Drives Tomorrow's Growth. Follow Inder on Twitter at @indersidhu.
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