Wednesday, August 12, 2009

Are Cisco’s Committees a Better Way to Innovate?

Most observers agree that large companies aren’t optimally organized to innovate. What’s less clear is a better alternative to current organizational designs.

An article in the Wall Street Journal last week about a radical organizational experiment at Cisco Systems kicked off a fierce debate on this topic. The article described how Cisco has moved from a traditional top-down hierarchical structure to a more
amorphous structure build around close to 60 different committees.

At the top of the organization sits an “Operating Committee” of 16 top executives, including Chief Executive Officer John Chambers. Twelve “Councils” with an average of 14 senior leaders report to that committee. Close to 50 “Boards” with an average of 14 less senior leaders report to the Councils (except for four Boards that report directly to the Operating Committee).

The more amorphous structure allows Cisco to bring together leaders from across its business to tackle critical problems, such as selling to small businesses. Of course, all these committees take time — estimates suggest that some senior leaders spend 30 percent of their time dealing with issues raised in committees.

It’s certainly different, but is it good for innovation? Most pundits don’t think so. For example, Silicon Alley Insider’s Henry Blodget sprinkled an article titled “Has John Chambers Lost His Mind?” with words like “nutbag,” “insane,” and “awful.” Author and consultant Geoffrey Moore told the Journal, “Right now it’s chaos because there’s so much on everybody’s plate.”

Generally speaking, I look for a structure that addresses five inter-related problems.

Read the rest at Scott’s Havard Management blog, Innovation Insights.

Scott D. Anthony is managing director of Innosight Asia-Pacific.

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