Cisco’s roller coaster 2012 was due in part to the Eurozone crisis that took a heavy toll on network spending and a subdued US market. It seems set for a better 2013 due to restructuring initiatives, undertaken during 2012, and more favorable prospects in its U.S. market.
Analysts at Forbes report that Cisco has scaled back its ambitions to diversify into 30 new businesses and instead is focusing on those areas that add value to its core routing and switching businesses. As a result, it has restructured its operations and cut jobs in areas that are not its core focus, making the organization leaner and more efficient. It helps Cisco to benefit more from the long-term growth trends of data demand and cloud computing. The analysts report that Cisco’s
“fundamentals remain solid due to the ongoing transition from wired to wireless networks, the burgeoning usage of data on both mobile and wired networks as well as a strong demand for cloud-computing routing solutions on the enterprise side.”
Cisco has also announced the acquisition of Meraki, a smaller networking firm that provides cloud-based services to small and mid-sized companies. This acquisition gives Cisco a big opportunity to tap into the fast growing mid-market segment as well as use Meraki’s product line to create a compelling cloud-based platform for bigger customers down the road. With businesses increasingly looking to move to the cloud and networks becoming more software and cloud-focused, Cisco’s move will help it address changing trends and compete better with fast-growing rivals such as Aruba Networks. Alcatel Lucent’s recent foray into core routers also poses a risk for Cisco.
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The omens are good for Cisco, but the combined effects of restructuring, refocusing, acquisitions and more aggressive competitors place substantial strain on the resilience of its culture.
While senior management might be clear on strategy and focus, does strategic alignment exist across the reduced workforce and the recently acquired Meraki?
Has the company retained its innovative customer-centric culture? Is the company measuring and benchmarking its customer-centricity to identify any potential weaknesses and associated risks to growth and profitability?
For Cisco to gain the momentum that analysts expect it will need to ensure its strategic re-alignment is embedded in all parts of the business. This means that all employees and contractors need to understand what the strategic focus is and how it translates into their everyday work. They then need to consistently act to support it and the goals of the business by providing superior value to customers.
There is no room for complacency at Cisco. We have seen the havoc that has been wrought on Hewlett-Packard’s culture and its subsequent business performance through acquisitions and frequent refocusing in recent years.
Do you have strategic alignment embedded in your business?
Has your business undergone restructuring and refocusing in the last 2 years?
Do people in all functions and groups know your vision and strategy and exactly how they are supporting it in their everyday work?
The only real way to find out is to measure and benchmark your level of strategic alignment.