Cisco Company’s Network Academy Program and Strategies

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Table of Contents

Executive summary
Introduction
Hypothesis
Problem Statement
Literature Review
Conclusions/Recommendations
References

Executive summary

Cisco is a multi-billion dollar high-technology company, considered the fastest-growing, with a market capitalization of over $200 billion and a low turnover of just 10 percent. It continuously adapts to change and reinvents itself by emphasizing technologies, products, and markets (O’Reilly & Pfeffer, 2000).

Cisco emerged from the dot-com boom, survived when the “bubble burst,” and continued to lead the technological revolution by introducing new software and software applications, technology products that have become industry standards, and applied a unique way of human resource management. It also continues to grow in size by conducting mergers and acquisitions (M&As), but mostly acquisitions of small- and medium-sized corporations. It also has a distinct kind of acquisition of new corporations, i.e. retaining most of the new personnel and making them productive, with new career opportunities in the new environment.

Corporate social responsibility, with its main feature strategic philanthropy, occupies a large portion of “corporate time” for Cisco. Strategic philanthropy is a way of giving opportunities through technology resources for students and youth, mostly those coming from impoverished nations in Asia and South Africa. An aspect of strategic philanthropy is the Cisco Networking Academy, which helps students and youth acquire technology education, online or in a physical classroom, to enable them to learn computer networking and enhance economic opportunities.

This dissertation will conduct a case study on a successful international organization like Cisco. Cisco uses unique organizational strategies to attain a competitive advantage.

Introduction

Cisco has been regarded as a “transnational technology corporation,” one of only a handful of international companies, like Intel and Microsoft, providing technology education to youth and adults, internationally (Patil, 2015). The main product is technology – it connects organizations through its many software applications. An advertisement on its website goes: to connect what is simply not connected – and that is networking (Cisco: Cisco overview, n.d.). In short, their product is a technology that helps connect people and organizations and enhances business functions.

The company’s CSR program, which has been regarded as an exceptional kind of philanthropy, is the Network Academy Program, a worldwide effort designed to teach internet skills to youth and adults (Schmitz, 2007). One of the certified courses is the Cisco Certified Network Associate (CCNA), which is equivalent to 280 hours of instruction and provides knowledge in computer skills and networking.

Aim and Objectives

This study aims to conduct an analysis of Cisco to include its successful strategy.

The objectives are:

To determine Cisco’s strategy in attaining competitive advantage;
To examine how Cisco uses technology and human capital in pursuing its goal;
To investigate how Cisco conducts mergers and acquisitions (M&As), and the process involved.

Hypothesis

Many organizations use technology for operational and functional purposes; Cisco does it differently. It achieves a competitive advantage by using human capital and technology. How this is done is the gist and direction of this dissertation.

Problem Statement

Despite being a technology company, Cisco continues to grow in size and capitalization by acquiring small- and medium-sized companies, and introduce innovations continuously without let-up. This is remarkable in an age where the product life cycle has been shortened considerably, and where markets disappear so quickly. However, from the literature and statements of those involved in major activities inside Cisco, and those who had been there, Cisco does it fast. As one former CEO remarks, “…the fast will beat the slow” (O’Reilly & Pfeffer, 2000). How does Cisco do it?

Literature Review

In the commercial world, Cisco has helped small- and medium-sized industries by providing them access to networking software. It collaborated with Starwood Hotels & Resorts Worldwide, Inc. is introducing Long-Reach Ethernet (LRE) technology to the business world. This is a high-speed use of the internet for hotel guests and employees. Cisco introduced the wireless LAN, which has won several awards and has made strides in different computer software, like the WAN (wide area network), routers and switches. It also collaborated with technology giant Microsoft in developing enterprise architecture security (Jeffrey & Perkins, 2015).

Historical background

Cisco was started by a husband-and-wife team, Leonard Bosack and Sandy Lerner, who first applied innovation to their own computers by connecting them locally; this is what is now called the local area network (LAN). The first LAN did not have the ability “to talk to each other,” which prompted the couple to invent a router or “translator.” Cisco offered its shares to the public in 1990, and began by selling routers, focusing on the LAN (local area network) sector.

These small boxes scanned network data and sent the data to the appropriate email address, through an efficient and fast network path. Since Cisco’s product (routers) could provide networking and connect all sorts of computers, it made Cisco penetrate corporate networks, a feature its competitors did not have. Demand for Cisco routers became so high; they were also considered of high quality since the routers’ life cycle could reach up to 24 to 36 months. The normal life cycle for technology products at the time was a mere 18 months. Speed to market was one of Cisco’s marketing strategies (Chatman, O’Reilly, & Chang, 2005).

In the 1990s, technology companies were successfully developing at a fast pace – Cisco Systems was one of these companies which enjoyed the boom years. It is number one in hardware and software technology. It continued to lead the industry until the twenty-first century; in early 2000, its market capitalization reached $550 billion, and with this unprecedented growth, Cisco has become a valuable, global firm (Chatman et al., 2005). During this period, Cisco’s human resource became a workforce of over 44,000 employees; thus, its greatest challenge was how to manage a growing human resource, as it continued to acquire small- and medium-sized companies. The management problem was not that unsolvable since the acquisitions became a source of management talent for Cisco. Its acquisitions came from competing companies, and the pool of human resources from acquired companies provided talented people that helped Cisco attain more successes (Chatman et al., 2005).

Cisco’s acquisition strategy was a way of developing management, in which managers and employees were given new and larger responsibilities at persistent speed. This fast pace, coupled with responsibility, was described as “scaling and speed – doubling and tripling and a run, run, run mentality” (Chambers as cited in Chatman et al., 2005, p. 138). As stressed by Mohsen Moazami, who once worked as Vice President of the Internet Business Solutions Group, they were not focused on acquiring profit nor concerned about costs, but the company emphasized on finishing things fast. An important strategy was to capture every opportunity as fast as possible, and they used this through their “countless” acquisitions. One vice president described the acquisitions as “picking diamonds up off the floor” (Chatman et al., 2005, p. 138). Because the organization is composed of people who came from acquired companies from the different parts of the world, one journalist remarked that Cisco halls looked like a “mini-United Nations” (Chatman et al., 2005, p. 142).

Cisco became the leader in the router market and LAN and WAN (wide area network) technologies. Cisco acquired about 70 companies in the 1990s, and became the largest company in early twenty-first century, in terms of market capitalization (Yurov, 2008).

Figure 1: Software Defined Networking (SDN) using Cisco routers and Switch technology.

By 1993, some high-powered technologies called switches, which had the capability to perform like those of the Cisco routers, appeared in the market. Cisco simply bought the companies selling the switches, which were known as Kalpana and Crescendo.

Corporate Social Responsibility

Cisco executives would like to call it corporate social responsibility or corporate social investments to refer to strategic corporate philanthropy. Officials at the Center for Corporate Citizenship at Boston College (as cited in Shannon, 2014) conduct biannual surveys of U.S. corporations, as well as frequent surveys of the behavior of the U.S. public in regard to corporate citizenship. The public expects business leaders to be involved in solving problems.

Largely, the survey results show that business leaders:

support a program of strategic philanthropy,
believe that they have a stewardship role, not only to shareholders but also to society,
want to integrate community, social, and external concerns into the daily operations of the business (Shannon, 2014).

However, the means by which those stewardship concerns should be integrated into their business strategies was not known to the respondents. No matter how large their corporate philanthropy budgets, the majority of the respondents stated that their company’s activities were only average, and that their senior management and boards of directors were not really committed to corporate philanthropy (Shannon, 2014).

Cisco’s mission is to be a technology company that everyone prefers and lead competitors in providing customer satisfaction, production innovation, market share, and profitability. Its use of technology is not only for business; the company also delivers it free, like the Cisco Networking Academy, a (CSR) strategy. Cisco calls its CSR strategy a strategic philanthropy.

Strategic philanthropy is just like a win-win solution for business and nonprofit organizations, through which social problems are efficiently addressed and the business realizes economic benefits through its involvement. Otherwise, corporations find it difficult, if not impossible, to make the business case and justify the expenditure of corporate funds on charitable causes as a means of impacting the bottom line (Shannon, 2014). Corporate philanthropy is just one component of corporate citizenship that extends beyond charities to also encompass legal compliance, and external issues such as responsibilities to the environment, suppliers, customers, the workforce, and other stakeholders. However, much of the scholarly literature and recent studies on the many areas of corporate citizenship does not clearly distinguish or report factual data regarding the subarea of corporate philanthropy (Kinnicutt & Mirvis, 2008 as cited in Shannon, 2014).

From an internal perspective, a strategic philanthropy program should be incorporated into the main business of the company. But from an external perspective, a strategic philanthropy program must carefully align with nonprofit organizations that can utilize the company’s talent and whose identities align with the mission and vision of the company (Shannon, 2014).

The Cisco Networking Academy (CNA)

The Cisco Networking Academy (CNA) aims for technology education as it teaches students how to plan and design and actually build computer networks, in order to enhance their economic opportunities in the international circles. The Networking Academy was started in 1997, but was first aimed at helping schools draw most of their resources. This has become Cisco’s largest CSR activity as it encompasses 165 countries with less than a million students benefited each year (Patil, 2015).

The CNA curriculum is delivered by way of the internet, like an online education program, as shown in figure 1 below. Students discover different applications and background information relative to network design. Theoretically, the curriculum uses Howard Gardner’s (1999) multiple intelligences. For linguistic intelligence, students must engage in activities such as informational oral presentations to the class, explaining concepts, and communicating in a group setting to present a network setup to the class. Students must also be able to communicate via email both to members of their presentation group and to the instructor (Schmitz, 2007).

Figure 2: Home Page of the Cisco Learning Network.

Figure 3: Profile Page of the Cisco Learning Network.

Gardner (1999) developed the principle of multiple intelligences, which are addressed by a variety of presentations and teaching methodologies. At Cisco, the Network Academy prepares students for high tech careers and recognizes multiple learning styles of students (Schmitz, 2007).

Gardner’s logical mathematical intelligence is demonstrated a great deal in the Cisco Network Academy. Logical thought patterns are introduced (Joseph, 2003 as cited in Schmitz, 2007). Students must understand the concept of binary numbers, be able to comprehend patterns and/or statements, write in hexadecimal, and convert numbers from binary to hexadecimal and to decimal without a calculator. The online assessments provided by Cisco are primarily multiple choice patterns, which also require a mathematical/logical strength (Brielmaier, 2003).

Gardner’s personal intelligences of intrapersonal and interpersonal are also of value in the Cisco Network Academy. When designing a network, one’s idea must be clearly understood by others in the group. The students must be able to comprehend another’s design as well as to clearly communicate and know that their own ideas are understood. This requires the ability to determine the intentions and desires of others in the group. In addition to this intrapersonal skill, the students must exhibit strong interpersonal skills (Schmitz, 2007).

Table 1. Cisco Learning Network Geographic Data. Source: Cisco: overview.

The Cisco Learning Network became one of the most visited networks. Table 1 shows statistics for the number and percentage of visits (online access) by geographic areas, with the Mexico and China having the largest percentage of visits at 64% each, followed by Philippines, France, India, Germany, and so on.

Figure 4. Graph and Table above showing Cisco Learning Network Most Popular Pages (graph for visits and number of new users each month. Source: Cisco company documents.

One component of the CNA involves a detailed engineering journal. Students must be able to clearly describe their personal feelings in the development of a network or in their troubleshooting steps. Students must also be confident in their e-mail communication skills. This type of communication involves reading and writing skills, the ability to know one’s own strengths and good interpersonal skills (Schmitz, 2007).

Cisco Student: A case study

An example of student success story is that of Kurt. He enrolled in the Cisco course because he was interested in obtaining Cisco Certified Network Associate (CCNA) certification and was interested in a career in Information Technology. He has always been interested in computers and wanted to be able to set up a home network. He enjoyed the course a great deal. In a follow-up email, Kurt announced he had successfully completed the CCNA examination and his certification during the summer of 2006. When asked about his multiple intelligences, these may have been utilized throughout the course. Kurt replied positively and gave some examples.

He felt his strengths were in Logical-Mathematical and Verbal Linguistic areas and he felt his strengths in these areas had helped him look for and memorize patterns, while his Verbal Linguistic strength helped him articulate specific questions and convey thoughts to the instructor. Kurt spoke specifically about networking protocols and his ability to discern certain patterns based on his experiences with reading music: He stated, “I tended to look for patterns and logical reasons behind why protocols work the way they do, how to set up a network, etc… by means of my Musical and Logical Mathematical intelligences” (Schmitz, 2007, p. 79).

Kurt spoke about his spatial intelligence and felt he was weak in this area. He suggested the intelligence might be useful in visualizing the flow of network traffic or the process of requesting and displaying a Web page. Kurt also remarked he did not feel Naturalistic intelligences were of much use in the Cisco network Academy course. Overall Kurt believed his ability to recognize patterns in the Cisco network Academy course was a benefit, and attributes this to a strong Musical Intelligence. He found it helpful to look for patterns in understanding the course content. Kurt referenced problem solving and logical thinking as being a great benefit. He suggested the course was highly logical and having strength in his area was very useful (Schmitz, 2007).

Data analysis

Cisco develops products using commonly accepted industry standards. However, O’Reilly and Pfeffer (2000) indicated that on several occasions, Cisco’s technology becomes the industry standard. Cisco does not promote any particular technology, but wants to be the leader in every primary sector of technology.

Cisco listens to customers’ complaints, notes current technological developments, and offer customers several choices. Its growth has been accredited to several factors, primarily through acquisitions, but management talent comes from the acquired companies. It taps first these new talents, draw from them what they know based on previous experience, provide some form of training and development, and they become living assets to the organization.

Cisco’s strategic guidelines include: using business units to focus on certain market segments, focusing on being number one or number two in each targeted segment, defining a set of measures in determining the appropriateness of an acquisition, and trust on established company teams and programs to speed up the integration of the merged business. Because of the sheer volume of acquisitions, Cisco changed its strategy from volume-based management to value-based approach (Kalyanam & Brar, 2009). The value-added model allows monitoring of some important features like: amount of partner investment; sales of major Cisco products; customer approval; and productivity of partner firm (Kalyanam & Brar, 2009).

There are key decision criteria in business acquisitions. The Cisco way of acquisition process is unique but humane. Cisco has a separate department in charge of corporate acquisitions, which focus on discovering the potential of human resources of an acquired firm or about to be acquired. This group’s activity begins when a decision has already been made by top management to acquire a company. They analyze the management styles, organizational make-up, and other cultural features of the company. Mimi Gigoux, who once worked with the Group, noted that these factors are predominant at the early stages of the M&A process because key personnel are concerned of their job than the other acquisition details. This situation allows her to look at the management style and operational activities of the company. For instance, some hidden liabilities are seen by looking at the management style and operational basis of the company. In another instance, a company acquisition was about to be finalized when she found out that some key personnel (engineers) could not be retained by Cisco. However, because of this early discovery, the problem was settled out (O’Reilly & Pfeffer, 2000).

The Cisco management has a policy to retain all personnel of an acquired firm, but they also take primary consideration on the key personnel, such as the senior management and those in charge of technology activities. Cisco retention rates have helped the company grow. Gigoux (cited in O’Reilly & Pfeffer, 2000) notes that majority of senior managers of acquired companies have been retained, and are a valuable part of human resource. These people have survived multiple beginnings and have accumulated their own personal wealth. However, informal surveys made by Cisco states that they stay with the company because they now have a new organization that can back them up to pursue new personal careers in life (O’Reilly & Pfeffer, 2000).

Once the details of the acquisitions are approved by both companies, the final processes and arrangements are made. In many acquisitions, formalities are done quickly because honest exchange of information has already been made. The acquired company must be immediately integrated into the system, for marketing start, and all other niceties can be executed later on. They follow one philosophy after an acquisition: “Early if not elegant.” This means that they have to be in a hurry to market the product before the market disappears. In the technological age, products have very short life cycles, or before you know it, the market is not anymore there. The Cisco group has to market the “new” product under the Cisco label, which usually takes a short period of time. Chambers (as cited in O’Reilly & Pfeffer, 2000) warns that “the fast will beat the slow” (p. 45). Integration teams, or those in charge of product and logistics, take charge immediately. They check if new employees are well-versed of the intranet, accommodated in their new offices, offered free soft drinks, and are well oriented into the Cisco system. Cisco employees have a welcoming attitude and are not used to the “outsider-insider” mentality.

Cisco tells new employees that change is painful, but to reduce the pain, they do it fast. Mimi Gigoux was a good welcome manager in her days, as she just applied a great amount of honesty to the process and to the people who felt uncertain of their future. But she told them that it was better that they felt positive about the acquisition. Some good news she had to reveal included retention and compensation plans, and more benefits packages and career opportunities (O’Reilly & Pfeffer, 2000).

Key Decision Criteria

The key decision criteria for choosing Cisco as the main topic for this paper, is the uniqueness of this business organization. It is not a mere organization with success stories to tell, but its meteoric rise from a small-start up is extraordinary. It has competed with technology giants Microsoft and Intel; yet its products are original, although some, particularly those drawn from acquisitions, are re-shaped and re-introduced into the market, as quickly as possible, so as not to lose the momentum.

As constantly noted earlier, Cisco is a technology company. It has another major activity which also uses technology as a tool, and this is corporate philanthropy, an aspect of corporate social responsibility that takes students and youth as beneficiaries. The primary target of this CSR program is the developing countries, since Cisco aims to eliminate the digital divide between developed countries in the West and poor countries in Asia and Africa. This is also one way of alleviating poverty by helping students and youth enhance their information technology skills, such as essential knowledge in networking, various computer software, and how to use these opportunities for career advancement.

Alternatives analysis

Analysis for this study has been focused on literature review and the relationship of the case study subject, Cisco, with other technology organizations. We can have an alternative analysis, and this is through empirical study coupled with qualitative and quantitative analyses. However, this is not available at the moment. Case study is important this time as this allows the researcher to build new aspects of the subject from the vast resources taken from scholarly journals and articles, by way of online databases, books, and websites.

Conclusions/Recommendations

Cisco is a model organization as it contributes to the new thinking of this new millennium, i.e. for people and technology. Cisco’s technology may not be all original, but they are patented in the sense that they bought the companies through acquisition.

Cisco has a record of being the technology company with the largest acquisitions, making it the number one in size and capitalization. Cisco does not abandon the personnel of the acquired firm, but Cisco thinks about their future, and their personal and professional lives. As soon as the acquisition deals are finalized, the Cisco team takes charge of the people, and then the product. This means profit and costs are second priority; they take charge of the personnel first. Cisco moves fast after all the acquisition processes have been made, in order to get to the market right away.

More than the commercial side of Cisco is the company’s CSR activities. Cisco believes in strategic philanthropy, as a way of giving back to the community. This organization helps in solving social problems through technology education. The Cisco Network Academy (CAN) is a CSR endeavor that helps students and youth from many parts of the world acquire technology education and computer networking. This is one way of alleviating poverty in countries in Asia and South Africa. That is why the Cisco Learning Network is one of the most visited networks that provide learning in areas in technology, networking, and business education.

References

Brielmaier, S. (2003). Cisco syllabus. Web.

Chatman, J., O’Reilly, C., & Chang, V. (2005). Cisco systems: Developing a human capital strategy. California Management Review, 47(2), 137-167. Web.

Cisco: Cisco overview. (n.d.). Web.

Gardner, H. (1999). Intelligence reframed: Multiple intelligences for the 21st century. New York: Perseus Books.

Jeffrey, C., & Perkins, J. (2015). Cisco systems, Inc.: Minding the GAAP? Issues in Accounting Education, 30(4), 329-352. Web.

Kalyanam, K., & Brar, S. (2009). From volume to value: Managing the value-add reseller channel at Cisco systems. California Management Review, 57(1), 94-119. Web.

O’Reilly, C., & Pfeffer, J. (2000). Cisco Systems: Acquiring and retaining talent in hypercompetitive markets. Human Resource Planning, 23(3), 38-52. Web.

Patil, L. (2015). The institutional rationale of transnational corporations in international educational development: A grounded theory analysis of Cisco, Intel, and Microsoft (Doctoral thesis, Columbia University). Web.

Schmitz, V. (2007). Examination of multiple intelligences in the CISCO network academy (Doctoral thesis, Capella University). Web.

Shannon, N. (2014). Leveraging core competencies in corporate philanthropy: Cisco’s exemplary strategic philanthropy (Doctoral thesis, Capella University). Web.

Yurov, K. (2008). The roles of geographic distance and networks in the acquisition strategies of high-technology firms (Doctoral thesis, University of Illinois at Chicago). Web.

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