Cisco Systems Uses Its Culture for Competitive Advantage

Manny Rivelo, a senior vice president at Cisco Systems, belongs to more internal company teams than he can count on both hands. "I'm on a litany of them—three councils, maybe six boards, and five working groups," he says.
They're part of an organizational web dreamed up by CEO John Chambers—a structure so complex that it takes 15 minutes and a whiteboard to fully explain. Chambers, however, uses just three words to describe the benefits of the San Jose networking giant's manage-ment system: "speed, skill, and flexibility."

It seems paradoxical that a multilayered organi-zational model would actually speed things up. But Chambers, whose company landed on the World's Most Admired Companies list partly for its management prowess, says his system of boards and councils has in-deed made Cisco (CSCO, Fortune 500) more agile—and that it will help the company grow in the recession.
Chambers' idea originated at the tail end of the 2001 downturn, after Cisco wrote off $2.2 billion in losses. He realized that the company's hierarchical structure pre-cluded it from moving quickly into new markets, so he began to group executives into cross-functional teams.

Chambers figured that putting together managers in sales and leaders in engineering, say, would break down traditional silos and lead to faster decision making.

Not all Cisco executives felt the same way. "It took seven years, and the first three years were bumpy," says Rivelo. Chambers has said that as many as 20% of Cisco's executives couldn't handle working with unfa-miliar colleagues; some were irked by the new compen-sation structure, which is tied to teamwork.

Rivelo is part of a nine-person council that the com-pany created to replace its chief development officer, who departed in December 2007. Some 70% of Rivelo's compensation is based on the